Two industry-wide business problems

By Emma Peterson. 

Roofing veteran Ken Kelly shares the most common issues he sees limiting contractors’ growth. 

In a recent episode of People Make Roofing, Luke McCormack of Roofing Talent America and The Coffee Shops™’ own Heidi J. Ellsworth interviewed industry veteran Ken Kelly.  

Ken got his start in the industry through his father, eventually taking over the family business. Over the years, the company grew under his leadership, gaining industry-wide recognition for their outstanding work.   

Today, Ken is retired but still very involved in the industry. He shared, “I thought about how many people had helped me when I was going through my journey. I wanted to give back and I have all this experience and knowledge that was trapped up in my head; it would be wrong to not help people in the roofing industry.”  

As Ken has made connections and provided guidance to companies across the industry, helping contractors improve their operations and grow their business, he noticed a theme among the most common issues they face. He shared, “There’s two industry-wide issues that come to mind. The first one is an inability to delegate. We want to control everything. And that's really just a visionary trait. And number two is that we tend to make decisions based on emotions, not on facts. And the worst time to make a decision is when you're emotional.” 

In the conversation, Ken broke down each issue and provided guidance for fixing these common problems. 

Sharing the load 

Many roofers are visionaries. They start their own companies, grow them from the ground up and work hard on them day-in and day-out. This type of work ethic and dedication is truly admirable. But it can be a double-edged sword. Ken explained, “What happens is contractors grow to a certain size, maybe $3 million, and can't get past that because we feel as leaders that we need to be a part of everything that's happening in that business.” 

The truth is, at the $3-$7 million mark, it’s important to know when to let go and when to delegate tasks to your team, otherwise you will never grow because you are limited by your own capacity. There are only so many hours in a day. So, what can you do to make that transition to delegation more comfortable? Ken had some ideas. He shared, “First and foremost, you want to be recruiting someone who's a good person, who's capable of learning, who wants to do things right and who believes in your vision. Then, you give them a little training, you set up a metric or a scorecard and let them go to work.”  

If you have hired someone who fits your culture and has the right training program set up, they will perform better than you could simply because it’s their full-time job. And then your time is freed up to grow your business beyond that $3 million point. 

The issue with emotions 

Once you have started hiring and delegating successfully, the next main challenge comes around the $5 million mark. Ken explained, “So many people don't know their numbers. They really don't know how they're performing. They know they're working hard. They're seeing roofs being installed. They see a little bit of cash in the bank. But at the end of the day, they get to around the $5 million mark and kind of stall.” 

That’s not to say contractors can’t get beyond that; Ken has seen some who push closer to $6-$7.5 million. He explained, “If they work super, super hard and they might convince maybe some family members, a spouse, a brother or a cousin to come and work with them. Then, all of a sudden, they might be able to get closer to that $6-$7.5 million level. But that’s really as far as they can go.”  

The reason that so many can’t make it past the $5-$7 million range?  Ken put it simply: “They're making these decisions based on emotion when they need to be making them based on their true performance numbers.” 

A good way to avoid this pitfall and continue growing past the $7 million point is using a method called EBITDA – Earnings before interest, taxes, depreciation and amortization. Ken explained, “EBITDA is basically the performance profitability of a company before all the noise gets thrown in there. Making sure your company is doing at least 10% of EBITDA on a regular basis creates a much better understanding of what needs to be done to grow. So, you can make your hiring decisions and other choices based on that, rather than emotion.” 

Once you are making choices based on facts, rather than emotions, and are hiring and delegating to the right team, that’s when your business will really start to grow. 

Listen to the full episode or Watch the recording to hear more of Ken’s insights and business advice.