Business owners have a unique opportunity to leave a legacy on their industry through their business, even after they've retired. Frank Zehna, a 25-year veteran of general contracting and the roofing industry, shared some tips in a recent webinar* for preparing to sell your business. In it, he offers a range of advice, including how to create a plan for making your roofing company profitable and why it's important to implement certain steps right now.
How Will You Leave Your Company?
Most business owners will either allow their company to go out of business, pass it down to their children, or sell it to someone else. When preparing to sell your business, it's much better if the business is profitable.
Zehna helps roofing company owners build up their businesses so they sell for maximum value. He says it's crucial to be sure things can run efficiently without the owner being there. The better a business runs, the more money you position yourself to get at closing—or, alternatively, the better chance your children will have when taking over where you left off.
Create Processes to Ease the Transition
Zehna sees many people who know how to sell and install a roof but who may not know how to run a successful business. Implementing efficient systems will not only boost your business's value to potential buyers but also reduce stress and free up more time for roofing company owners to spend with family, he notes. That's because organized companies are easier to run and are more attractive to buyers. When employees have a system to follow, there's no guesswork.
"For a roofing business, you need to systematize so that when there's a problem, you can figure out where the problem is," says Zehna.
For example, consider using ordering form templates—that way, your team orders the same way every time and can keep tabs on prices so you know what you've paid in the past. Implement specific systems for quality control, including placing someone in the field to double-check guidelines and procedures. Follow up on past-due accounts with a good billing and receiving system, and likewise have a system to track warranty repairs.
Hire Smart People and Treat Them Well
"When you delegate, you train people so they can do the task. You help them flash a chimney, and you check on it," Zehna explains.
He advises it's important to learn the difference between delegating and dumping a problem onto someone else.
"If it's a process measuring a roof, make sure they understand what's expected of them and let them do it. Allow your employees to grow and to make mistakes. If you don't, you become a micromanager and the business never outgrows you. Hire people who are smarter than you, because they can grow the business when you're not there. Treat them right, and they'll stay there a long time."
Nobody will pay a premium for a company where the owner does everything, adds Zehna. A motivated, well-trained staff shows buyers your company is worth investing in.
"Cultivate employee retention. You want to have the kind of company that good people want to work at," he says.
Strive for Value
Zehna suggests having several things in place to shore up your company, including written goals and projections to help keep you on track. It's crucial to maintain clean books so that potential buyers can see how much money the business is making. Having strong before-tax earnings, recurring revenue streams such as residential and commercial maintenance plans, or work done for property management companies can all show buyers how profitable your business is.
Ensure that the business has proper financial controls in place, such as purchase order system so you see where your money goes and judge if jobs are profitable. Limit access to your accounts, but make sure someone knows where they are and how to access them.
Also keep accurate customer relationship management, financial, and marketing information, which can highlight to buyers how many clients you have and how you handle them. Retain testimonials from customers—if you can show many years' worth of happy homeowners, potential buyers may be more likely to pay more for your company.
Prepare for the Unexpected
As a business owner and a cancer survivor, Zehna knows that anything can happen to a business owner. Make sure you carry adequate health, business, and key person insurance and that all information pertinent to your company—including bank account numbers, logins, usernames, and passwords—is organized and accessible to your heirs, he advises.
"Your paperwork, estimates, and signed contracts should be filed in an organized manner, whether it's digital or paper files, so someone can find them if you're not there," explains Zehna.
"Make sure your backlog of work, bankers, accountants, financial planners, and loan information is all listed."
Build Up Your Network
Zehna suggests taking advantage of GAF's webinars, online classes, regional get-togethers, and conferences where you can meet vendors and roofing contractors from across the country.
"There's nothing better than sharing good ideas and best practices with someone who's not in your market," he says.
Hire good professionals if you don't already have any—including an accountant, lawyer, and financial planner—because they'll help you save and make money, adds Zehna.
"I want roofing company owners to sell their business to someone else for a big profit so you can go to the beach with your family," he says. "Get a profitable business so you can leave it successfully one day."
*To access the GAF Learning Portal you must either log into your account or register to create a free account.