The roofing industry in the United States is a major market, valued at over $45 billion annually according to recent data. With such a large market size, starting a roofing company can be a lucrative endeavor for entrepreneurs with the necessary skills and capital. The roofing business requires hard work, expertise, and the ability to bid competitively.
With proper planning, preparation, and execution, new roofing contractors can carve out a niche for themselves even in this highly competitive home improvement landscape. This guide will walk through how to obtain proper licensing and insurance and implement effective sales and marketing tactics.
1. Conduct Roofing Market Research
If wondering how to start roofing company business planning, start with your research. Market research is an important part of developing a successful roofing business. Research offers insight into your target market, local market saturation, and trends in roofing products and services.
In particular, the industry has benefitted from a boom in residential construction over the past decade. Construction companies are thriving. Spending on home improvements and remodeling has also fueled demand for roof replacements and upgrades. As households continue investing to enhance comfort, efficiency, and aesthetics, outlays on roofs are expected to remain robust.
Regionally, the strongest markets for roofing services include southern states with high population growth rates. Areas that suffer extreme weather also have steady growth in roofing.
While largely resilient to economic downturns, the roofing industry faces ongoing operational challenges that new entrepreneurs must navigate. Insurance, material, fuel, and labor expenses squeeze profit margins across the sector. Building rapport with reliable suppliers and subcontractors is critical.
For those new to the trades, beginning as a specialty roofer or independent subcontractor can provide on-the-job training and mentorship before branching out as a general contractor. Ongoing overhead like payroll, sales, and admin can also quickly add up, making sufficient access to credit imperative. Building emergency funds to handle seasonal dips and unexpected costs is likewise vital to survive those critical early years.
As a niche, specialized trade with recurring demand and lucrative insurance claims, profit margins of 10-20% are common for well-run contractors. Solo operators can potentially net six figures after some years provided they operate efficiently and cultivate strong referral networks among agents, adjusters, and past clients.
2. Analyze the Competition
Evaluating the competitive landscape is crucial when launching a new roofing enterprise in any market. Beyond investigating the online presence of roofing businesses, driving around town to observe yard signs, truck branding, and active job sites provides important grounds-level intelligence.
Monitoring sites like HomeAdvisor and Thumbtack also give quantifiable data on local roofers’ service areas, ratings, specializations, and activity levels. High ratings and large numbers of reviews typically correspond with leading operators who likely invest heavily in marketing and customer service.
New contractors should identify such top performers in their hometowns to assess competitive positioning and pricing. Discerning whether a market leader competes mostly on speed, price, quality, etc. helps guide your positioning. Installing business profiles on the same directory sites also aids visibility alongside rivals when prospective clients search.
Trade association membership directories like National the Roofing Contractors Association and state roofing & sheet metal groups provide additional background details on local companies’ certifications, capabilities, years in business, and more.
Such data lends helpful context for gauging a market’s overall profit potential and competitiveness. If numerous established players are struggling to stay solvent, breaking in as a neophyte presents substantially more risk and difficulty.
3. Costs to Start a Roofing Business
When starting a successful roofing company, the upfront investment covers critical licenses, physical assets, and initial operating expenses needed to open for business. Developing a budget is essential to the business plan of any new business. This includes:
Start-up Costs
Licenses & Insurance
- Roofing contractor license – $100-$300 depending on state
- General liability insurance – $2,000 per year
- Bonding – $5,000+ depending on project size
Vehicles & Equipment
- Cargo van/truck – $25,000 to $60,000 used
- Ladders, air compressors, nail guns – $5,000
- Basic tools & safety gear – $2,000+
- Laptop & phone – $2,000
- Website – $1,500
Facilities
- Shop or yard lease – $2,000 per month
- Basic office furnishings – $3,000
Working Capital
- Enough liquid cash to cover overhead and payroll for the first 3-6 months
Total minimum startup costs for starting your own roofing company often amount to $55K-$75K not counting trucks or working capital reserves. Those starting out moonlighting may bypass major assets at first. But getting fully equipped with a branded vehicle and professional tools requires around $100K upfront, a higher amount than what fencing businesses or flooring businesses, but the potential for profits is higher.
