Protect your bottom line before chasing the top line

By Emma Peterson. 

Trent Cotney explains how strong legal foundations support roofing business growth and profitability. 

In a recent Read Listen Watch® episode, Megan Ellsworth hosted Trent Cotney of Adams and Reese for a conversation about how roofing companies should view the legal side of running a business as more than an overhead, but as a driver of profitability.  

When most roofers think about profitability, they think about sales. Trent explained, “Everybody loves sales. Sales are fun. But too often roofers get singularly focused on those top line numbers. And if you want to grow, go from one million to five million, from five million to 10 million, you need to think more than the top line numbers. You need to think about the bottom line, the net profit of your company.” And protecting that net profit is where proper legal structures and management become crucial.  

Things like paying legal fees over disputes or OSHA fines add up and can quickly harm the bottom line of your company even if your top line, your sales, stay on track. In this way, maintaining the legal side of your business becomes far more than risk mitigation, it becomes proactive protection for your business’ success. So, where do you start when it comes to building a legal system that keeps your business’ bottom line safe so that you can improve the top line and make the net profit you want?  

Start with your documents. Trent elaborated:  

A lot of contractors tell me that they don’t know where to start, they don’t know what they’re missing. And that’s natural. I always tell them to start off with reviewing their core documents. Imagine it as a triangle. At the top you have your customer contracts, subcontractor agreements, 1099 salesperson agreements, all those types of things. And then the next part is your safety documents, so manuals and toolbox talks. And last but not least is your employee set up. Think HR, employee manual, etc. 

By looking at these core documents and structures, you can make sure that you have a strong foundation of legal clarity and coverage that you can build upon as your company grows. As Trent put it, “You need to have that framework in place to be successful, avoid needing to hire lawyers or pay fines and give yourself the space to focus on sales and the other fun things that people like.” 

Listen to the whole RLW to learn more about building a legal framework that helps your roofing company grow!