What It Really Takes to Build a Profitable Roofing Company in Texas

What does it really take to build a service business that lasts for decades instead of disappearing after one hot streak?

In this episode of Official Success Formula, Justin O'Neil of Fair Claims Roofing and Construction breaks down his 24-year journey from launching a roofing company at 21 to building a respected Texas brand doing millions in annual revenue. This conversation goes far beyond roofing. It is a masterclass in business longevity, customer trust, referrals, operational discipline, and scaling the right way.

Justin shares how he transitioned from a long-term partnership into sole ownership, why consistency beats chasing home runs, and how deep community roots became one of his greatest competitive advantages. He also explains the difference between insurance-driven roofing work and retail roofing projects, how material inflation changed the game, and why cash flow can make or break a growing company.

You will also hear Justin’s exact approach to lead generation, branding, referrals, close rates, project pricing, financing, team structure, sales compensation, customer communication, and why clear contracts matter more than most business owners realize. If you are building a service business, running a home services company, or trying to scale through trust instead of shortcuts, this episode is packed with practical insight.

In this episode, you will learn how to build a referral-driven business, improve your sales process, protect profit margins, manage change orders, avoid cash flow traps, and create a brand customers trust for the long term.

Instagram- https://www.instagram.com/thejustinoneal/
Instagram- https://www.instagram.com/fairclaims_roofing/
Website- https://fairclaimsroofingcompany.com/

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Transcript

SPEAKER_01 0:00

All right. Justin, welcome on. For context, what's your company's story? What do you do? Where are you located? And how long you've been in business?

SPEAKER_00 0:08

Yeah, man. My uh my company's Fair Claims, Roofing and Construction. Uh, my office is up in the Woodlands, Texas. Uh I've been in business this year, it'll be 24 years in April. Um started the company when I was 21 years old and uh just have have diversified over the years. And and really I tell people, man, we we we do well, but we're we're a we're a company that's done, you know, we've we've been the single double uh guy rather than the home run guy, but we've done it consistently for a long time, uh, which we've been able to build off of and and kind of form pretty deep roots in the community that we're at.

SPEAKER_01 0:45

Do you do you mind sharing your revenue?

SPEAKER_00 0:47

No, last year was a down year. Uh we did seven and a half million last year, uh year before we did 10 million, um, with a recent acquisition that I made that's gonna add a couple million to that, um, you know, from a sister company uh that I separated from a few years back, but now I've kind of regained the rest of that business.

SPEAKER_01 1:06

So is it is it the it was in the same exact Yeah.

SPEAKER_00 1:09

So I started the company with a partner back in 2002. And uh we, you know, it was one of those things I was 21 years old, we started the business, and the the game plan was always for me to take over someday. The other partner was gonna retire. And um, you know, it was always just kind of a handshake thing. We never really inked what that looked like. Yeah. And uh as you go along and, you know, 10 years in, 15 years in, you know, like me especially, I'm thinking, okay, when's this gonna happen? Uh the partner was a lot older than me, and um, it just kind of kept becoming one more year, one more year. And in 2020, I turned 40, and that was kind of a kind of a year for me. I'm like, look, man, I gotta, I gotta get this show on the road. I either need to work out a deal where I can separate off uh the business that I've built here, uh, or I've got to potentially go out and start over, which I really didn't want to do because I'd put, you know, 18 years into building the company brand and the the clientele and stuff that we had here. But we were, he wasn't quite ready to retire yet. So we kind of got creative and worked out a way for us to both coexist with the same name. So we split off a different LLC and I kind of acquired the business here uh solely. Uh bought him out from that. And uh, we both kind of coexisted for the last four years, but he's finally to a point now where he's looking to retire. So we've just recently kind of come to an agreement to be able to for me to take over the rest of that business.

SPEAKER_01 2:30

Was it the same? So what's your split between commercial and residential for the for the main company?

SPEAKER_00 2:34

But both of most of it's residential. I mean, I would say we're about 90-10, you know, 90% residential, 10% commercial. Most of the commercial business that we do is a relationship-based opportunity where, you know, we knew either a residential client knew somebody that had a commercial building. We're we're well equipped and well staffed to be able to do those jobs, but most companies either are heavy commercial or heavy residential. It's it's hard to do both just because the business that you do tends to lead to more business similar to what you're doing. Yeah.

SPEAKER_01 3:04

So yeah, referrals. Was he did he have the same type of business, only residential?

SPEAKER_00 3:09

Yeah, very similar business. Um, you know, just residential, you know, a little bit different in kind of how we we built things. You know, I kind of set more roots and and really tried to focus more on kind of being in the same community and really just building a brand. You know, being in the North Texas area, uh, it's more storm-driven. So, you know, it's a little bit harder animal up there because you're really more dependent on storms, just because a lot of people are it's a rare situation for them to pony up and pay a retail to to get the roofs to place. Not that they won't, but usually if you wait long enough, you'll get a storm, and most of those jobs happen from a from an insurance claim standpoint.

SPEAKER_01 3:48

So do you have to have a relationship with the insurance company to get the leads?

SPEAKER_00 3:52

Uh no, not really. I mean, most of the the leads that you get are through through word of mouth. I mean, a lot of a lot of companies do door-to-door. Uh, we started doing door to door and kind of built a big enough brand to where we didn't really have to do that anymore, but I still believe that that is the best way to go out and generate new opportunities for yourself, especially in an environment when there's been a storm. You know, there's just thousands usually uh of homes that potentially have damage and need work. And even though there's thousands of roofing companies now, you know, there's not enough companies for when a storm hits, yeah. Yeah.

SPEAKER_01 4:24

How else are you getting leads? Like out outside of like a storm or insurance, like what's the main way you're generating leads?

SPEAKER_00 4:30

And the main way we generate leads is through our our online presence. Yep. Uh the social media stuff that I do. But more than anything is just 24 years of relationships. You know, when you've been in business as long as we have, we've done, you know, upwards of 10,000 plus uh residential roofs really within a 15 or 20 mile radius. So every one of those clients are familiar with us, had an experience with us, and and they're typically the ones that are saying, hey, yeah, call Justin or call the guys at Fair Claims, they'll they did a good job, they'll take care of you.

SPEAKER_01 5:00

Whenever you have a cold lead, what how are you what what's the close rate on like a cold lead?

SPEAKER_00 5:07

A cold lead is still decent. I mean, uh, if we can get an at bat, you know, we're we're gonna close 60 percent of of even a cold lead. Uh some guys are gonna close better than that. I mean, my staff average, I ran the numbers not that long ago, and it was anywhere from 60 to 70 percent close rate on any lead that they were given. That's pretty good. Yeah, it's real good. I our sales process is really good. Um again, my business here has been modeled more in a retail approach, and we've even kind of even morphed that even for when we're dealing with insurance. You know, everybody gets so caught up in uh Xactimate and what the insurance companies will pay for, and that being the pricing. And I'm like, look, we don't we don't need that. We can we can give a proposal, we can set our pricing, we can give a lot of different options, add a lot of value for the client, and just educate them and empower them to be able to make a solid decision. And when you back that with our our tenure, our reputation, our accreditations, yeah, it's you know, it's pretty obvious that we're the best and safest choice most of the time.

SPEAKER_01 6:04

What about the cost to acquire a customer? Do you know what it is? I don't, to be honest. I it's something I should have. Yeah, y'all get a ton of referrals too. Are you spending anything on marketing outside of like organic?

SPEAKER_00 6:15

Yeah, most of the marketing money that I spend is just in brand advertising, which as you know is it's kind of hard to track. A long-term, yeah, a long-term play. It is, and I know that it works. And and we ask every customer how how do you hear about us? We do track our leads and and track how the how how it works. Most people will say I got your name from my neighbor. Okay. But what you'll find out is when you get there, they're like, Oh, hey, I've seen your uh your your reels, they're really funny. Or hey, I've seen your your signs at the ball field, you know, because we've got uh big signs at the Woodlands High School. Uh I've got big all the foul pole signs at one of the um the little league parks.

SPEAKER_01 6:51

Yeah, so it's almost like they already know who you are, and then whenever the neighbor gives you a little bit of credibility, they're like, Oh, yeah, it's like that refresher, you know.

SPEAKER_00 6:59

We're we're one of the few companies out there that most people have at least seen or heard of just because I've been investing into brand marketing there for at least the last 10, 15 years uh fairly consistently.

SPEAKER_01 7:10

If you had to restart in a new city with only 10 grand, what would you do in the first 30 days?

SPEAKER_00 7:16

And in the first 30 days, number one, I would find as many networking groups as I could find. Um this again, real estate, yeah, investors. Yes, all all of those things, right? Because like most businesses, relationship is is key. And people do business with who they like, know, and trust. You know, as important as tenure is, if you can get to know people, they can get to know you, they realize they can trust you, they like you, they're gonna start referring you business.

SPEAKER_01 7:40

Especially in the contracting world, you get screwed over so many times by fly by night guys. I mean, I've been there a thousand times. Yeah, I've done so many projects that even us, you know, you still from time to time, like you know, using somebody different or somebody, you know, that was good and then they either went under or fall apart or you end up getting screwed. So it's super common in that.