Ongoing Costs
On the recurring expense side, key line items roofing contractors face include:
- Payroll – $50K+ per technician/year, more if welding work is also required to get the roof done
- Workers comp/payroll taxes – 15% of payroll
- Software subscriptions – $100-$250 monthly
- Vehicle insurance – $150+ monthly
- Fuel & maintenance – $1K+ monthly
- Equipment rental – $2K+ monthly
- Marketing – $2K+ monthly
- Bookkeeping & legal fees – $200+ monthly
Given mostly seasonal revenue in roofing jobs, contractors generally aim for 20-30% profit margins to carry them through the winter months. This means covering overhead costs of $8K-$15K per month, or $100K-$200K annually for a full-time operation.
4. Form a Legal Business Entity
When establishing a roofing contractor business, the legal structure you choose determines taxation, liability protections, and options for growth. The four main entities each have pros and cons to weigh.
Sole Proprietorship
A sole proprietorship constitutes the simplest and most common initial form for fledgling contractors. Requiring only a DBA filing to operate under a business name, sole proprietors report all profits and losses on their tax return. With no corporate veil, however, the owner’s assets remain exposed in lawsuits, underscoring the need for ample insurance policies.
Partnership
Partnerships allow two or more owners to jointly run and share profits from a roofing venture. A formal agreement governing each partner’s capital contributions and responsibilities is essential. Without adequate insurance though, each partner’s assets remain at risk.
Corporation
Forming a corporation creates a distinct legal entity from the business owner. “C Corps” face double taxation, however – once at the corporate rate, and again via income dividends. The structure better suits larger roofing enterprises planning to eventually go public or issue company stock down the road.
Limited Liability Company (LLC)
For most small contractors just starting, operating as a limited liability company (LLC) offers the best of both worlds. As pass-through entities, LLC profits and losses pass to the owners’ returns, avoiding C Corp double taxation. Individual owners also gain protection from personal liability for debts and legal claims against the roofing business itself.
5. Register Your Business For Taxes
Whether operating as a sole prop, partnership, or LLC, every roofing business in the United States needs to obtain an Employer Identification Number (EIN) from the IRS.
Similar to an individual Social Security Number, an EIN serves as a unique identifier when opening business bank accounts, applying for licenses and permits, filing tax returns, and employing workers.
Even contractors working solo without employees need an EIN to pay and report taxes properly on annual Schedule C, Schedule SE, and other IRS forms tied specifically to your roofing operation. Applying early on also spares headaches later if you expand and take on crew members.
Thankfully obtaining an EIN proves quick, convenient, and free direct from the IRS website. The entire application takes just a few minutes to complete online via the EIN Assistant tool.
The online EIN form simply asks for your LLC or business name, address, tax filing status (sole prop, LLC, etc.), and responsible party. Owners provide their own SSN though this is not shared publicly.
After submitting the form and a brief verification call from an IRS agent, the assigned EIN appears on the screen to print out for your records. The IRS then mails an official EIN confirmation letter to your roofing business’s address within 4 weeks tops.
With your permanent EIN credential in hand, don’t forget to also complete state-level requirements based on where you operate and conduct projects.
This includes registering for sales and use tax permits with your state revenue department so you can appropriately collect and remit sales tax on roofing services. Like obtaining an EIN, registering for sales tax generally involves only basic, no-cost online signups to legally empower your business to charge appropriate rates.
6. Setup Your Accounting
Meticulous record-keeping and accounting from day one help roofing startups operate efficiently while ensuring full legal compliance. Yet with no background in bookkeeping or taxes, tackling the administrative side can quickly overwhelm entrepreneurs passionate about construction.
Accounting Software
Using small business accounting software like QuickBooks right away simplifies recording income, expenses, payroll, and taxes in one integrated platform. Automatic imports and reconciliation with connected bank/credit card statements save tons of time tracking cash flow. This frees roofers to focus their energy on sales and production.
