Complex designs. New materials. Technological advances. Roofing contractors' ever-evolving worlds have become increasingly challenging. As small-business owners, roofing contractors must anticipate the possibilities the future may bring so they can set their companies' directions while attending to the fundamental goals of installing quality roof systems safely, on time and on budget.
To help roofing contracting companies of all sizes address the varied demands associated with managing a roofing business, NRCA's Business Leadership Committee has redefined its mission.
According to committee Chairwoman Jayne Williams, chief financial officer of KPost Co., Dallas: "NRCA's Business Leadership Committee's mission is to work with NRCA staff to develop products, services and programs that equip roofing contractors with instruction, information and other resources to help them define and reach their business and leadership goals."
The task ahead
The committee identified four areas of focus it is calling the four pillars: business literacy, people management, business growth and leadership development.
Capturing the complex combination of factors business leaders must consider when making decisions, the four pillars highlight the need for organizational and individual focus on business activities. The pillars balance visionary leadership with practical business management and represent a broad strategic approach to leadership by building on strengths and opportunities while addressing threats and weaknesses. Philosophically and in practice, many NRCA members already are taking their businesses to the next level. Are you?
Business literacy
You don't have to have a national presence to know roofing enterprises are complex organizations. Regardless of company size, roofing leaders must possess a refined understanding of their companies' financial, accounting, marketing and operational functions. Many of these skills come as a result of hard work and experience. However, leaders need to recognize when they need to seek deeper knowledge. Whether taking courses, hiring experts, or sharing what works and what doesn't with peers, at some point, leaders need to gain wisdom from outside sources. But it doesn't always come easily.
"Financial leadership is one of our biggest challenges," says Harry H. Esbenshade III, president of The Mountain Co., Vienna, W.Va. "Contractors need to understand and appreciate the value of data and ratios that signal a healthy business, and not all these are intuitive."
Esbenshade notes NRCA's financial and wage and benefit surveys can help contractors with their financial planning.
"Because the information in the surveys is provided confidentially, the surveys provide contractors with strong tools to measure their successes and identify areas for improvement, ultimately helping them build profitable, healthy businesses."
Sound financial management is imperative to sustaining and expanding a business. Financial statements are critical for tracking a company's success and how it compares with other companies. Without proper financial management, a business can be at risk of having cash flow problems, misused funds and missed opportunities. It is important for contractors to be familiar with the financial tools necessary to plan and manage their businesses. Benchmarking industry information against similar companies' information helps when budgeting operating and administrative expenses, as well as projecting sales-related figures, including revenues, bookings and backlog.
Operational risks, which include contract language, employee relations, regulatory compliance, crisis management, security, payment provisions and insurance coverages, stand out as important focal points for roofing contractors.
For example, whether you are a large commercial roofing contractor in business for a long time or a startup residential roofing contractor, your rights and obligations are governed by the terms of the contracts you sign. A contract is the law for a given job, and a contractor who signs a contract without reviewing its terms does so at his or her peril.
According to the Roofing Contractors Introductory Guide to Reviewing Construction Contracts published by the National Roofing Legal Resource Center, generally accepted best practices for reviewing construction contracts include:
The same management and leadership principles can apply to establishing a sound cybersecurity plan, as well. Nearly 73 percent of all cybercrime data breaches investigated by Verizon Communications' forensic analysis unit during 2015 involved companies with fewer than 100 employees. And the trend of hackers targeting small- and medium-sized businesses is increasing; the financial effects of these incursions are enormous. Before developing an information security program, ask yourself:
Running a successful business not only relies on managing daily operations and leading employees to achieve established goals, but it also depends on anticipating what is to come. Does your company have a company scorecard that tracks safety, costs and profitability by the job and not by the quarter or year? And does it have a crisis management plan that incorporates communications, information dissemination, collection and analysis of data, and training opportunities?
Even a well-informed and established company can fall victim to a kind of paralysis when a crisis strikes, and being unprepared compounds the trouble and turmoil brought by the incident. The most frequent mistakes made during a crisis are not recognizing its severity, delaying response and/or failing to manage the situation properly. And because there are a number of different kinds of crises that can occur in the roofing industry, you need to be prepared by having a crisis-management plan in place before an event occurs, including being able to:
"Tracking your business and having preventative measures in place prior to a crisis occurring allows you to become an expert in decision making, enabling you to adjust quickly, if necessary, and making corrections for every job and situation," says Serge Lafleur, president of Norman & Collie Inc., LaSalle, Quebec.
People management
Steve Jobs once said: "People with passion can change the world for the better." And at the heart of every roofing business' success is people—crews in the field, staff in the office, and the executives who build and lead the company.
But finding these people can be difficult. Roofing contractors face ongoing workforce challenges, including immigration, labor shortages and an aging workforce in addition to generational issues and work expectations.
Visiting NRCA's new Career Center is a good place to start. NRCA's new web-based career portal was developed to match prospective hires with roofing industry employers in addition to providing information about jobs and career opportunities in the industry. It also will serve as a repository of information for employers, providing sample forms and processes among other resources.