SPEAKER_02 8:03

Yeah.

SPEAKER_01 8:03

What what serve if you did that, if you started over, what service would you choose first? Would it be um retail or would it be commercial or like what would it be re-roof? Like what where would you choose?

SPEAKER_00 8:13

It would definitely be retail re-roof. Um commercial is one of those things that it is a long play. Most commercial projects take years of planning. And uh, you know, you'd if you only had $10,000, you'd starve to death pretty soon. I got you. Yeah. Going after commercial.

SPEAKER_01 8:26

And then the capital is gonna be a lot higher, right? So do a commercial roof. I mean, some of our roofs cost $150, right? Exactly.

SPEAKER_00 8:32

Yeah, you either need capital or credit, and usually both.

SPEAKER_01 8:37

What what does your daily schedule look like from start to finish?

SPEAKER_00 8:41

You know, it is it's variable uh from from day to day. I mean, typically I'm I'm up relatively early, you know, have my coffee, I kind of sit and evaluate, hey, what are all the tasks that I need to get done today? Uh, but like a lot of business owners, though, you you you you can't predetermine how much that phone's gonna ring. And um, you know, when you're at the the the head of a company, you know, every employee that you have has different clients, different challenges. The crews may have a challenge that the that they're gonna call you about. And I'm unlike most roofing company owners, I'm still very involved in the uh even in the sales process. I still go on sales calls.

SPEAKER_02 9:15

Okay.

SPEAKER_00 9:16

Um, I do that because I like it. You know, I that is the part that I just love about my job. I love people, I love clients, and uh and I also want to be an example setter. I want to go out and show the guys that hey, this is what it looks like and be relevant. I don't want to be a guy that's in an office that hadn't been on a sales call in 10 years telling you how to do it.

SPEAKER_01 9:32

Yeah, sitting in the truck all day. That's right. That's what got me working out super early. Because the phone, like as a business owner, like yeah, if you go and do it early, like the phone just starts, fire start about eight o'clock, maybe even a little bit earlier. 7 30. Yeah. Just everything starts melting down and it's over. So that's what actually got me into like waking up before everything sort of happened and and then trying to hurry up and finish everything. This was even before I had kids, like I couldn't even imagine with kids. I'd have to wake up earlier. That's it. But especially being this, you know, CEO, still being involved as much as you are, for sure. When somebody starts, what licenses or insurance they need in place to get started when roofing or it's one of the crazy things about Texas, at least.

SPEAKER_00 10:14

You know, Texas doesn't even offer a license in roofing. So that's why there's so many companies. Most of them don't survive. The average life of a roofing company is only three years. But in Texas, there's very, very low uh barrier to entry. Sure. Um, if you want to do things the right way, which like like us, I mean, you you want to have the capital to be able to buy your liability insurance. I'm actually licensed through the Roofing Contractors Association of Texas. It's our uh state roofing association, it's a subsidiary, the National Roofing Contractors Association. They created a license and a process to get a license uh several years back that's fairly vetted and fairly thorough. It has a lot of value in that license, but it's it's not a true state license.

SPEAKER_01 10:55

But that just shows the customer, hey, I'm not a fly by night company. That's right. I didn't start out I'm not working on the back of my truck. Like we have that's right. Yeah. We've done our due diligence to So in other states, I guess and I I think I've heard that too. Um if you're a builder or if you're any type of contractor, you have to have some type of license. It's just different in every state.

SPEAKER_00 11:14

It's different in every state. Some states require it, some states don't. Some states enforce it, some states don't. Right? It just depends on on where you're working at. It's uh it's it's kind of like even permitting, you know, like permitting in in Houston. The city of Houston requires a permit to to do a roof. Uh, if you're doing uh a roof in the city, then it's Houston. But depending on where you're at, there are a lot of areas that they're they're never gonna stop you if you don't have a permit. But there are areas that for sure, if you're doing work, they're they're going to uh kind of enforce that. Uh right, wrong, or indifferent, that's just how it is. It's kind of how they do their their patrol uh kind of thing.

SPEAKER_01 11:49

If somebody was starting out, what margin should they expect to hit on on you know repairing a roof or you know, whether it's residential retail or insurance claim, like is it all the same or what margins are they trying to do?

SPEAKER_00 12:01

There's definitely different margins. Uh I would say on the repairs, repairs should definitely be a significantly higher margin. You know, our repair margins are up around 50%, uh, which is where I felt like you need to be, especially it's a it's a lower dollar amount. So you've got to make more margin for those dollars to be worthwhile. Um on insurance, you know, work, usually you're making around 40%, you know, on insurance. That's why so many guys only do insurance claims. Um in the retail world, it's it's a little less, it's closer to 20, 25%.

SPEAKER_01 12:31

Uh is that because of competition and just trying to win the job?

SPEAKER_00 12:35

That's right. Everybody just uh there's always somebody out there, and again, with no barrier of entry, you know, you might be competing against a guy that's uh a one-man show that doesn't have any overhead, any expenses really, probably may not even have insurance.

SPEAKER_01 12:48

Probably not.

SPEAKER_00 12:49

And uh, you know, those guys, I mean, we we compete against bids that are at cost. Um people tell us all the time, you know, hey, you were more expensive than the next guy, but we want to do business with you. Um but a lot of times, and even even in order to get that opportunity, you've got to stay at least within, you know, 10, 20 percent of kind of where that range is at, or you'll get if it's if it's if it's doubled, a lot of people aren't gonna go for it, they're gonna just go for the cheaper guy.

unknown 13:12

Right.

SPEAKER_01 13:15

What are some things that if somebody's starting out that they forget when they're pricing jobs or they don't they might miss when they're pricing a job out?

SPEAKER_00 13:24

Yeah, common mistakes, man. I mean, number one, you've got to make sure the roof is measured correctly. You know, I I think we've you know, back when I started, everything was measured by hand, and by hand is always the most accurate way to do it. But anymore we depend on softwares, we use satellite imaging.

SPEAKER_01 13:39

Yeah, I was wondering if you just use Google Earth and then like Yeah, and and that works great, man.

SPEAKER_00 13:43

I mean, we we don't have a big issue with it, but you know, say for example, there was a tree and it was covering a porch and you couldn't see that in the aerial images, and you may have given the proposal without verifying that, you know, you might run a little bit short. We we had a job we lost money on a couple years ago because the way that our software pulled the house, it actually pulled a house down the street instead of the house that we needed to bid, and it was about a 1,500 square foot difference in in square footage. And um, you know, it was in a busy time and job got contracted, assuming it was based on those other specs. And when we got into it, man, we were significantly short and ended up taking a pretty good little hit on it.

SPEAKER_01 14:18

Uh one job, losing money on one job is not the end of the world.

SPEAKER_00 14:21

That's that's one of the benefits of residential over commercial, too, is that you know, you get a lot of opportunities to to be able to be profitable. And if you you really miss on one, you know, one or two, you're gonna make up for it by the volume of the others. In the commercial world, that you know, those mistakes are they could put you out of business because the the you get into some I mean, I've done a mil over a million dollar project on commercial work. Yeah, it gets expensive, man. It does.

SPEAKER_01 14:43

Whenever we're, you know, so sometimes if you have a flat roof, whenever we're buying distressed buildings, I mean, you really have to buy that building cheap because if it's really distressed and there's holes in the roof and it's you know abandoned, or it's just been like, you know, not taken care of and it just has a couple leaks, you still I mean, you're talking seven, eight hundred grand for a roof. And so even though you're getting the building for 200 grand, sometimes the numbers you have to really be careful. It's it's tough, man. Roofs are so expensive. They are. Is how's the cost like after pandemic versus pre-pandemic on like the material? Like what's the is there what's the cost difference?

SPEAKER_00 15:18

Every everything, man, it's it's been weird. Everything kind of shot up and it just kept going up and kept going up. I mean, the inflation in roofing material was was silly. I mean, I would say every bit of just pre-pandemic levels. I mean, and just to give a a straight number, you know, we were buying, say, you know, your normal laminated shingles for around 70 bucks. Okay. Well, up until recently, man, that stuff had gotten all the way up to 125, you know, almost $130 a square. So it almost doubled in price. But recently there's finally been a little bit of pullback uh where they've kind of still not even close to where it was. And and a lot of that's just been volume driven. You know, if you look at the historically over the last few years, like uh 2023, for example, or twenty yeah, 2023, 2024, record storms nationwide, a lot of hurricanes, a lot of bad hail storms. Building was still going strong, the interest rates hadn't quite caught up to to all of that. But in uh 2025 was one of those years at number one, building trends were were trending down.

SPEAKER_01 16:19

Finally started the market, the real estate market did cool off.

