November 7, 2022
Adam Hoeksema
As long as there are buildings, people will want roofs on them. Starting a roofing company might seem like a good idea, and for someone with the right approach, it could well be. However, the project comes with a lot of competition and hard work.
As a roofer, hard work shouldn’t be unfamiliar to you, but it’s just as important to work smart, too. So, in this article, we’re going to go over the steps required to get a roofing company started, and some different approaches you might consider when doing so.
Before we look into the specifics of how to start a roofing company, let’s take a peek at some industry insights and see why roofing might be such a good investment right now.
The Roofing Market: An Overview
The roofing market varies by type. You’ve got asphalt shingles, tiles, metal, residential, non-residential, etc., and each will fluctuate as a result of different factors. Taking the sector as a whole, we can see an average expected CAGR of almost 7%. The current market stands at about $26.6 billion in the US, which sets the forecasted outcome to about $38 billion by 2027.
The construction industry is one driver of almost all roofing types, and modern structures demand modern roofing solutions. Not only do they have to be stylish, but there are new needs for improved insulation, efficiency, and other contemporary priorities that keep the sector relevant in both R&D and sales.
Though the COVID-19 pandemic tanked the entire real estate market, post-pandemic trends look relatively positive. Infrastructure is on the rise again, and rapid advancements in tech and urbanization are all boosting the growth of the roofing market. Green roofing is gaining popularity, and governments are investing a lot in infrastructure development
Some of the current challenges facing experts in the sector include new regulations, lack of good talent, a highly-competitive environment, and unreliable or delayed payment schedules. Safety issues are a continuous but shrinking component of roofing work, and pricing is particularly challenging as materials become more expensive, but consumers demand familiar costs.
If this all sounds manageable and appealing to you, you’ll likely want to know how much it’ll cost you to start a roofing company of your own in this sector. Costs are the first thing to consider when pondering such a venture, so let’s take a look.
Starting a Roofing Company: Startup Costs
As you’d expect, the specific costs you’ll be looking at will be determined by the type of roofing you’re hoping to do. There’s diverse market segmentation in roofing, and three major ways to break these segments down.
1. Materials – These can be divided into shingles, metal, tiles, wood, or any other standard roofing materials. You may focus primarily on one type of roofing material, or go with a variety, depending on your business model.
2. Roof type – This is simply whether you’re working on flat roofing or sloped roofing. Again, it’s likely you’ll specialize in one kind, but being able to cover both bases might expand your market share.
3. Application – This will be whether you’re doing residential work or commercial, or any other kind of non-residential work. Some companies do both, some specialize in one.
On top of all of this, you can divide roofing by the areas you’ll be working in. Within each of these areas, there will be different tax and licensing requirements. Finally, as you’d expect, the startup costs depend on the scale you’re looking at. We’re going to look at a small-scale startup, to begin with, and give a rough estimate based on the average overheads across most of these factors.
To get off the ground as a small business owner in roofing, you’re looking at the following immediate costs:
- Transport – This is going to be your vehicle for moving people and materials to your work site. It’s likely to cost at least $4000 if you get one on finance.
- Tools and equipment – Nail guns, air compressors, ladders, all the usual stuff, and enough for you and whoever will be working with you. Budget another $4k for these.
- Roofing contractor’s license – This should only be a couple of hundred dollars.
- Insurance – Tack on another couple of hundred for this.
- Social media/website – Depending on how you go, this could range from free, to a few thousand. Consider at least $1200
- Marketing media – This will cover your fliers, ads, business cards, etc. In the beginning, expect to pay maybe $200 for these, more if you hire a designer.
So, if we add all those initial expenses up, we get a figure somewhere around the $10,000 mark. This will cover most of the startup costs for a small roofing business in most areas of operation. But of course, that’s not all the cost. And knowing how to start a roofing company means knowing what’s coming in and what’s going out on a regular basis.
We’ll take a look at what comes in shortly. First, let’s look at what your ongoing expenses might look like.
Roofing Company Expenses
Much of the ongoing costs of running a roofing business are the same as running any other trade. You’re going to have working capital, administration, hardware, and other standard outgoings. To give you some examples, here’s a list of a few common ones:
- Insurance
- Vehicle and equipment maintenance
- Supplies
- Waste disposal
- Salaries
- Marketing
- Certifications
And it’s worth repeating that these costs will depend on how large your company needs to be and what angle you’re approaching the market. These costs will also be broken down into what might be called “hard costs” and “soft costs”, the latter of which shouldn’t be overlooked.
Your soft costs will be certain things like how much it costs to acquire customers, which will be determined by your marketing strategy and the market itself. Knowing best how to start a roofing business means knowing how you’re going to dig into your share of the market, and this means having a solid plan of action.
We’ll touch on how to build your business plan very soon, but to balance out your costs, you’re going to need to bring in plenty of revenue, so let’s go over what sort of money you might realistically bring in with your new company first.
Starting a Roofing Company: Revenue and Profitability
Of course, these metrics will change in relationship to one another as your company gets off the ground. Ideally, your costs will be at the highest as you get established, and will gradually decrease and settle, at least as a percentage of your revenue.
Roofing as a small company can reasonably expect to see revenue of anywhere from $200k to $700k after becoming established. This reflects a profit of between $60k and $120k, depending on how tight your run your ship, and your specific business model. To give an example, the average roofing contractor salary is around $49k a year, but this average will have taken into account salaries as high as $101k and as low as $19k, so the actual amount you make can vary.
