# When to quit growing? Seeking advice



## J-Peffer (Mar 3, 2007)

A brief background:

I'm 28 years old, I started doing roofing and siding on my own about 4 years ago.

I've grown every year since, and generally, I'm booked more than I can handle. Which leads to this problem:

I have help I've hired, 3 guys. They are all pretty good workers, they make good money, show up, work the entire time. 

I'm good with the numbers, and I feel I really have a sales talent, I get most of my jobs, and I'm competing against much larger companies, with bigger crews, that can do work cheaper than I can. I'm a very honest guy, and I don't have to fake that when I'm conversing with my customers, they sense that, and trust me.

That being said, I feel I have very little time to dedicate to the sales. Which is fine. I enjoy doing the work.

I'm also very good at managing a crew, much more work gets done when I'm there, while my guys are good workers, I can do twice as much as them when I'm there. 

I know, I can't expect hourly employee's to have the drive and desire, that I do. But crunching the numbers, it's more profitable, for me to miss a few jobs, or pass a few jobs, and be on the job site to help with the work.

I bid all my work, based on:
-Materials
-Days (Labor)
-Dumpsters yada
-Over head (insurance, equipment, vehicles, administrative, misc)
-Profit (what I need to make)

I run into the problem though, if I'm swamped with estimates, pulling permits, drawing up plans, ordering dumpsters, a day in the office, cost me 2 days on the job site.

I've hired my sister, to just help with invoicing, returning phone calls, answering the phone, but honestly, she is simply a window to me. The customer needs to talk to me to get the answer they need, the entire company operates through me.

I do not know a single person, who would, or could, operate the crew the way I want, or the way I would. Maybe I'm expecting too much. One of my guys is a great worker, but he lacks the ability to take charge. I'm not willing to "experiment" and hire guys and "see how they do" either. They could cost me a lot, it could lead to law suits, or burn bridges with contacts or customers.

What have you guys that have more experience found works? Should I tell customers I'm booked for the year? and offer to start bookings for the next year? I'd hate to turn down work.

Or try to find someone to help?


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## Warren (Feb 19, 2005)

Clone yourself


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## dan-o (Sep 28, 2008)

I'd raise prices with the goal of keeping my schedule full with fewer, more profitable jobs.


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## Mike Finley (Apr 28, 2004)

#1, your prices are too low.

Yep, here we go again, how can Mikey say that crap when he doesn't know anything about me or what I do?

It's simple.

#1 you are job signing percentage is way above average. Nothing makes sales more than low prices. I don't care how good a saleman you are, the best closer is lower prices.

#2 you can't afford to invest the money into your company that is needed for you to lay down the shingling axe.

First step is raising your prices so that you can afford the hit to production that will come when you can't work the jobs. Production and profits will fall when the owner lays down the hammer. You have to have a big enough profit percentage in your jobs to support this. That's why you have to raise your prices.

#2 is after you raise your rates, get used to production being completed at a different pace. Making this adjustment willl take time, but it has to be made. 

The bigger a company gets some things cannot be avoided. - production falls and quality falls. Those two have to be made up for with bigger profit ratios to combat them.


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## gman1985 (Oct 5, 2008)

hi, im almost where u r right now. Never been booked for a whole year yet, thou had a few month booked, and even then i felt really overwealmed between working and gettin work set up. Anyhow , if i were booked like u r and still have more work coming my way i would make 2 and then maybe even 3 crews, if there enough work for everyone. Just get to every job site a few times a week make sure everything is going good , keep in touch with costumers . If you wanna keep ur guys motivated put em on % instead payin them hourly.
im not more expireiensed than u, but thats my goal.


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## Ed the Roofer (Dec 12, 2006)

Also, get rid of the thought that no one else can do the tasks that you do.

Accept that Good Enough is Good Enough for the most part and don't isolate on the mindset of your perception of perfection and forget how to delegate.

To Delegate, is also To Teach.

To Learn, means that they must be allowed to make some mistakes, yet be held accoutable and understand why they miscued in the first place.

As long as you are on the job and still trying to grow, you will burn out and stagnate.



*Use the Broken Leg Premise.*



What would happen to your company if you got hit by a car and broke your leg badly enough that you were out of service for 1-3 months?