SPEAKER_00 16:22

Yeah, so that shrank a lot of the the pie the of shingles that were being made. Well, you combine that that we didn't really have a name storm hit the United States last year in the hurricane. Uh, there wasn't near the amount of hail storms that hit big cities like there was the year before. So there was like a 30 to 40 percent shrink of asphalt shingles that were sold. I mean, uh in nationwide. It's a huge number. So a lot of these manufacturers had built up, you know, they they went from being on allocation to all of a sudden having this volume happening where they've got all this production going out and they had to sell it. So the supply and demand curve, you know, all of a sudden now they're they've got plenty of inventory and they're trying to make deals which have kind of helped get the price back down, probably more in line with where it should. I think it was probably got a little excessive just because of the the supply and demand justified it.

SPEAKER_01 17:10

But the cost is so is so much higher still for I mean, overall when you're building a house, but when we're doing a building, it it's it's so much different. And I know a bunch of restaurant owners that are really good friends of mine that own, you know, 10, 15 restaurants. And they said that the numbers don't even make sense anymore. That like their old build-outs are, you know, two million and now it's like four and a half, five. And of course the landlord needs more money because the rent's more and the insurance is more and everything's more. And he said the numbers just don't work to open a new restaurant. It doesn't make any sense. Like we both of both of them they're saying the same things in in different areas. And so I yeah, I mean, I've I feel for a restaurant. I mean, that that that's already tough. And then like the numbers don't. I mean, it's like on some stuff we have to watch our our buildings that we still buy, is you just have to be really careful because the cost just got so high and they never really you would think they would come back down, but it's kind of just almost I'm not gonna say stay the exactly the same because it's slightly less, but it's not significantly less overall when you're piecing in the roofing and you're piecing in everything together, the labor, everybody still wants a ton of money.

SPEAKER_02 18:11

Yep.

SPEAKER_01 18:11

So it's it's definitely weird.

SPEAKER_00 18:13

I I had a job that I actually closed yesterday, previous client of mine. Uh we originally did his roof back in 2006. Uh when we did his roof in 2006, it was around eleven thousand dollars.

SPEAKER_01 18:25

Oh, so he got to replace he got sticker shock on this one, I'm sure.

SPEAKER_00 18:28

Yeah, this one was 30 grand. Uh so that's that's the difference in price for really the same, same project, same type of material, but from 2006 to 2026, 20 years later, you know, it's almost tripled in cost to get it done. So crazy.

SPEAKER_01 18:42

How do you how do you hand whenever you are on a job, whenever you bid a job, how do you handle like change orders or when you have to go back out and fix something? Like how does it happen without like making the customer mad?

SPEAKER_00 18:54

Number one, we we try to do always try to use what what would I expect if I was a client, you know, and and handle it that way. Um, you know, number number one, you know, people will try to get at you for things that really aren't your responsibility. Uh to some extent, yeah I'd rather take a hit and make it right, keep the customer happy. But at some point you have to kind of put your foot down and be like, look, no, I'm sorry. Hey, that was already like that. It's not something that we're gonna take care of.

SPEAKER_01 19:20

Yeah, building's tough because the the homeowner when you're built just when you're building a house or when you're remodeling a house, they expect a lot. I mean, they expect it's like, oh, just go ahead and fix it. It doesn't really cost any of your time, right? Y'all are already here. It's almost like they kind of expect you to fix it. And it doesn't really work that way all the time.

SPEAKER_00 19:35

No, it doesn't. But it's you know to me, having a happy customer is more important than uh the the extra dollar or two you might make having to eat some some costs on some things. The the best way to avoid it is just to have clear expectations and and doing this for as long as we have, we've learned to look for those kind of things, to point out certain things that we could see becoming a problem.

SPEAKER_01 19:53

Is it mostly when you remove the roof and like the decking or something that you can't see is a or maybe some rafters are rotted or something that you have to go and and replace before you do that?

SPEAKER_00 20:02

And there's not too much of that, but we clearly tell them look, we we include, you know, usually three sheets uh of decking in our project, because we're always gonna have some. But we say if we need more than that, you know, this is how much we're gonna charge per sheet, we're gonna document it, we're gonna take pictures and show you. Because you can't know for sure uh what that's going to be. Um the stuff that you get some pushback on sometimes is if they're looking at the house, all of a sudden when you've done a roof, all of a sudden they're looking at their house really closely. And, you know, if that they've got rotted siding, for example, that wasn't part of the scope, and you know, maybe that siding flaked out while you were putting the flashing on it. Well, now they expect you to replace that siding. And I'm like, well, that that siding's rotted. We didn't we didn't make it rotted, you know. That was just part of the normal process of doing the job. We'd be happy to do it for you, but I'd have to give you a price to do it. And it's just having those kind of conversations because sometimes in their mind, well, it wasn't like that before. Well, it really was. You just didn't notice it because you weren't looking at it that way.

SPEAKER_01 20:55

Yeah, it's tough. Always a fine line of like keeping the customer happy, but also you can't you can't go too far because you have to make money. That's right. What margin do you walk away from a job on? Like when it gets too low, like what what's what's too low?

SPEAKER_00 21:08

It depends on the season. I know it shouldn't, but you know, it it when it's you know, you're doing stuff in December and January when there's not as many projects uh as there would be, you know, I d I don't mind getting down to uh you know eight, ten percent margin if I have to to keep from losing a job.

SPEAKER_01 21:23

That's do guy do guys work a little bit less sometimes? I mean, would they work for a little bit less subcontractors? Not not really.

SPEAKER_00 21:30

I mean, you know, those guys work so hard and and they're paid well. Um, but you know, it anything's negotiable, but for the most part, you know, it's like you want to you want to take care of the guys that are taking care of you, the guys that are doing good work. Uh they're the last persons that you people that you want to ask to take a haircut, in my opinion, to be able to to make something work.

SPEAKER_01 21:48

How do you pay a subcontractor? Is that basically is it like a a a percentage of the job or is it a like a base and then a percentage of a job? Like how would you how do you pay the subs?

SPEAKER_00 21:56

Yeah, our installers get paid by the square, which is a hundred square feet. Uh and you know there's different metrics that quantify how much they're going to get per square, but it's already a pre-agreed amount that obviously we know what our labor cost is going to be regardless of what kind of situation or circumstances and you know and and account for that.

SPEAKER_01 22:16

So okay. Um walk us through your sales the sales process. So you get an inbound lead all the way to when they sign the contract.

SPEAKER_00 22:26

Yeah. Well say a client calls us and like, hey, we're we're taking bids uh to get a new roof. Um, you know, my my sister said you did a great job on her house. We'd love to get a quote from you guys. Uh well, we make an appointment with that client. Uh, we want to be able to go by when they're there in person. We don't typically want to just go buy and email them a quote. Um, you know, that's a good way to get your quote shuffled in amongst everybody else's. But when we go out there, uh we we try to look it up in advance before we ever go. We we try to have uh some kind of numbers already put together before we get there. Uh when you get there, you just verify that, hey, does everything look, you know, like the the Eagle View or whatever report you did shows it to justify your quantity. You kind of look for any things that you might not have seen on that or any, you know, surprise things you need to point out to them, like if the sighting's too close to the roof to do the flashing, et cetera. But we we try to go ahead and put the proposal together right then and there because the hardest thing that you can get in today's world is somebody's face. You know, if you've got FaceTime with somebody, I think that's very important to take advantage of. Um, I've got a full keynote presentation uh that we use on iPads and Macs. It's kind of like a PowerPoint presentation. So we go in and we sit down and we run through that and we explain to our customers, hey, this is kind of what the industry is, this is what you need to be aware of. Uh, too. Yeah, these are these are the high notes with us. And and and typically our proposals are built such to where we offer a a good, better, best option that's kind of an industry industry standard that's a fully comprehensive proposal, but then we offer uh a lot of best practice options that are not necessarily our industry standard, but they're things we recommend. But we want the customer to know what it is and what it costs. So if they want to include it in the project, they can. But if I'm dealing with an investor that, like, man, I just I just need to get this thing sold and need something that's comparable, you know, we're not trying to force sell them something that's more expensive than what they want to do. Uh, but that whole educational process builds a lot of trust because most of my competition is not gonna take the time to do that. A lot of them don't even have the knowledge themselves to be able to communicate that. Uh, but but people are visual learners as well, too, right? I mean, I can sit here and talk about roof stuff all day that I know what it is, but if you don't do roofing, you know, just because I say something, it may not even register what that is. But if you're looking at a slide that that shows what that is, all of a sudden now that makes sense and you retain it better. Um, you know, a mentor of mine um talked about setting living room landmines for your competition. And it's not that it's anything like just aha, but anything that you talk about with a client about what you're gonna do or how you're gonna protect this or how you're gonna do that.

SPEAKER_02 24:58

And then they another person comes in and bids a job.

SPEAKER_00 25:00

They don't talk it. Well, they've stepped in that line mine because now there's doubt of whether or not that other guy is gonna do it. So just being able to get that time, I think, is a big part of why we win a lot of that, uh a lot of the work that we do. But in addition to all the other things that we offer that most guys don't, there's very, very few companies out there that have been in business as long as we have and have the reputation that we do. So it's just uh it's a it's a built-in trust factor that you can't really recreate without doing it.