Hire an Accountant
Before the looming April deadline, most roofers then pay their accountant another $300-$1,000 to handle full financial statement preparation, income tax returns, quarterly sales tax filings, and other compliance paperwork. Working with the same accounting firm annually pays dividends when the IRS inquires about a return; long term long-term familiarity with your roofing operation lends valuable context during audits.
Open a Business Bank Account
The separation between business and personal finances remains essential for roofing enterprises of any size. From small purchases to payroll, documenting every business expenditure through a dedicated checking account and credit card simplifies expense classification.
Apply for a Business Credit Card
Business credit cards also feature higher limits thanks to lending formulas focused more on cash flow projections rather than personal credit scores. Building business credit history also helps young ventures later qualify for vehicle, equipment, and line of credit financing critical to scaling up.
7. Obtain Licenses and Permits
Before promoting services, bidding on projects, or pulling permits, roofing companies across the country must obtain the proper credentials from their state licensing board. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
Rules and costs vary enormously from state to state. Some like Vermont feature open licensing, charging only an initial $100 filing fee. Meanwhile, states like California require proof of four years of experience plus two qualifying exams at $300 apiece before approval. Either way, state licenses must remain active through managing timely insurance renewals and license fee payments.
On the local level, roofers must also apply for – and in some areas sit for classes – to receive any municipal endorsements like home improvement contractor permits. These commonly cost another $100-$500 depending on the town.
Additionally, National Roofing Contractors Association memberships call for certification showing roofers carry at least $500,000 liability coverage and $1 million worker’s compensation policies. Some contractors’ boards levy fines against non-members operating without NRCA verification.
Federal EPA requirements surrounding safe handling practices for lead paint debris and asbestos shingles also apply; most states regulate this via licensing exams or approved continuing education. Failure to follow containment procedures could trigger lawsuits down the road.
For commercial projects, several other considerations come into play. Any commercial roofer alterations over $2,000 in most areas need approved architectural plans stamped by a licensed engineer. ADA compliance also applies to public buildings.
OSHA safety rules further govern steep pitch scaffolding, fall prevention, and hazardous equipment operation on all job sites with staff or subcontractors present. Keeping training certificates and inspection logs proves vital should a safety inspector pay a visit. Open permits similarly lead to fines and work stoppages until resolved.
8. Get Business Insurance
Carrying adequate insurance represents a non-negotiable pillar for any legitimate roofing enterprise. Policies shield both your assets and livelihood.
Without proper coverage, a single liability claim could easily bankrupt an uninsured small business. Scenarios might include:
- Water damage from a leaky roof installed incorrectly
- An employee falling and suffering serious injury
- A fire broke out and destroyed a customer’s home
In each case, the contractor faces legal action, massive compensation payouts, and attorneys’ fees well beyond most individuals’ means. Even one uncovered claim often spells financial ruin for bootstrapping startups.
General liability insurance accordingly ranks as the most essential policy roofers carry. For around $2,000 annually, roofers gain protection from third-party property damage and bodily injury claims up to $1 million or more through providers like Hiscox and Progressive. Workers’ compensation policies add critical employee injury coverage based on payroll size.
The typical process to gain coverage involves:
- Researching top-rated insurers used by competitors
- Getting quotes through agents familiar with roofing
- Selecting desired liability coverage levels and deductibles
- Adding other policies like auto, tools, and equipment
- Paying premiums monthly while meeting eligibility requirements
Maintaining active general liability and workers’ comp remains essential to legally pull permits, access job sites, hire staffers, and demonstrate credibility. Failing to renew policies on time could mean halting operations until reinstated. Compared to devastating lawsuits however, insurance costs remain a small price to pay for all roofing contractors.
9. Create an Office Space
Some type of administrative office space is needed for qualifying leads, generating proposals, and handling ongoing client management. Dedicated office capacity lets startups detail the scope of remodeling jobs or insurance claims effectively while conveying professionalism.
Home Office
A basic home office generally provides the most economical base for fledgling contractors, whether operating as a solo generalist or managing a small crew. Converting a spare bedroom into a functional workspace with a desktop, fast internet, and room for filing records demands little upfront investment. Set aside $2,000-$3,000 to make the space conducive to sales meetings and basic clerical work.