Think of that now and have a plan and systems in place to allow the company to continue on.

How can you take an extended vacation if you Must be there?

Learn to give up some responsibiltiy and assign it to the ones who can accept their portion of it.

Ed



.


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## Warren (Feb 19, 2005)

Kudos Ed.

This struck a chord with me as I had an experience similar to that
Back in 2001, I had surgery and was out of commission for 4 weeks. We were getting ready to start the roof framing on a very large complicated house. I prepped my lead guy as much as possible but I still had doubts. Not only the lead guy, but #2 also showed up big time. This gave me confidence that in the future, splitting the crew was not only possible but necessary. Now if we only had enough work now to go with 2 crews again.......................


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## WarnerConstInc. (Jan 30, 2008)

Nevermind.


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## J-Peffer (Mar 3, 2007)

Mike Finley said:


> #1, your prices are too low.
> 
> Yep, here we go again, how can Mikey say that crap when he doesn't know anything about me or what I do?
> 
> ...



That's half the problem:

I could raise my prices, I make good money each job now, but it's dependent on myself doing about everything. I have excellent security, because I do have a good closing ratio. It's allowed me to build a really good customer base over 4 years, and establish my name. 

It would cost me about 1 to 1.5k a week to be just an office manager, or depend on a crew to just install. Even then, most idea's, and any problems would have to be ran by me. I might rather stop booking work, than let it cost me jobs, or that 52k a year. Until maybe I find the right guy.

I have similar problems in the office though too. If someone else is doing my books, I don't know where we are at.....


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## OGStilts (Aug 30, 2007)

This is a common problem for all businesses. Read E-Myth, I think it will strike a chord.


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## Mike Finley (Apr 28, 2004)

J-Peffer said:


> That's half the problem:
> 
> I could raise my prices, I make good money each job now, but it's dependent on myself doing about everything. I have excellent security, because I do have a good closing ratio. It's allowed me to build a really good customer base over 4 years, and establish my name.


Well, you're at the cross roads of making the change from having a job as an installer of what your company sells, or running a company that installs what your company sells.

You have security and good money in your job as an installer, but where is the future in that?

You don't have any choice in regard to your pricing. That's economics. How else are you going to pay for the extra employees labor burden when you move out of installation? By Volumne? Unfortunatly productivity is going to take a hit. This is what happens, it's the hump to get over when owner/laborer stops being labor. As soon as you replace yourself as labor, productivity goes down and labor costs go up. How do you make up for that? The only way is to increase your prices to cover this, you will also have more warranty and call back expenses, material waste... etc....





J-Peffer said:


> It would cost me about 1 to 1.5k a week to be just an office manager, or depend on a crew to just install. .....


Of course, that's why you have no choice but to raise prices to cover your new expenses and overhead. Now you are talking about a minimum of two new employees. Labor and office staff, that's even more money to make up for. Unless your company was generating an excess profit annually equal to these two salaries and you are willing to forego that profit and return it to the company, how else are you going to pay these extra expenses without raising prices? Why not move out of the labor position first and see how that goes then think about the office person down the road?



J-Peffer said:


> Even then, most idea's, and any problems would have to be ran by me. I might rather stop booking work, than let it cost me jobs, or that 52k a year. Until maybe I find the right guy......


That's the catch 22. If you can't raise your prices to break yourself out of the installation role, you really need to step back and think about what have you created for yourself? You most likely have just created a job as an installer for yourself and you've been living a false sense of security all this time. If you can't raise prices you have no way to grow. You really haven't created a business model with a future, just a lead installer job for yourself.

The dirty shock awaiting you is probably the realization that you're the cheap guy on the block. The reason why you are busy and making money is because #1 you are cheaper then most, #2 you are doing the installation work and all the rest of the work to run the company and only paying yourself 1/2 of what you should make. 

For instance if you are paying yourself $52k a year (which seemed like a good dollar amount) and now when it's time to grow you find you need to replace yourself with a $40K installer and a $40K office/sales person, then you really should have been paying yourself $80K all this time. In reality you've been living in a lie and you're now just discovering it.