SPEAKER_01 25:25

Do you close, do you ever close jobs with the when you're not in person and they're just over the phone?

SPEAKER_00 25:30

I have. Yeah. Usually these are projects that are going to be rental properties, investment properties, real estate transactions. So he's like, just give me a price. Yeah. We do we do a lot of work. I've got a lot of realtor relationships where we will come in if we know the roof needs to be replaced. Hey, they can send us an inspection report and we can quote just repairs if it needs it. Anymore, most insurance companies are not wanting to take on new policies on roofs that are older.

SPEAKER_01 25:53

And so it happens a lot. Like we've sold a lot of houses, but over the years, it have it's gotten more and more aware they're like, hey, we're just not gonna insure it. Yep. Which is especially here in Texas.

SPEAKER_00 26:04

Yeah. And and if you're taking a mortgage, I mean, if you're paying cash, you don't have to have insurance. But if you're if you're taking a mortgage out, most of the mortgage is going to require you to have insurance. So that usually results in the roof having to get changed out, really whether it fully needed to be or not, just to be able to get it sold. And and we'll do a lot of jobs where we'll come in, we'll bid it, you know, based on the satellite images and and what we know, and then they'll they'll typically negotiate it out and we'll either install it prior to closing and they'll roll it into their mortgage and we'll get paid at closing, or they'll negotiate it out and then the the buyer will contract us to do it once they take ownership.

SPEAKER_01 26:35

Whenever we bought our most recent house, had no idea, you know, it's under contract and you know, just all the normal things had no idea that like all these insurers, like all the main insurers, Chubb being one of them that um insures luxury stuff, don't even they don't even write insurance on flat roofs anymore.

SPEAKER_00 26:53

Yeah, wow.

SPEAKER_01 26:53

I'm like, really? Okay. So the market is ultra small, so it's expensive because there's only a handful of people that do it. And Chubb won't even do it on luxury properties. Like it's it's weird. And so if they've taken too many hits on something, they just don't write it. Insurance sucks, man. Their business, man, and they they it's just numbers, and they're like, oh, these there's too many claims here, we're just not gonna write it anymore. Yep. And the customer just was like super screwed.

SPEAKER_00 27:18

Well, I think our our industry too, over the last, I'd say 15 years at least, as people have realized that, hey, this industry is pretty profitable, and oh hey, I can go recreate and do that. Oh, and there's no barrier of entry. We've created thousands and thousands of roofing companies that are just door-to-door guys going out generating stuff. Some of it's legitimate and some of it's not. But but the industry has created a significant amount more claims than what the insurance industry would have normally experienced. And because of that, they're they're cracking down. It's like, look, they can't afford, A, they've raised the rates up to where they're crazy expensive. It's expensive. And uh and they're writing language in the policy now to where the the coverage amounts are are are less and less. I mean, a lot of policies now have what's called a roof schedule where instead of it being full 100% replacement, based on the age of it, if it's 12 years old, for example, it may be insured for 72%. And when it gets to 13 years, it goes to 68%. 14 years it gets down to 62% or whatever the schedule is. And that's still subject to your deductible. Most people have a 2% deductible. Uh, and that's been one of the biggest things that I've really seen an impact for in why my business has shifted even more retail, because up in the market that I'm at, it's more of an affluent market, a lot of high home values. You know, man, five years ago, you know, a five, six hundred thousand dollar home probably had a one percent deductible. You know, they might have had a fifty, five hundred dollar deductible. And if a storm came through, well, they would have been willing to pay fifty, five hundred dollars to change out what might have been a twenty-five thousand dollar job. Well, now that job might be thirty thousand, but oh, your house is now approved, you know, appreciated up to nine hundred thousand, a million bucks. Oh, and you've got a two percent deductible. So you've got an eighteen to twenty thousand dollar out of pocket pocket expense for a thirty thousand dollar job. I mean, if your roof's 19 years old, you're still gonna do that because that's you're buying it for a third of the price. But if your house is only 10, 12 years old, you're not gonna spend that kind of money to change the roof out. You're gonna let it go until it starts failing. And um and it's really reducing the amount of claims that are being filed because of it.

SPEAKER_01 29:14

Yeah, I hate insurance. Whenever you're pitching to the homeowners or you're trying to close a job, do you always offer them just one package or one price, or do you give them a payment plan? Like how do how does it work on the retail side when it's not insurance?

SPEAKER_00 29:27

We offer financing and even on insurance jobs, you know, we will offer financing. You know, it technically they could keep their insurance money and finance the roof and go use their insurance money to make an investment if they wanted to. Okay. Um, most people aren't gonna do that. And and most of my clients are are are people that are have enough liquid to be able to just do it. But I I can say over the last year, we've financed more customers than we've ever financed before. Uh, I think more people are just I think just with the environment political environment, economic environment we're in, even people that have liquid cash or wanting to hold on to their liquid cash, it's just feel safer even if they're paying a little bit of interest over a period of time to do it.

SPEAKER_01 30:08

But hey everyone, real quick, I just want to let you know this podcast is 100% independent. No ads, no sponsors, just real. If you're finding value in whatever we're doing here, the biggest help that you can give us is hitting subscribe and sharing this with someone who you think needs to hear it or someone that it will provide value to. That's how we continue to grow. And if you did that, I would really appreciate it. Do you think do you use like finance everything in-house, or do you use a just like a third party that finances it for you takes a percentage?

SPEAKER_00 30:38

Definitely use a third party, you know. And I've and I've got a great partner. I I've used several partners over the years. The one that I've got now I'm very happy with. It also keeps you from chasing down homeowners and saying, hey, you're not paying me. No joke. Well, you can't really afford to be the bank, right? Yeah. Even even making good margins. I mean, you know, you're you're upside down until you get to a certain point, depending on how much you're financing. And um, I mean, I would I would always finance an amount that I would be comfortable not collecting, you know, if it was a situation, like if our margin was good. But um, but yeah, I it's just really not our business model. You don't want to be the ones having to send statements and keep up with who's paying and who's not, and it's just a pain.

SPEAKER_01 31:13

So but focus on what you're good at. That's right. On the sales rep side, how do you compensate the reps? The sales reps?

SPEAKER_00 31:22

Yeah. So we pay a percentage of the profit uh of our jobs. You know, some companies just pay a percentage of the retail price. Is there a base plus commission or is it just they're not. I mean, my sales reps are independent contractors. You know, I've got them set up that way. I've got I've got one that's an actual employee that we have a little more structure with, but uh the rest of them are a little more autonomous. Uh we provide them opportunities, but uh, you know, they still work independently. Uh I require those guys to be uh an LLC. You know, I don't deal with hiring individuals as a 1099. It gets a little hairy with employment law, but but having them have their own LLC, it's it's a lot easier for us just to pay their LLC, their commission that they earn. Uh but they they do work on a hundred percent commission, but we do pay a pretty generous percentage of the profit.

SPEAKER_01 32:06

Better better for them too, anyways, because you can have expenses and have some other stuff that's definitely. That's right.

SPEAKER_00 32:14

Yeah. So it works out well for them. But yeah, but we have a tiered system too, depending on you know your experience, how long you've been here, and there's kind of a a very established benchmark. Uh when you get to these benchmarks, you get a greater percentage of the profit on the jobs that you're you're selling and and managing for us.

SPEAKER_01 32:28

Aaron Powell What about the review system? And with online, I'm sure it's a big thing, especially Google. Yeah. How do you or do you automate the reviews or how does it work on the reviews after you finish a job?

SPEAKER_00 32:38

We do, man. And and I actually came up with a great thing uh a couple years ago that's really benefited us being able to get more reviews.

SPEAKER_01 32:46

Um, you know, because if you rely off your guys, I I used to have a retail company trying to get Google reviews and they ask it 30% of the time and then they just forget, or you know, you get busy or they just don't want to ask. I mean, it's a combination of everything.

SPEAKER_00 33:00

It's so tough, man. I mean, even the ones that you ask, you know, they'll tell you they'll do it. I would say only you're if you can get 20 or 30 percent of your customers to give a review, you're killing it.

SPEAKER_01 33:11

Uh, because the others all also I even even me, like even when I want to review people, sometimes it's like, well, I don't use a Gmail and then I have to like go in and like I mean I have one, but I don't even know how to log into it. Yeah, yeah.

SPEAKER_00 33:22

Yeah, it can be a bit bit inconvenient.

SPEAKER_01 33:25

Um so how do you what what's the audit is it just automated now?

SPEAKER_00 33:28

It it is it's we used an automated system. We actually got away from it to where we're still doing it manually. I've got staff in the office, and that's part of their job is you know, we're we're not doing such a volume that that's hard to to keep up with, you know. I mean, and even in a busy week, you're talking less than 20 clients that you'd be messaging for for reviews.

SPEAKER_01 33:45

Uh that and if you're following up and saying, hey, how'd the job go? And so you have somebody in the office, it's just like making sure they're happy.

unknown 33:51

Yes.