New England, New York, and California see the highest rates of pay for roofing contractors, and roofing contractors are typically paid more highly than crews, engineers, and salespeople. Other factors that affect revenue need to also be considered. Here are some of the revenue streams typical to roofing businesses, listed as their percentage of revenue in 2022:
- Roof replacements – these make up a third of revenue for residential roofers
- Roof repairs – Second to the above, repairs made up about 14%
- New constructions – These too represented about 14% of revenue.
- Metal roofing – This is the dominant residential roofing material, sitting at 78% of residential roofs
- Asphalt shingles – A close second to metal, asphalt represents about 77% of roofing jobs and accounts for around 30% of revenue.
So, metal roofing and roof replacements are profitable ventures for many looking to get into the roofing business. Homeowner demand is outpacing roofer supply, so the market is wide open in many areas.
But of course, your specific skill set, budget, and approach will play a significant role in how much you can make and from which streams. To get started, you’ll need to know your business model and develop a business plan.
How to Start a Roofing Business: Step-by-Step
Your business model is likely to be based on your expertise. If you’re looking to jump into running a roofing company with no prior experience, you’re unlikely to be able to compete, so we’re assuming you know a little about what you’re doing, and what you plan to focus on in your business.
Some common business models for roofers are:
Sole proprietorship – This means the founder and owner are in charge of everything. They’re responsible for every aspect of the business and are consequently legally liable in the case of any damage or accidents.
Partnerships – These a run by multiple people who share legal and business development responsibilities. These can be equal or weighted-share partnerships and this will likely affect how profits are distributed.
LLC – A limited liability company is a separate entity from its owners, and that takes some of the strain off when it comes to legal liability. These are the most common roofing model and can be run by one or more people, with responsibilities split between them.
So you’ve got three approaches right there, and then your model will go deeper into whether you’re focusing on repairs, installations, new constructions, consultancy, and so on.
Once you’ve got your business model identified, it’s time to start creating the business. Here’s a step-by-step guide to getting off the ground.
Step 1 Create your business plan.
Designing this immediately will pave the way to numerous successes in your company’s future. A solid business plan is more than just a document of ideas, it’s a well-researched, realistic framework of strategies and projections that will teach you about your company’s position and prospects in the industry.
It’s also a key component to finding investment or other capital for expansion. Your business plan will be comprised of a minimum of seven sections:
1. Executive Summary – This is the overview of the document. It’ll contain a short-form version of everything that’s coming next.
2. Market analysis – Here’s where you document your market research. Completing this section of the business plan will go a long way to teaching you everything else you need to know about your business and how it fits into the industry as a whole. It’ll also guide you on your marketing strategies and financial projections, in later sections.
3. Company Description – This explains who you are and how you’ll compete, as well as your business model. It will draw upon customer profiles identified in the previous section, and explain what their pain points are, and how you plan to fix them.
4. Organizational Structure – This section lists out how your business will be structured internally, and whom your management teams comprise of. It’s possible to put up some individual profiles of your management team here, pinpointing the qualities that they’re bringing to the table that will help you succeed.
5. Products and Services – This will be an itemized list of everything you offer and how much it will cost. You can list high and low prices for seasonal shifts, and include discounted rates, and other promotions too.
6. Marketing Strategy – From your market research you’ll have devised a strategy to best approach and acquire your customers. This might be where you’re going to look, which channels you’ll use, and how much you’ll spend.
7. Financial prospects – Finally, you’ll have a series of financial projections based on anticipated possibilities. These will be based on accurate market research and will need to be tight to get the attention of investors.
These financial projections will probably be the first thing your prospective investors or lenders will turn to in order to see if you’re reliable and realistic with your expectations. Here at ProjectionHub, we've built a 5 year financial projection template specifically for roofing companies. Our templates come with free support, can be modified to suit your specific situation, and are designed to appeal to investors.
Step 2. Register your company
Your business plan will give you pretty much all you need to know about what your company will be and how it will function. Before you can do anything, though, you need to make it legitimate. Registration will vary in requirements and costs from state to state, but you should be able to find out your requirements easily. Make sure you get the right permits too.
Step 3. Funding Sources for a Roofing Startup
If you can cover the startup costs yourself, that’s ideal. For most companies, however, you’ll want some capital injection to get on the road quickly and grow into something sustainable. There may be government subsidies, grants, or loans available, particularly if you’re going to work in green roofing, so look out for those first. From there, you have two main options.
Bank loans will be tied to your personal equity, so you’ll be responsible for paying them back even if you don’t make any money. Investors will take that financial risk for you, but you’ll have to give them some company equity in exchange for this, diluting your control over your company's direction.
Step 4. Spend the money
Now’s the time to put down your funds on all the things you need to pay for to get started. Hires, equipment, insurance, and everything else you need to turn your idea into a reality. If you’re not already marketing, this is where you need to get started. As you’re setting up other business-related things, you can be growing your customer base and spreading awareness to people so that they know you exist.
This leads us to the final step.
Step 5. Build your brand
This step is about rapid growth and access to your market share. Your marketing strategies will have been laid out earlier, but there’s still going to be a lot of trial and error involved in figuring out how to do this. Network, advertise, and get out and promote yourself as a solution to the needs of your customer base.
And that’s more or less how to start a roofing company. Of course, the specifics are all down to you, but with the format outlined above, you’ll soon be on your way to bringing in your first clients.
Conclusion
Getting to know how to start a roofing business is a lot easier than actually going out and doing it. Still, the process isn’t really any different than starting any other trade company. As long as you’ve got the experience, there is a wide-open market available for the competitive entrepreneur.
The key is to get the groundwork done first. A solid business plan outlines your approach and projects your successes. It also helps you gather funding for rapid expansion. Once you’re on that trajectory, it’s just about maintaining good, quality work and the margins you’re comfortable with from your market research.