Coworking Office
For those wary of inviting strangers into their residences, leasing desk space at shared offices like WeWork offers an attractive alternative. With desks renting for $300 per month and small private offices from $600 monthly, WeWork locations provide professional meeting capacity with mail collection/forwarding and administrative flexibility. However, construction tools and equipment cannot be stored securely on business center premises.
Retail Office
Retail showrooms prove unnecessary for most residential and commercial roofing contractors focused on large production jobs rather than small homeowner walk-ins. Nonetheless, some high-end custom copper and slate installers successfully showcase their specialty building products and design services on commercial storefronts in affluent areas. Plan on $3,000 monthly for minimal store lease rates.
Commercial Office
The path of eventually leasing standalone commercial office space remains the end goal for most leading roofers managing multiple large projects concurrently across a metro region. But with industrial office rents averaging $6.13 per square foot, it generally makes sense to master operations from a home office or coworking space first before committing to significant commercial overheads.
10. Source Your Equipment
From trucks and compressors to basic hand tools, new roofers need reliable equipment to deliver professional results. Striking the ideal balance between durability and affordability when sourcing these vital assets proves pivotal.
Buy New
Top brands like DeWalt, Makita, and Milwaukee sell long-lasting power tools along with hardware store staples. Big box shops may extend a 10-15% discount for trade customers lacking corporate accounts with roofing supply warehouses. Expect to invest at least $5K outfitting a basic toolkit suitable for roof work.
Buying Used
Scour auction/classified sites like Craigslist and Facebook Marketplace for major deals on cargo vans, compressors, and gently used cordless tool sets, which run at half the sticker price. Budget $15K for a solid used truck and $3K+ for reconditioned nail guns/table saws. Just inspect condition and maintenance records closely before transacting.
Renting
Eliminate maintenance headaches and upfront outlays by renting heavy machinery like lifts and commercial HVAC units for large jobs. Big Rentz offers roofing equipment bundles at competitive day/week rates. You simply return gear after finishing roof work. Expect to spend $750+ weekly renting basic scaffolding though.
Leasing
Lease-to-own programs through equipment dealers help break out payments for expensive fleet vehicles and tools over months and years to align with project revenue. This also keeps equipment under warranty during terms. Beware of high-interest rates however that can almost double the total owner cost over an outright equipment purchase. Lease rates run around $500 monthly for a solid starter cargo van.
11. Establish Your Brand Assets
Cultivating a recognizable identity right out the gate helps roofing startups stand apart from the sea of competitors vying for local property owners’ business. Thoughtfully addressing every customer touchpoint to align with a defined brand helps draw in and retain customers.
Getting a Business Phone Number
Acquiring a unique local phone number exudes far more professionalism than relying solely on personal cell phones. Web-based services like RingCentral provide call routing, voicemail transcription and unlimited US calling plans starting around $30 monthly.
Creating a Logo and Brand Assets
A custom logo pulls together your visual identity across online and print materials. Sites like Looka generate tailored concepts combining your roofing company name with regional imagery, roof slopes, or other clever icons that signify your specialty trade for under $150.
Creating Business Cards and Signage
Business cards serve as handy leave-behinds with new leads while job signs planted outside projects underline your accountability on active sites. Print providers like Vistaprint ship durable cards affordably; customizable 18”x24” job signs with ground stakes cost under $50.
Purchasing a Domain Name
Secure the matching .com domain for your roofing brand – and consider additional extensions like .net. Registration hub Namecheap allows grabbing domains for under $20 annually.
Building a Website
Consider launching with budget website builder Wix if web coding proves unfamiliar. Their user-friendly editor permits the publishing to attract,tive roofing sites featuring image portfolios, customer reviews, service menus, and contact forms to captivate site visitors. Figure $15 per month. Freelancers on Fiverr offer custom site development pairing pro design with expert SEO maximizing local findability.