SPEAKER_00 33:52

Uh but we also have a little bit of a kind of an incentive. I I I had a kind of an idea that's worked out really well. You know, and in my business, especially if you're doing a full roof for somebody, you know, you don't usually have a reason to go back out to that home. I mean, the the reality is is your roof wouldn't even need a typical service, like actually work unless something was failing prematurely, usually for at least five to seven years, you know, just to try to tune things up. So and most times people are not going to call you for that stuff anyway. But uh, especially up in the woodlands where I'm at, there's a big issue with pine needles, a lot of pine trees, all that stuff gets on the roofs. So, as a differentiating tool, you know, we started offering a free uh roof cleaning maintenance service to where if you hire us for a new roof, once a year, kind of in the anniversary month of when we do your roof, we send our roof tech out uh at no cost to clean all that stuff off for you. By the way, while he's there, he's gonna check, see if there's any manufacturing defects that may not be visible, visible from the ground. We're gonna check your caulking to make sure the drought conditions hasn't dried it out and the caulking's coming off of a nail head that needs to be re-caulked. Uh, we're just gonna kind of stay on top of that for you. Um, but we really appreciate it as a thank you for giving you that service for free that you will give us a review. Um, so it's it kind of gives us at least a talking point to be able to, when we're asking for the review, just to remind them that we're doing that for them. Uh and we'd be appreciative if they'd take the time to give us a review because you know, it's a pretty high value. We even show what the value of that service is.

SPEAKER_01 35:18

I was about to say, service businesses on Google are still, I mean, it's still strong. I wonder what happens with AI when people, as people start searching more and more in AI, it's like, hey, give me three roof, who are the you know, the most dependable roofing companies in Houston or whatever. I wonder how that's gonna work. I mean, I know they'll eventually have ads, so I'm sure it'll be some type of same system, but it's like, how do you come up in the AI?

SPEAKER_00 35:40

We're we're dealing with that right now because we're trying to re-optimize some of our stuff to be more AI generated. Dude, one of the things that we're finding out, like, I I haven't paid the Better Business Bureau to be a member in 15 years. You know, with the digital era and Google reviews, you really don't need the better business bureau to tell people that you're a good company.

SPEAKER_01 35:58

That was the original review system that people would and you'd only have Madden.

SPEAKER_00 36:01

Because the only people that would review are like the It's the phone book directory of businesses. But they you know, not to talk trash. I mean, they have their value and they have their importance and all those things are nice. But the only people that have ever asked me about are you uh, you know, a better business bureau guy or people that are older than my grandparents. Uh but recently my my marketing guy, my digital guy that's doing the SEO for the AI, he's like, dude, they're crawling the they're checking the BBB and they're recommending BBB companies over even companies that have a thousand reviews on yeah, on Google. So I'm actually in the process now of rejoining to be an accredited BBB company, as silly as I think that is, just so that Yeah, yeah.

SPEAKER_01 36:42

I mean, I I don't I don't I don't know where it's gonna go. I I don't know where it's gonna go. And I don't know. I think eventually you know you have ads in AI is where they're gonna have to just to make money. It'll be like a Google, like you have the sponsored link, and then you'll probably have some type of review system in AI, I would guess, like that it would find. I don't know, but yes.

SPEAKER_00 36:59

Does it taint the value of the intelligence if they're promoting things based on monetary gain and not just true intelligence of what it's finding? I have no idea what's the same. Because that's like when we do a Google search for right, I mean when I see the sponsored ads, I discredit those more than the organic.

SPEAKER_01 37:15

But on the organic on Google, is it still like a combination of reviews and um what what's the to pop up on like those top three when you search Google of service companies? If I'm like, hey, roofing companies, Houston, Texas, and there's like three, and then the rest of them you you have to click on.

SPEAKER_00 37:30

Right. Yeah. So the map pack that that comes up. So you have your your sponsored stuff, like even your verified, you have your Google verified, which they put me through a background check and all that kind of stuff to qualify for those. So there's some some value in it. But just the organic map pack that's usually based on your physical location kind of being in close proximity to the searcher, but there's a lot of other metrics that go onto that Google My Business listing as well. As far as the amount of reviews you have definitely gives you more relevance. Yeah, you know, if you've got 500, you're gonna show up more relevant than somebody reporting. Um that's a big part of it. But your tenure, how long you've been in that location, there's a lot of you know, algorithm factors, and it probably changes regularly. Uh, but but that's really what we focused more on in the last several years and building, you know, for true SEO to try to get your organic website listed, is it's so hard because you're competing against all these advertising companies that are selling ads.

SPEAKER_01 38:21

But and then the SEO thing with the way that the firms used to charge, it's like such a a lot of them can scam you for sure. I've been there. I've I've this is early, early days too, when SEO was like like a huge deal. We're like, we'll get you on the first page of Google and they work for like a week and then they don't really do much after that. It's it was such a scam.

SPEAKER_00 38:45

Yeah, it takes the time. Well, we'll keep doing it for free for a couple months, but you've already paid them 20 grand at that point and with no result. Um but yeah, we I kind of gave up on that. I mean, when you start when you've got even even say 40 companies out there that say that he could be in the first page, well, they're competing against each other and there's not 40 spots. So there's no way they're all right.

SPEAKER_01 39:03

Um what do a lot of your uh leads still come from Google? Like can you all tell that it's like it whenever they call straight off Google or whenever they click the link on Google and then it goes to your website?

SPEAKER_00 39:14

If they click the sponsored stuff, it actually comes in on a recorded line where we can know 100% that it's from Google and Google's actually charging me for those.

SPEAKER_01 39:21

Okay.

SPEAKER_00 39:21

But if they just go to the map pack and see where I'm located and see my reviews and call me.

SPEAKER_01 39:26

What if they click on the the just the the the map pack or whatever it is on the not sponsored links? Can they just click the number and you can still tell that it got sent over the phone?

SPEAKER_00 39:36

Because they're actually calling my actual number directly on that. But they'll still say, Hey, we found you on Google. Um but you'll also find too that even the people that found you on Google, they may uh tell you that, well, like I found you on Google, but I also Or I searched your name on Google, but I already knew about I saw it on somewhere else.

SPEAKER_01 39:53

Right.

SPEAKER_00 39:53

Yeah. A lot of those things.

SPEAKER_01 39:55

So what I guess what's what's a good lead that you're getting, or what's like one of the leads that you think you're getting that maybe isn't as fancy or um something, is it just referrals or still like the best lead that you can get?

SPEAKER_00 40:09

Or in my opinion that they are, and and I kind of have a mentality too that any lead is a good lead. Uh even if it's somebody I don't do business with today. Uh I'm long-term minded and I I try to even, you know, convince my staff of this too, because sales commissioned people typically don't want to mess spend a bunch of time on something that's not going to be very profitable for them, but they're thinking just today and in the present, you know, even going out and doing a service contract, even if it's a small repair for somebody, even if it's a hey, your roof's actually okay, you don't need anything, that's now a new client. You have a good contact and a good interaction with them, roofs don't last forever. And they're eventually going to need to be replaced, even if it's 10 years from now. But if you do a good job staying in touch with that client in some way, even even if you just put some kind of automated system to reach out to them once a year just saying, hey, check in, you know. I'm I'm I'm just in the roofer that looked at your roof, you know, just want to keep in your contact list. So if you ever need something, give me a call.

SPEAKER_01 41:06

That is what it is. It's like right place, right time. It's like, oh man, I've been needing to do that. Yeah. That I that happens to me every once in a while. It's like you're putting off something, putting off something, and then it's all like, oh yeah, you know what? I did I do need to get you back out here to bid this.

SPEAKER_00 41:19

That's part of my even sales process. I don't consider something dead until they tell me they've done business with somebody else.

SPEAKER_01 41:25

It's cool now with all the automated stuff too. Like you don't like no one person could sit there and follow up with all these people, but that's right. That's really cool. What system do you all use?

SPEAKER_00 41:33

So we're using a company called NETO AI. Okay. We've been using them for months. Is it specifically for uh the roofing industry or is it just it was kind of created for the roofing industry? Okay. Uh it was a bit of a startup. I feel like we were a little bit of a guinea pig working through some of those things, but their their chat bots are really good and it's set up to where we can upload our CSV files that we export out of our um our CRMs. But we can filter it however we want to filter filter it, and we can do mass uh messages out to our clients to offer different things or to do follow-ups. Uh a lot of automations that you can set up with it. Um, I just uh recently signed up with um the the one that the woodpecker that I referred you to, yeah.

SPEAKER_01 42:14

It was cool. Those guys are really good guys. They um again it it seems super cool. Like if I I actually you know told a couple of people I know in the service space, just in general, because we have a my business partners use it for like off-market properties. So they're using it in Arizona right now and having pretty good luck with like kind of scraping the information, starting conversations instead of just like having their because their guys were just they had a sales team and they're just pounding the phones, like finding properties for us and they got pay commission or whatever. So at least it it it gets you to more warm leads than sales guys just like hammering calling a hundred people and you know all of them are bad, right? That just a hundred no's. But at least if you have like 30, 40 percent of those are like warm leads, you have people that are actually interested in in selling so their conversations are better. They've been they've been having pretty good luck with it. So I'm sure it's a little bit of trial and error. It took them a couple like months to get it like really dialed in, but we've got some properties from it.