Also you should consider that there will be no right guy to find. Productivity goes down, labor expense goes up, this is the cost of growth, expansion and laying down the hammer. Anybody who could replace you is not going to work for you. He will be like you and able to work for himself.



J-Peffer said:


> I have similar problems in the office though too. If someone else is doing my books, I don't know where we are at.....


Bookkeeping and overseeing your numbers are two different things, I think you are confusing the two.


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## piercekiltoff (May 28, 2009)

J-Peffer said:


> That's half the problem:
> 
> I could raise my prices, I make good money each job now, but it's dependent on myself doing about everything. I have excellent security, because I do have a good closing ratio. It's allowed me to build a really good customer base over 4 years, and establish my name.
> 
> ...


Raise prices first, worry about that other stuff later.

On the next job you bid, add a ___ % to the price per _____ [unit]. If you get the job, great, if you don't - you're booked for the foreseeable future anyway. That ___ % is going to be what generates $1k to 1.5k a week, over time.

I think if your closing strategies are really that good, the client will look the other way on a 1 to 5% price difference between you and your competition.

I've found in our line of work that perfection & quality do NOT equal low prices - we've always bid our wells & pumps higher than all our competitors, but emphasize that we aren't putting in something we have to maintain or fix on a 10 year basis, we're putting something in that will last, that will perform, and that is actually an efficient utility.


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## DavidNTX (May 6, 2007)

J-Peffer said:


> A brief background:
> 
> I'm good with the numbers, and I feel I really have a sales talent, I get most of my jobs, and I'm competing against much larger companies, with bigger crews, that can do work cheaper than I can.


What makes you think that your competition can do the work cheaper than you simply because they are larger and have bigger crews?

It sounds to me like maybe you are cheaper. Just like you when that owner has a day at the office it too cost him 2 days at the job. The difference being he probably has this everyday on all of his jobs. Along with multiple trucks, offices with multiple offices, a book keeper, receprionist, field supervisor, estimator etc. and all of those other things that can't be done by hiring a sister just to help shuffle paper and to be a telephone buffer.

Raise your prices. Start quite a bit higher. It is okay to not get a job. This starts to help define the upper limits of what the market will bear. You need to know this number. From there you can work your way down to find that limit and use that as a "baseline" for your bids.

I am all about knowing what a job will cost you and using those numbers to estimate your work. It sounds like you are doing that. The problem I see is there isn't any money in there to allow for expanding your business. By using your current system for pricing you defined the last item as follows...

-Profit (what I need to make)

Increase this number. You now need to make more so you can hire the people that will help you "run" your business. Your competition has already done this when they grew. Before long you will see your profit go back down and your overhead grow as your business grows.

It wont take too long for you to start realizing just how much more it cost in overhead to have a larger company with bigger crews.


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## GnB Co. (Apr 8, 2009)

I see alot of good advice above, Like most people said raise your rates, I remember when i was at the same issue, the way i step over the hump of being a labor to only a business runner, I hired sub contractors, that taught me to raise my rates to make more money on each job. If a sub was charging me 20k to do a job for me, My estimate was 30k to the homeowner, that covered my expenses plus time. As time past i found a good little crew with a crew leader and started to take chances of them performing the work under my name, Yes you still have to babysit them at times but in all reality it works out for the better, Down the road they learned how i wanted things done and when to get them done. It was actually cheaper for me to run a second crew instead of subbing the work out, Now if i didn't have this second crew i would have to sell my boat :laughing:

Just learn to take chances and make mistakes, There is a right person just waiting for a good job like a crew runner, Its just do you have the $$ to pay this man??


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## J-Peffer (Mar 3, 2007)

DavidNTX said:


> What makes you think that your competition can do the work cheaper than you simply because they are larger and have bigger crews?.



It's not uncommon for customers to tell me, Company XXX bid the job 1,500 lower, but we are still using you.

There are only 3 companies around here, and I'm familiar with their pricing, I'm sure they are familiar with mine.

They buy in volume, store materials, 6 pallets of nails at a time. I buy all my materials from local suppliers, on a per job basis.

They pay there employee's, $8 an hour. Most are kids out of school, or local drunks. I pay my guys much better, but expect more of them.