The industry's unique personnel issues also are spurring focused solutions related to personnel management.
Remarked Alex Hernandez, president of Clark Roofing of Broadview, Ill.: "For many years, we drove home the safety message, and now it is considered an integral part of every job. Many contractors view personnel management as vital, too. Without the right people in the right place, your job can be just as at risk as one without good safety practices."
Ensuring employees at all levels within the company receive adequate training can lead to improved employee productivity and satisfaction. In addition, providing meaningful feedback in a constructive manner that encourages employees on a regular basis is a foundational management skill and a cornerstone of effective business and leadership practices.
According to Don Kennedy, president of Don Kennedy Roofing, Nashville: "Training remains the best way to signal your commitment to employees, and it provides the most enduring payback to the business."
Business Leadership Committee members agree: Contractors must focus on people as a driving force in their businesses.
"A core tenet for retaining high-potential employees is defining expectations, training them for the skills they need, mentoring to build their strengths, recognizing and rewarding their progress and placing a priority on their success," says Kent Schwickert, senior vice president of national sales for Tecta America Corp., Rosemont, Ill.
Business growth
Growing a business has the potential to leave a legacy benefiting generations for years to come, but that depends on successfully managing risk on an enterprise-wide basis.
Lafleur observes: "At Norman & Collie, we spend a lot of time teaching the importance of quality work rather than working faster to save time."
Business growth, Lafleur says, is a combination of installing roof systems safely; displaying to customers that professionalism and quality are core company values; and involving staff in the business at every level, from engaging with customers to profit sharing.
"We communicate with our people about growth and about business risk to the benefit of everyone's bottom line," he says.
"Market position also is key," says Tim Blue, president of Blue's Roofing Co., Milpitas, Calif. "By finding a more technically challenging niche, we reduced our competition to a small group of competent contractors, and we increased our return on investment by multiples. Working only with owners (and not purchasing departments) and treating consultants, architects and manufacturers as customers provide fertile ground for building relationships and increase the chances for repeat business."
To promote strategies for growth among roofing business leaders, Heidi Ellsworth, president of HJE Consulting Group, Camp Sherman, Ore., recently has begun a partnership with NRCA to provide roofing contractor members with sales and marketing consulting and support for their businesses.
"By building marketing strategies and strong collaboration between marketing and sales teams, roofing professionals not only promote growth, but they also will create a more cohesive message about the business for customers and employees," Ellsworth says.
But growth is not only about expansion. Business leaders also must mitigate the strategic risks that affect business growth. Risk analysis is an important part of defining a product or service market, and it influences plans to enter and dominate it.
Moving beyond operational risks, enterprise risk management (ERM) can build knowledge and increase control of strategic risks relating to financial decisions, strategic direction and reputation building. Using ERM, a business owner will begin to look at a business as an interrelated whole and provide a structured process for managing all risks.
"Leaders shouldn't be afraid to take educated risks when setting a strategic direction for their businesses as long as they fully understand the risks to the enterprise and downside exposure," says Gary Kerley, president of Crane Renovation Group, Anderson, S.C. "Taking business growth to the next level will mean assessing your business strategy, taking an inventory of strategic risk, and being focused when it comes to marketing and sales."
Leader development
NRCA's Business Leadership Committee strongly urges roofing leaders to focus on the benefits of concrete educational experiences as well as networking. Two programs that can provide both are NRCA University's Future Executives Institute (FEI) and Executive Management Institute (EMI). FEI and EMI participants often remark that discussing challenges and sharing solutions outside the classroom are the most valuable parts of these rigorous programs.
"I am still in touch with my classmates from FEI," says Chad Collins, president of Bone Dry Roofing Co., Athens, Ga. "We aren't in each other's markets, so we are able to talk openly about the challenges we are facing and truly help each other find solutions."
Engaging with groups to learn and expand is important, but leader development is about more than personal growth. For many companies, it's about succession planning, too. Often, the goal of developing leaders is to ready them for promotion.
According to Schwickert: "Exposing rising employees to meaningful business problems and empowering them (with guidance) to solve them will build their confidence to make decisions, be open to learning from mistakes and ultimately help them become successful."
"Providing employees with a visible path to the future is key, and so is challenging them regularly to become the next generation of leaders," Williams adds. "We look at promoting from within when we first hire people."
Unlimited possibilities
For roofing business leaders, being able to adapt quickly is critical to success. Whether rising to the challenges of new competition, responding to regulatory changes, addressing shifting workforce demands or developing new growth strategies, attention to the basics applies.
Refining the way you think about the core business fundamentals of business literacy, people management, business growth and leader development can help you develop a plan and increase profitability within the context of your business.
Karen L. Cates, Ph.D., is a consultant to the roofing industry and professor of executive education at Evanston, Ill.-based Northwestern University's Kellogg School of Management. Alison L. LaValley, CAE, is NRCA's vice president of member services and development and executive director of the National Roofing Legal Resource Center.
Did you know?
NRCA offers resources to help you better manage your business. Go to shop.nrca.net to learn more, or contact NRCA's Customer Service Department at (866) ASK-NRCA (275-6722).
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