SPEAKER_00 43:09

That's cool. My my concern with a lot of that is that at what point do our phones start filtering out the ability to receive those messages? Um, I I know even with the most recent Apple update, they've already started filtering in unknowns from you know promotion from you know receipts or whatever it is. And I know at least theirs are gonna stay at least as an unknown number. So if an unknown contact contacts you, that's what it shows up. But even myself, I don't I'm I'm finding I'm having to really pay attention because if a new client messages me and they're not saved, I may not see that message right away because it's I've got to go to the unknown senders to be able to see those things.

SPEAKER_01 43:44

Oh yeah. And then the um the spam button's like right below the message now. So if you want to like delete, if you press delete, it's like, do you want to report this as spam? Yeah.

SPEAKER_00 43:53

So not people report you either you're then you're gonna get blacklisted.

SPEAKER_01 43:56

Yeah. So I didn't know how that worked on the phone number side. Do they use a different number? Or like a different system that way if it comes out from different servers, so it's not like one number set up. That's exactly what it is.

SPEAKER_00 44:06

Yeah. They they just they're coming, but all the numbers they have go through the registration process to show that it's a valid number and it's connected to your business. It's not just some robo number they're blasting things out from to at least give you that credibility up front.

SPEAKER_01 44:18

Aaron Powell On the on the um operation side, like right when you win a job, what happens like immediately after? Like what's the first thing that happens in operations?

SPEAKER_00 44:26

Yeah. So we have a through our CRM, you know, there's just kind of different statuses that everything goes through. So once you've got a an agreement made, uh, you know, we have the docu-signs and everything uploaded for the job, all the photos, all the orders and everything that we do. Uh then it then it kind of automates a queue that is ready to be scheduled. That's something that I still do. I still schedule all of our big projects. Uh my assistant schedules all of our repairs. Uh, but I go in and just uh put it onto the calendar and then there's an automated system within our office of who orders the materials.

SPEAKER_01 44:56

And that's what I was about to say. Who orders materials, who like verifies the quantities on the job, who does all that?

SPEAKER_00 45:00

Yeah. So everything in-house we we do uh in the office as far as sending the orders, sending the work orders to the crew. Uh but the on-site stuff is still done by the the sales rep that that's hold the job.

SPEAKER_01 45:12

They're still kind of managing that project to make sure that that's and then somebody in the office is is just ordering materials getting delivered to the job site and then the subcontractors start.

SPEAKER_00 45:19

Yeah, and my my templates and systems already have the material orders generated. We just have one person that watches the schedule that sends those orders over to the distributor and tells them when we're when it delivered and if there's any notes of where it needs to be delivered at.

SPEAKER_01 45:30

Uh how often are you getting called back out to fix stuff?

SPEAKER_00 45:34

Not very often. Okay. Uh not very often at all. I mean, our our warranty rate is is pretty low. Uh, but the most common thing is stuff that's related to to caulking, like on pipe jacks, like a furnace vent or a hot water heater vent, you know, those vents go up through a collar and that's usually just sealed with caulking. Well, three or four years in, you know, I mean, if if it's been really dry or if the caulking doesn't hold up well, it can split and then you can get rain that can kind of come in. So they'll call us to come back out and re-caulk that kind of stuff.

SPEAKER_01 46:01

But what were your first three hires whenever you were just starting out and you were like went from a one-man show to to a real company?

SPEAKER_00 46:12

Yeah. Well, my first three hires back then were hiring just salespeople, you know, to try to get more jobs. Yeah, to try to get more jobs. And and and back then it was very much just the door knock game, and we were chasing kind of old damage, you know, it wasn't from a recent storm, but we were working in neighborhoods that had had storms in the past to try to see what we get going. I mean, this is over 20 years ago.

SPEAKER_01 46:32

Yeah, and those guys would just it's straight commission, you're just like, hey, go knock these doors.

SPEAKER_00 46:35

Yeah, and we were and we were all young, you know. I mean, hell, I was 21, 22 years old, you know, and the guys that I had around me were a little bit older than me, but not much. And uh man, I probably put eight or nine companies in business back then because, you know, that once they figured it out, like, hey, why am I working for you? And they could go out and do that for themselves.

SPEAKER_01 46:52

That's um every industry's like that.

SPEAKER_00 46:54

Yeah, but it honestly though, it was good for me because it allowed me to understand that, hey, I've got to create more value for my reps than just a brand that you're re representing. Uh, you know, we and and that's why I've done some of the things that that we've done and invested some of the money that I've invested in. I mean, we generate a lot of leads now that are fed to them, that they're not having to go out and knock on those doors. And we there's very few companies out there that have the tenure working for a 24-year-old established business. You know, it's uh it's just a lot easier place for them to be. And we also compensate really well. I mean, we try to compensate them in a way to where whatever extra money you think you'd make, we'd be spending that on operations anyway. Yeah, there's no cap on it. Yeah, you're getting you're you're gaining lab liability in exchange for really not much extra money.

SPEAKER_01 47:39

How do you know when it's time to hire another sales rep? Like what at what point you know, if you're trying to scale, I mean, you still want to give your guys enough leads.

SPEAKER_00 47:47

That's that's really my biggest challenge. And I've kind of I feel like I've somewhat figured out how I want to scale and grow. Um, but the challenge for me, having morphed my business into what it is now, to where we are pretty much a lead service sales process company. We're not a door knock lead generation company like a lot of my competitors are, because when a storm hits, you know, you just hire more guys because everybody, the whole process is geared upon generating a lead, going out, knocking on doors, and doing that. Well, my entire staff is used to the leads being set for them, or or they've been doing this a lot of a lot of my guys are well tenured. Their cell phone rings as much as our office phone rings with opportunities for referrals, yeah. So when I bring somebody in, if they're green and don't know the industry, it's really hard to teach them how to go out and establish themselves uh because you don't want to just delete the dilute the lead pool where you know you the people that you have are having less opportunities because you're bringing in a rookie to show them how to do that.

SPEAKER_01 48:44

And then they're pissed and then they want to get another job if like, oh, you're giving all the leads to the new guy.

unknown 48:49

Yeah.

SPEAKER_00 48:49

So but recently I've been able to hire some established guys in the industry that their business model is doing the door-to-door, getting out hustling and chasing. Uh so I've finally got some guys in place now that can model that, uh, where you can bring some people in. But I think my big plan for for trying to uh acquire people are going to be acquiring people uh maybe that are not right on top of us.

SPEAKER_01 49:12

Uh I was about to say, what about expanding into a different city or county or discovery?

SPEAKER_00 49:17

Houston, as big as Houston is. I mean, the majority of all my all my people are up north. So I mean, there's a lot of opportunity to expand in here, but I think I think my my key people are finding people that maybe they're working for another organization, maybe they're not being compensated well, maybe the organization's a Mickey Mouse outfit, but they're kind of the driving force of of the sales. Well, I think I could provide them a great opportunity that would be a much better fit for them where they'd have an opportunity to make more money. Uh, but it also give me a chance to be able to grow, man. I mean, if you can hire guys that are gonna sell, if they've consistently sold over a million dollars a a year, you know, they're making decent money already. Um, but you know, if you can get 10 guys that do that, well, that I could double the size of my company. Uh and there's there's a lot of guys out there that are doing this.

SPEAKER_01 49:59

Yeah, and I'm sure you can probably find them with a low barrier to entry. It's like you said, there's a lot of Mickey Mouse operations that either they're not getting compensated right or they're getting screwed around or wasn't what promised, you know, wasn't what's promised to them. What role makes the biggest difference going from like one to five million of revenue? Like who what do you who's who's the main key to do that? Or what role do you need to have?

SPEAKER_00 50:21

Man, it really the the good outside people to be able to have those opportunities and and to be able to close them. One of the things that I've seen over the years, man, like when we when we started out, I mean, you were very much generating everything. And I remember like the first little storm that we had, you know, that was a decent little hail storm. Well, it's like all of a sudden that created an influx and created a little bit more of a base. Well, then you had, you know, Hurricane Ike where it went like this and then it established a little bit more of a base. And then you have another event. And it's like after every event where there's a lot of volume, it's like your new base and your new normal of what just comes in organically is now more and consistent. And um, and that's part of how we've been able to grow and even maintain the growth. I mean, like like last year was a little bit of a down year, but you know, like I was saying, it was industry-wide down 30 to 40 percent. Uh, we were down right at 25%, uh, I guess for the year last year. But um still, I mean, to be able to consistently do that, there's a lot of companies that'll go out and they'll they'll have a pop rocket year and then they're down to nothing. I mean, they just completely go out of business a year or two later because they don't have a way to have a base. You know, they all they know is to go out and work a storm. If there's no storm, then they're you know, don't have anything to do. Um, because they're not established, they don't have any value to be able to go out and sell in a in a retail environment.

SPEAKER_01 51:37

What net profit are you looking to hit? Like what would be a good margin for you to hit at the end of the day, like after everything?