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## rbsremodeling (Nov 12, 2007)

150K a year and a Hummer SUT as a company vehicle ( i will supply gas) and I am there. You can kick back and start to enjoying life


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## Mike(VA) (Jan 9, 2008)

J-Peffer, since you said you know your numbers, raise your prices until your rejection rate is 20% higher than it is now. The 80% staying with you will present you with a better return than you are getting now, for less work. Don't increase scope just to justify the price increase, just increase your prices. 

As for you being indispensable, the Chinese have a saying that goes something like this: when a man pulls his hand out of the water, there is no hole left. Many of us have been where you are feeling that you need to manage everything. It is one of the hardest things to do to let good people work and you to stay out of their way. 

Try this to start: decide which jobs are routine enough that you don't need to work them with the crew. Then just show up right after the job is done and check it out and see how the customer feels about the work. On jobs where you feel you really should be there, show up at the start, go over the specs, and leave. Show up after the job is done and check it out. You should have very few jobs where you need to be there the entire time.

Do this for a couple of weeks and two things will happen; you will start to feel more confident in your crews and you will have more time to devote to growing your business.


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## J-Peffer (Mar 3, 2007)

Mike Finley said:


> Well, you're at the cross roads of making the change from having a job as an installer of what your company sells, or running a company that installs what your company sells.
> 
> You have security and good money in your job as an installer, but where is the future in that?
> 
> ...



I think you are right on here Mike.

It comes down to risk managment. Do I bring on more help, raise my prices, and risk getting fewer jobs? Risk having to lay guys off? 

It comes down to a numbers game. If I had to add 100k to my payroll to do this, would it maybe be better to just do it myself....and book a few less jobs and keep that 100k to myself? 

If I'm bidding 300 a square lets say, and I have to bid 380 a square to grow....I could do 80% less work from not having a larger crew, but still get away with bidding 25% higher....I'd probably come out further a head.

But again, you are right, I'm maxed out on what I can do. I can only work 16 hours a day, these 2 hands can only do so much. I just have to find the right help.


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## J-Peffer (Mar 3, 2007)

Mike(VA) said:


> J-Peffer, since you said you know your numbers, raise your prices until your rejection rate is 20% higher than it is now. The 80% staying with you will present you with a better return than you are getting now, for less work. Don't increase scope just to justify the price increase, just increase your prices.
> 
> As for you being indispensable, the Chinese have a saying that goes something like this: when a man pulls his hand out of the water, there is no hole left. Many of us have been where you are feeling that you need to manage everything. It is one of the hardest things to do to let good people work and you to stay out of their way.
> 
> ...


You seem to have a good method for testing the waters doing this. Rather than hire on 3 more guys, and bid my next 10 jobs 25% higher, I think you have the right idea on pressing to see when the rejection rate is higher. 

I really have to over come the issue that I can't turn down work, and I like to win each job. I spend so much time combing over the roofs, taking pictures, putting together a presentation to impress the customer, taking classes to make myself more qualified than the other guys.

I just hate to look at it as a %, that I'm going to loose 40% of my estimates. That means 40% of my time is wasted I feel. I know, it's just part of the business, maybe my skull is just too think!


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## rbsremodeling (Nov 12, 2007)

Start charging for estimates and Raise your pricing 10-15%. It is that simple


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## wheeler (Feb 8, 2009)

you're in a high risk trade, don't take on more than you can manage safely. growth eventually means running multiple crews at multiple locations. you can grow a roofing business if you can do that safely. if not, don't grow.


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## Ohmy (Sep 10, 2009)

You need to make a decision at some point as to what kinda of life do you want. Do you want to be a self employed guy or a business owner. Then you need to make a business plan based on that decision. I don't mean a business dream but a plan. Like how you handle payment and process payment, how you handle complaints, what you say when you answer the phone, who you buy your material from, what you pay your guys. The key to a good business plan is that its an actual plan. Usually, when I see business plans that are just goals and dreams. I.E. I want to make alot of money and have this many trucks. A good business plan will tell you how to get there.

Good business decisions are made from good business planning. Good business planning is the key to success. The entire franchise industrial is built on this truth.


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