475: The #1 Reason Roofing Contractors Go Broke (It’s Not Leads)

Prioritize understanding your financial numbers, including job costs, overhead, markup, and gross margin, above all else. Without this, increased leads or sales will only accelerate business failure.

Do not base your pricing solely on competitor rates. Calculate your per-square price based on your exact job costs, overhead, and desired profit to ensure sustainability.

Aim for a minimum 8% net profit margin, with 10% being ideal. Anything less often leads to cash flow issues and indicates poor financial health.

Clearly differentiate between markup (applied to job costs) and gross margin (applied to sales price) and understand how to calculate both correctly for accurate pricing.

Implement a robust financial system with monthly Profit & Loss (P&L) statements, organized by 'percent of job completion', to proactively monitor your business's health and make timely decisions.

Ensure your P&L distinguishes between job costs (directly tied to a specific job) and overhead expenses (general operating costs). Your salary as an owner should be an overhead expense, not part of net profit.

Adjust your markup strategy based on job size: increase markup for smaller jobs and maintain a consistent, profitable markup for larger projects, resisting the urge to reduce prices for bigger contracts.