SPEAKER_00 51:44

15, 16 percent. Yeah. And that's about where we're at now. Okay. That's after, you know, all all commissions and everything's paid.

SPEAKER_01 51:53

What about insurance payments? How are the how does that work?

SPEAKER_00 51:56

It's expensive. I mean, uh our liability insurance is is pretty expensive. Uh with like most insurance, you put a significant amount down, and then typically we're just financing that out over the are you are you talking about insurance payments to us from clients? But both. All right. Um You know, the insurance doesn't owe us when we do work for people. And that's something that has to be communicated to clients. We're we're not a hospital, you know, we don't have contracts with insurance companies.

SPEAKER_01 52:19

So they pay the they pay the client and then the client.

SPEAKER_00 52:21

Yeah, the client client pays us, and it it's important to communicate that to your client because it's real easy for them to get this idea that, well, the insurance company owes you, not me. No, we're we're contracting to do the job. This is what the job costs. This is I've got to get paid by you, whether the insurance company pays you or not. Now, I I can certainly do everything I can to help you get your money from them, but ultimately this is your debt to me, not the insurance company's debt to me. And I think as long as the communication is good on that, we don't have much problem. But I think when they understand that, they're gonna be more intentional about following up with their insurance company, making sure the insurance company is doing what they're gonna do.

SPEAKER_01 52:54

Fighting for the claim, yeah.

SPEAKER_00 52:55

Yeah, because even if we're trying to assist with that, the insurance company really doesn't care that we're calling. They don't have any obligation to us, they don't have any responsibility to us. But if the client's calling, well, yeah, they've got responsibility to them. They're gonna be more apt to respond and get back with them. And, you know, you learn by doing, right? I mean, we used to try to take ownership of all of that process. And you know, if you've got a hundred clients out there that owe you money, you're making a hundred phone calls a day. But it's a lot easier for a hundred people to make one phone call a day than it is us to make a hundred phone calls. And it's really kind of cleared that up. And, you know, we we try to stay out of that. I'd I'd I would even incentivize a client like, you know, hey, why don't you put this on a credit card and earn some points on whatever your second check is? And that way when the check comes in, you just pay it off as you get to earn some miles, you know, in the in the meantime. But that helps the the cash flow in the process because that's probably one of the biggest challenges in our industry, especially if you're doing much insurance work or even custom home new construction work, which we do as well, is potential timelines from start to finish and getting paid. And a lot of times you can be floating some, you know, pretty good cost uh waiting to get paid. And uh you either have to have the capital or the lines of credit to do that.

SPEAKER_01 54:05

So yeah, if they're waiting on draws from the bank is a big one too for builders and homeowners, really, if they're building a house.

SPEAKER_00 54:11

It's strictly communication and and your staff has to be able to communicate the sense of urgency and feel the community you know, sense of urgency to get paid. And uh if not, it's just if you're real casual about collecting payment, well, the clients can be real casual about getting you the payment.

SPEAKER_01 54:25

Um What's some of the most common install mistakes that people make?

SPEAKER_00 54:30

Uh a lot of companies, you know, it's like uh number one, I see a lot of high nailing uh that happens on steep routes.

SPEAKER_02 54:38

What does that mean?

SPEAKER_00 54:39

So uh when you have a laminated shingle, you know, uh a laminated shingle is actually made out of two pieces. You have a rectangle and then you have uh another piece that bonds to it that has uh you know your your dragon teeth that cover over that rectangle. So it's like a rectangle with little dragon teeth that kind of glues together at the manufacturer, uh, and that little overlap usually is about an inch or so. Uh, that's what the nail line is. And you have to nail it into that nail line so that it goes through both pieces. Well, if guys get going too fast and they shoot above that nail line, if it's on a real steep roof, well, gravity over time, that sun will heat that stuff up and eventually that little rectangular piece that doesn't have a nail through it start sliding off and falling off. And you start looking at mansard roofs in and around the city, you know, where they're like almost straight up and down, you'll see all those little where you just see the tab and it's black underneath it. That's because the the rectangular piece slid out from underneath it.

SPEAKER_01 55:32

What about contracts? When you're doing contracts with people, what's like the biggest thing that you have to have in there? Uh the biggest contract or the biggest like issue, the biggest uh item that you need in your contract when you're, I guess, with the homeowner.

SPEAKER_00 55:45

Uh I I would say just whatever your payment terms are, you know, just so that you're crystal clear on, hey, this is how much we're getting and and when, whatever that is. But I mean, contracts need to be specific. Uh, you know, especially when you're deviating even things outside of roofing. If you're gonna say, you know, we're doing a job, say, for example, they've got some rotten trim around the window, hey, they want to get that done too, we're gonna include it. You need to be real specific on what that is that you're doing because you get into a situation where you just put, oh, we're gonna replace the rotten wood. Well, there could be 15 places of rotten wood and you didn't specify which one, and now contractually, you could be obligated to have to do all of it. So I just what whatever, whatever you're doing, just be specific so that it's crystal clear, and then also just making sure the payment terms are completely defined out, just so that again you don't run into situations where the client might think that they don't owe you for something or that the insurance company owes you instead of them, you know, etc.

SPEAKER_01 56:37

Hey everyone, real quick, I just want to let you know this podcast is 100% independent. No ads, no sponsors, just real. If you're finding value in whatever we're doing here, the biggest help that you can give us is hitting subscribe and sharing this with someone who you think needs to hear it or someone that it will provide value to. That's how we continue to grow. And if you did that, I would really appreciate it. What would be the hardest thing to replicate about your company compared to like the competition?

SPEAKER_00 57:04

The hardest thing to replicate is the tenure. You know, you just you just can't replicate it. Uh there's nothing more secure to a client than a company that's been in business 24 years. Even if you're doing everything that I'm doing, you've been in business seven years, you're still a higher risk to that client than we are because we've been doing it longer.

SPEAKER_01 57:20

Yeah, it makes sense.

SPEAKER_00 57:21

Yeah.

SPEAKER_01 57:21

What's the fastest way people go broke in roofing?

SPEAKER_00 57:24

Uh overspending. Uh overspending, not managing your money and not collecting the money that's owed to you. Uh that that's, you know, if again, if you're not collecting your AR, the longer somebody owes you, sometimes the harder it is to collect. Uh, we don't have too much trouble with that, but we we had some clients even over this last year that stiffed us, you know, they got the interest money and spent it on the TV or spend it on something else. And you know, you get a lead on their house, but you really can't collect on that until it sells. Yeah. So, you know, if you're you you've got to collect it and you've got to be able to collect it relatively quickly because fortunately for me, we've got good lines of credit the way that we buy our material. What are the payment terms?

SPEAKER_01 58:01

So, like if you if I do business with you, you sign a contract with me, is it uh 25% up front, half up front?

SPEAKER_00 58:07

Like how how does the draw schedule work when you're doing the roof or retail contracts are easy because you just usually do, you know, half the morning that we start, the other half. I don't ever like to ask for money before I've ever been there. We're not there with material because there's too many of those weird stories. I gave a guy a check and he never came back.

SPEAKER_01 58:21

Well in c in the contracting world, yes. Yeah. Yes. Especially for somebody that they know that they're never gonna work for again. That's where you get screwed is like the retail homeowner.

SPEAKER_00 58:30

Yes. Yeah. Um the other situation is you get into a project that's got different stages or different things that are going on. You know, we do stuff just more than just roofing, you know. So we'll have a job that we're doing, say, the roofing and then all the siding for somebody, and then we're gonna add all the gutters, especially when you're building a house.

SPEAKER_01 58:46

Yes.

SPEAKER_00 58:47

So, like from a contractual standpoint, what's best is to break those down into three contracts and do them three jobs, finish them, get paid. But in the past, I've made mistakes by lumping them all into one lump sum. And if you're trying to do half and half, well, if there's an issue with a gutter, for example, and it's okay, you didn't finish the gutters yet, but yeah, you got somebody holding back potentially fifteen, twenty thousand dollars over a five hundred dollar item. Uh so you just have to have good, clear communications to be able to get that stuff coming in. Or or worse, you get sideways with with somebody, say that I just I'm just not happy with this. I don't like the way that it that it looks. Uh, we're we're having a very OCD client right now that's just obsessed about the way his events look. And uh probably an engineer or an attorney. 100% he's an engineer, and and I think we're gonna be okay on it, but we've already changed them out once, and there's there's basically two different ways you could do it. We did it the first way, didn't like it. We did it the second way. Now he still doesn't like it. I mean, he's wanting you to put levels on him, and I mean it's he's it's ridiculously OCD, and it's not even really related to the colour.

SPEAKER_01 59:42

The mind of an engineer. I already even I knew what it was before you even told me who the client was. Yeah, just overthinking. Yeah, those are they're hard to work for. They've it's it's it's strange. Not it, it's it is not I wouldn't say OCD, but they definitely overthink and and overprocess everything. And it'll take you ten times longer to do a job for them.

