Former corporate guy turned searcher and now SMB residential roofing company owner.
On the acquisition and dealmaking path.
SBA, search, roofing, SMBs, ETA.
Roofing is the best home services business. Here's why
Necessity: A roof is essential for the protection and integrity of a home. It safeguards against rain, snow, wind, and the elements. When roofs leak or deteriorate, homeowners prioritize these repairs. When they don't there is severe discomfort and social stigma.
High Ticket: Roof repairs and replacements are typically one of the more expensive home services. This means that even with fewer jobs compared to other home service businesses, a roofing company maintains substantial revenue. You have to pressure wash a lot of driveways to get the equivalent revenue of a single roofing job.
Regular Demand: No matter the economic climate, roofs always need repairs and eventual replacement. Age, weather events, and general wear & tear all contribute to consistent demand. Roofs aren't recession resistant, but they do handle downturns much better than landscaping services and HVAC replacements.
Barrier to Entry: Roofing requires specialized knowledge, skills, and equipment. This can deter some from entering the business, reducing competition for those committed to mastering the trade. However, there are smart ways to leverage this for the benefit of the provider.
Potential for Insurance Jobs: Weather events that damage roofs can lead to insurance claims. Roofing businesses that navigate the insurance process effectively can benefit from consistent, high-value jobs.
Opportunity for Maintenance Plans: Just as HVAC companies offer maintenance plans, roofing companies can offer regular inspection and minor repair services, ensuring a continuous relationship with the homeowner and potential recurring revenue.
Less Seasonal Than Some Trades: While roofing can be seasonal in very cold climates, in many areas, it can be a year-round business.
Diverse Services: Beyond just installation and repair, roofing companies can offer gutter installation, insulation services, skylight installations, and more, expanding their revenue streams.
Business Growth: With experience, a roofing contractor can expand into commercial roofing, which involves larger scale projects and contracts.
Tangible Results: For many homeowners, a new roof can significantly enhance the curb appeal of a home, leading to high customer satisfaction and potential referrals.
If you enjoy learning about roofing, please give @Ladder_Larry_ a follow!
@WNY_SMB@lawyer4SMBs @millerck1225 I promise you that the very best SMBs out there are not being sold to buyers who don't have any experience in the particular field, who've never run an SMB before or who have never worked in homeservices before.
@sensarpensar I'm not sure where the 5 months came and why a post about risk is wild, but good luck to you. You know that in constructuction most companies don't make it.
If you run an SMB, especially one that you borrowed to buy, then for the next 10 years your lawyer, accountant, tax advisor and the civil engineer who comes out to tell you 'the foundation on the warehouse needs shoring up' will take home more money each month than you.
I feel that's a wild way of describing a highly risky venture.
Are you taking out debt to fund it? Have you worked in this industry before? Have you run a business before? Have you managed this employee group before?
If not you're doing something risky first. The upside-maximizing option might come. I wish you that. But we're entering a global recession.
@millerck1225 @lawyer4SMBs "Angling to do this" doesn't inspire confidence.
How many of those friends bought 10 years ago and made 4x more than if they stayed in their W2s (to account for the added risk)?
@lawyer4SMBs @millerck1225 @SMB_Attorney ... although the statistics are way against you.
It's great you're doing this if you know your chances of success are 1 out of 5 and your chances of going back to a job are pretty high.
It's not okay if this is sold to you as a 95% sure thing.
@lawyer4SMBs @millerck1225 Yes and my point is they're making a big mistake financially. Many will lose their shirts, most will make less then in their jobs and a small percentage will be happy they did it.
@blueprintsmb22@excel_ranger@NickHaschka@SMB_Attorney And this is a very fair trade off. I'm only speaking about the financial side.
Financially, you're worse off. Maybe some of the other things are better? Great!
@excel_ranger@NickHaschka@SMB_Attorney If I'm a 28 year old lawyer making $400k and I buy an HVAC company, there's a serious opportunity cost associated with me leaving my job.
I'm saying 'buy one or start one if you don't have better options' because statistically, on a risk-adjusted financial basis, small businesses aren't a good living.
If all you can do is make $60k at a job, then yes, $85k at an SMB you own for a lot more risk might make sense. And maybe you can make $200k, if you're super good and lucky.
But that's what a lot of 22-24 year olds out of college make.
Double entry accounting is undefeated.
If you want inflate one number, an offsetting adjustment must also exist.
From Enron to F T X, this is how forensic accountants reverse engineer frauds.
A few examples:
Want to make revenue higher? Okay, but your accounts receivable will increase until it actually converts to cash.
Want to disguise the increasing Days Sales Outstanding metric from the higher AR? You’ll need to charge off AR to bad debt expense.
Want to disguise equity distributions as assets? Great - but your related party or shareholder receivables balance will remain stagnant (looking at you Sam 👀).
Want to steal from your employer by creating fake vendors? Okay, but you’ll have to code those expenses somewhere and the Gross Profit % or Net Profit % of the business will shrink.
Want to have a related entity incur a liability and “lease” the property to the operating entity to achieve off-balance sheet financing? You’re now caught under either Variable Interest Entity rules (Enron 👀) or Right-of-Use new lease accounting rules.
There’s no new ways to commit fraud - and all of the ways are beholden to debits and credits.
Double entry accounting for the win.