12. Join Associations and Groups
Beyond researching roof work techniques or material specs, connecting with fellow local contractors provides invaluable insider perspectives as newcomers navigate the residential and commercial roofing landscape in a given area. Veterans happily share supplier insights yet remain tight-lipped about their most effective marketing tactics.
Local Associations
In most regions, builders’ associations like the National Roofing Contractors Association maintain specialty councils for remodelers and roofers to trade insights. Membership runs a few hundred dollars annually but grants access to forums displaying deep localized knowledge. Don’t overlook nearby metro chapters either to widen your network.
Local Meetups
Attend nearby Meetup trade events like supply house product demo days or manufacturer factory tours to interface with crews installing the latest tools and materials. The conversation naturally leads to exchanging licensing hurdles, insurance costs, and subcontractor referrals.
Facebook Groups
Social media platforms like Facebook prove indispensable to new roofing business owners. Joining local and international Facebook Groups provides connections to others in the industry to ask questions, read tips, and learn about market trends. Check out Roofing Community and Limitless Roofing Group to start.
13. How to Market a Roofing Business
Beyond quality craftsmanship, roofers rely on continuous promotion to keep new sales flowing, especially in non-storm years. Yet most contractors fixate more on nail guns over networking, overlooking low-cost tactics to cement a referable reputation.
Personal Networking
Without some marketing muscle, even elite roofers struggle to remain visible against competitors bidding aggressively to backfill lighter schedules. When starting, your sphere of influence marks the most fertile ground for earning business and positive word-of-mouth.
Offering friends or acquaintances a 10% neighbor discount for example lets them relay firsthand experience with your crew’s care, workmanship, and impressions made onsite throughout days-long projects.
Digital Marketing
- Run Google Ads campaigns geofencing zip codes within 10 miles of your home base, targeting searchers proactively needing roof services. Expect to budget around $500 monthly to effectively cover a metro.
- Sponsor local community Facebook groups awarding a free roof inspection or gutter cleaning to engender goodwill among area homeowners.
- Launch a YouTube channel documenting common repairs like patching wind-damaged shingles or addressing ice dams. Video content has unparalleled potential to rank locally.
- Claim and update free profiles on NextDoor, and other referral hubs feeding homeowner leads.
Traditional Marketing
- Print full-color trifold brochures showcasing your services for $50 per 500 through Vistaprint. Seek permission to display these at nearby hardware stores, realty offices, and other high-traffic housing vendors
- Sponsor a little league team and offer players’ families 10% off roof services while getting logo placement on jerseys and banners
- Air 30-second radio ads on local stations before storm seasons explaining how to minimize hail and wind damage
- Send direct mail postcards to owners of aging roofs in mid-century home neighborhoods that may warrant replacement
Casting your net widely across both digital and traditional channels marks the surest path to securing your slice of the steady stream of local roofing leads.
14. Focus on the Customer
In a locally driven, referral-fed sector like residential re-roofing, a contractor’s reputation rests almost entirely on the sum of customers’ on-site experiences dealing with your crew. A few shoddy jobs or thoughtless workers can swiftly sink even the most polished sales and marketing efforts.
Homeowners enduring major, messy roof tear-offs expect workers to treat properties with care, communicate progress clearly, and leave the yard tidy before getting paid. Crew leads must remain gracious and patient answering endless homeowner questions about materials despite tight project timelines.
Unlike interior remodels, roofs happen largely out of owners’ direct sight for days or weeks. This compounds their uncertainty. If your team goes the extra mile keeping them informed and responding promptly to concerns, you earn that gratifying referral phone call shortly after sending the final invoice.
The reverse also proves true. Cutting corners, botching details or dismissing issues sparks damaging word-of-mouth that no amount of advertising can overcome in tight contractor circles. Just a few online complaints about timeliness, cleanup problems, or leaks arising shortly after the warranty expiration travel swiftly across neighborhood channels.
In short, every roofing job represents a pivotal opportunity to earn an advocate who independently drums up multiple additional jobs from their inner circle. Conversely, a chance to permanently sour leads by reinforcing negative contractor stereotypes through indifference. Managing customer experiences remains paramount.