SPEAKER_00 1:00:01

Yeah, that's right. And on a on a big contract, I mean, you're you're potentially holding up twenty-five thousand dollars. I mean, this particular contract was a seventy thousand dollar contract. You know, their final payments twenty grand. It's done. And now he's got to be convinced that he's happy enough. Otherwise, he's holding that money over something that really is not even an issue.

SPEAKER_01 1:00:19

We had a we had a person buying a house from us that was an engineer. And you know, when you go to the title company, and it's like there's loan documents and everything. I mean, he had he was getting a loan to buy the house. And he went through this is this is my title attorney telling us like I wasn't in the room, but he went through line by line and read every single word and every single document, and he would say, Hey, I'm I'm not comfortable with this language, and he's like, Well, and then so the title attorney have to go, Well, the bank already drew off documents. I don't think they're gonna negotiate with you on this, but if you want, we can no, no, no, okay, and they keep going. And he would do it again. And again, he said it took four hours or five hours to close. He read every word, it was like insane, and nothing was changed at the end. Nothing was changed. Like he couldn't do anything about it anyway. It was like you have to accept the bank's documents like as they are stuff, too. Yeah, it's all standard stuff. Yeah. So crazy. Yeah. That in attorneys. Attorneys are sometimes like we've had the same experience with some attorneys, just selling houses too. So what are three KPIs that somebody should track in the roofing business that they should look for? Three KPIs. Yeah, key performance stuff that you look at.

SPEAKER_00 1:01:26

Uh number one, where your leads are are coming from. Okay. You know, I think that's really important to you know what advertising dollars you're spending, if you're spending them, if if they're paying for themselves, uh, number one, but also e even just kind of determining where you need to put your effort, your time, and your energy into to helping those those things come in. Uh close rate, I think, is also important if you're providing leads to your your staff, if you've got someone that's got a significantly low close rate than the majority of the group. All that kind of your key signals of hey, you need to work with that guy, or maybe it maybe that's not the right guy for your team. Uh I think that's a a big parfit, uh, big big part of it. Uh, but then also is just kind of keeping a metric on your on your PL. You know, I think one of the things that get a lot of companies, roofing company specific, in trouble.

SPEAKER_01 1:02:10

Every company.

SPEAKER_00 1:02:11

Um, even myself, man, I had to make some big adjustments uh in the last three or four months because again, you do a ten million dollar a year and then you do a seven and a half million dollar year where your expenses are set up based on your ten million dollar a year, especially like uh variable expenses, stuff that different advertisings, different things that were made total sense to do, but you you know, the return on it may not have been justified in a year that you're not doing as much business. So you just really have to watch that. Otherwise, you just kind of pay that stuff blindly, and before you know it, your your profitability has shrunk significantly because you're not paying attention to what's what's going out.

SPEAKER_01 1:02:46

Yeah, that's where a lot of people get in trouble is when you start in business and they don't, they're not looking at their PL, they're not, they don't have a real bookkeeper, they're not looking at their numbers and they're living out of their checking account. Yep. Yeah, I had a builder go under that pretty sure that's how he's operating. But I mean, he did good for a while, worked with him for 15 years, and then just not probably living out of his checking account. I mean, I'm just guessing, assuming, because he had so many jobs going. I'm sure he was dropping them all in the same uh same account, have draws from different banks, and he probably didn't even know who he owed, or it's it's easy to do. And then what happened was is when interest rates started going up and his houses finally started slowing down, that's where he got caught because I think he didn't really know how much he had because he was always selling houses for the last 10 years. I mean, there's there's just so much happening, and then interest rates go up and it finally like cools off, and it's like, oh shit, like I owe all this money. So what I I think happened.

SPEAKER_00 1:03:36

It happens all too often, man. I mean, and the same thing, like even with me and my material bills, you know, I I paid my material bills after 60 days, so I've got a 60-day cushion to be able to pay them. So if if you're a company that's operating like that, out of your checking account, it ain't your money. It's it's yeah, you're selling, you're selling new jobs, and and so often it's like you think, well, okay, I just we got to get to a place where we do a big volume to make up for it. But it it's it I even feel it my cash flow as we go through the winter months because you know I'm writing checks that were to cover, you know, in December.

SPEAKER_01 1:04:06

Material 60 days ago.

SPEAKER_00 1:04:07

Yeah, right. So in January, you know, your your expenses from November are more than they were in in January. So if you're not keeping the money that you're accumulating from your AR as it's coming in, because the whole reason you have those terms is to allow time for your AR to come in. Um, so you really have to collect your AR, and then you also have to make sure you're not just spending the money that's coming in because it's there. I mean, just because it's in the bank doesn't mean you can spend it because you have to look at your AP too and what's coming down the pipe.

SPEAKER_01 1:04:34

And I think a lot of people that's where a lot of people struggle and they just don't know their numbers and they're looking at their checking account. It's like, oh, I got half a million dollars in here today.

SPEAKER_02 1:04:42

Yeah.

SPEAKER_01 1:04:42

It's like, no. Right. You only got 30 grand if you pull all your AP and AR. Yeah. That's exactly right. What um what would you go back and tell yourself if you're a start number? Like what would you tell yourself to or mistakes you can avoid? What would it be?

SPEAKER_00 1:04:57

Man, number number one, just to like kind of define things better. I mean, you make mistakes on on some of these contracts. I would also say not every job is worth having. You know, there's been jobs that I knew in my gut that this is not worth it, but I did it anyway, and uh ended up getting burned with headaches. And I mean, we've been able to survive a lot of uh stuff. I mean, I had I've had some nightmare jobs that I mean, it's amazing that I got out of those profitably, but they were just a nightmare and such a drain on your time. That's the one thing that you don't really realize when you're doing projects is if you're looking at just the job and the profitability of it, you can justify doing it. But if you're not factoring in the PETA factor and how much time and how much energy and resources it's gonna take from you or your team to manage that job, yeah, and how much I guess opportunity cost you're gonna cost yourself dealing with that type of client that may not be worth doing or doing a job for a margin that really isn't that much for the liability that's there. You know, it's not so much that job, it's the it's what that job takes you from being able to go out and get that would have been better or would have been more profitable and makes it better. Use of your time. Because there's a good handful of jobs that I definitely would have just said, you know what, we're not going to do that job. Number one, but I probably would have also gone off on my own sooner. You know, I I would have definitely would have advised myself to figure out, hey, you're you're talking about an exit, you know, when you're starting. Well, let's define what that looks like. Don't just leave things loosey-goosey, because I think that could have been been set up better to where there was a better understanding for me. Uh, but also I probably should have brought that to a head a lot sooner than I did because I had an 18-year investment into a business before I really started trying to figure that out. Unfortunately, I I had a great partner. He's a great mentor for me. I'm so close, almost like family to me. But, you know, just from a pure business standpoint, you know, I I'll probably let that drag on longer than it should have for my best interest. It would have been better for me to probably have had that conversation about best in the beginning, but for sure more like 10, 12 years in.

SPEAKER_01 1:06:55

So I think that happens a lot when you're young too, and you're just trying to prove yourself. I I know somebody in the very similar situation that same thing. He was the top sales guy there. I mean, like really top, like millions and millions of dollars they brought in. And he they were all, oh, we're gonna give you equity, we're gonna give you every year, every year. And he finally was like, Man, y'all, I I'm gonna have to leave. And when he's gonna leave, then they were like, No, no, no, sit down. And so they're we're you know, we'll talk about this, we'll get the contracts drawn up. Still didn't do it, just kept putting off the contracts, kept putting off the contracts, kept putting off the contracts. He leaves and they go start. Well, I know this because my business partners, he's a partner now in one of their companies, and they were able to go and grow it's a it's like um ATVs and Jeskies and like the Polaris dealership type stuff. And that guy is now a partner with those guys, and they're gonna do a hundred million this year because he they my partners are the right guys to go fund it, and he was the right guy to go run it, and they've just been buying dealerships, you know, since pandemic, like every, you know, lot of old burnt out owners that are trying to leave the industry and they're doing stuff that's outdated, doesn't work anymore. They were used to just people coming in and buying stuff. Now you gotta go back and like really sell. But he left because of that reason. It's just like if they would have just gave him equity, they probably could have kept you know the star guy that made it all possible, anyways, right? So, yeah, same thing. It was the same exact situation.

SPEAKER_00 1:08:26

Equity and autonomy, and he could have blown it.

SPEAKER_01 1:08:27

It took him a long time though. I mean, he was there. I mean, he's older, and I mean it same as yours. It was probably 15, 15 years of like kind of stringing him along a little bit.

SPEAKER_00 1:08:36

Yep.

SPEAKER_01 1:08:37

So crazy. Well, thank you for coming on, man. Ton of value that will hopefully keep people from making mistakes. Or if you ever want to know anything about roofing, I mean you went over everything.

SPEAKER_00 1:08:47

I'm an I'm an open book, man. Thank you.

SPEAKER_01 1:08:51

Appreciate it.

SPEAKER_00 1:08:52

Thank you, Sean. Appreciate it.

SPEAKER_01 1:08:53

Sweet.