Warren Pavon, from New York City, NY, owns CCM Roofing. With over 34 years of experience, Warren has learned what it takes to grow your business and has seen many good contractors fail. From his viewpoint, one of the most important things that many roofers fail to adequately address is ensuring a profit in every single job they do.
Profit is more than just money left over at the end of the day. It is also the fuel that drives the growth and development of a roofing company over the years.
He states that your balance sheet is a barometer of how the business is growing.
To ensure that the profit and loss columns are working in your favor, you must truly know the costs associated with each job or, as he put it, “you have to know your numbers”. Even the smallest line items must be addressed and compensated for. Failing to address this can easily result in a negative number or loss at the end of your business year.
Line items that are commonly missed or overlooked in a roofing estimate include things like primer necessary per linear foot of edge metal, cover tap per linear foot of edge metal, the amount of portable sealer for every pitch pocket, fasteners to be used and other small details that can make or break the bottom line.
Warren believes that most roofing contractors don’t go out of business because they are poor roofers, they go out of business because of a basic failure to understand the BUSINESS of roofing. You must separate yourselves from your competitors who may underbid you on a job but are doing so because they are not including all their costs and will eventually end up falling by the wayside.
Job costing at the end of every job will help identify areas that may have been overlooked or inadequately addressed when developing the original bid. Finding these shortages as you go enables you to address them immediately rather than waiting to the end of the year to see where your mistakes may have occurred. Being proactive in addressing issues is one of the primary keys in ensuring a healthy profit at the end of the year and the opportunity to reinvest and grow your business.
To help, Warren has developed a spreadsheet that Andy Near has available for people who want it, along with a video explaining how to use the spreadsheet effectively.
Beyond simply job costing, part of ensuring a profit and growing your business is monitoring cash flow. Overtime, for example, can cause money to go out faster than you are able to collect. This cash flow crunch can lead to an inability to grow the business appropriately. Balance between outflow and intake is critical.
Another example of watching costs to increase profit is monitoring your labor needs and adjusting appropriately, as the project develops. Change orders are another area of potential profit loss. If you are going to get paid for that change, you need to get it signed and approved BEFORE implementing the change.
To ensure a healthy bottom line, remember you aren’t just a roofer, you are in the roofing BUSINESS and you are foremost a businessman. This mindset will help ensure your business grows and flourishes over time.
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