Value Drivers for a Roofing Company
The roofing industry has maintained steady growth despite economic externalities. This is true for both residential and commercial roofing companies. Growth in this industry is expected to have very little variation within the next five years as well. This makes for a competitive industry with low barriers to entry. If you are looking to buy or sell a roofing company, the first place to start is obtaining a business valuation.
A business valuation for a roofing company will determine a fair market value. The appraisal will also identify key value drivers and the strengths and weaknesses of the roofing company. With steady demand for new entrants, here are a few areas of focus to help set your roofing company apart from the competition: These areas are key value drivers. Focusing on key value drivers will increase the value of a roofing company. Peak Business Valuation, business appraiser, is here for all your valuation needs. Schedule a free consultation using the link below.
Key Value Drivers for Valuing a Roofing Company
Below are key value drivers for a roofing company. A valuation expert will consider these when determining the fair market value of a roofing company. For more information or questions, schedule a free consultation with Peak Business Valuation, business appraiser. See Valuing a Roofing Company as well as Valuation Multiples for a Roofing Company for additional information.
In this new age of information, customers expect to know what something costs before they pay for it. It is important to have a general understanding of what your competitors are charging. This allows you to maintain competitive pricing and make your customers aware of it. Having a documented system in place to generate reliable and instant quotes has several benefits. First, it sets you apart from the competition. Consumers expect a fairly quick response for a quote. And, having a system in place makes the business more transferable and sellable. A business appraiser such as Peak Business Valuation will analyze the sellability and transferability when valuing a roofing company.
Next, potential customers look to the internet for pricing and other information. This means when they are building a new home, looking to make roof repairs, or roofing the office of their business, the first place they go is Google. Not only is it important to have an online presence, but it is also crucial to have a good reputation to go with it. There are a few key elements that are essential to developing a good reputation online.
- Great website – You don’t need to spend thousands of dollars to build a perfect website for your roofing company. However, a website that is easy to navigate will bring in more leads for your business. Pictures of previous jobs are a great way to illustrate roofing expertise.
- Reviews – Clients want to have the best idea possible of what they are getting before they pay for it. Asking for Google reviews is a great way to boost your online presence and credibility.
- Contact – Make sure your contact information is easy to find online. If your info is hard to find then potential clients will look elsewhere. This applies to your Google page, website, social media, etc.
The online reputation of a roofing company will correlate with the company’s local reputation as well. Maintaining good standing in both is vital to the value of the business. The more visible and accessible your business is the higher your chances of gaining new customers. The more work you can bring in and fulfill the higher your revenues will be. Revenue directly impacts the value of a roofing company.
Commercial vs. Residential
Another item a valuation expert considers is whether the roofing company typically works with commercial or residential clients. Residential roofing companies have seen an increase in demand due to the housing market. Whereas, commercial companies are expected to decrease due to “declining corporate profit” in the aftermath of COVID-19. A valuation could have entirely different results in value depending on the client sector a roofing company focuses on. The valuation expert will analyze your split of revenue and compare it to industry standards.
A successful roofing company is organized and completes jobs in an orderly and timely manner. This requires good communication and organization which begins with management. Managers set expectations for employee performance. If the leadership in a roofing company does not set a standard for how quickly and well a job is completed then it will reflect in the bottom line. Management’s ability to maximize profit through its workforce is an indirect value driver in a business valuation. For more information schedule a free consultation with Peak Business Valuation, business appraiser.
Next, technology has made many industries more efficient through industry-specific software. This includes the roofing industry. There are several roofing software companies (Acculynx, JobNimbus, etc.). They provide a streamlined way for roofing contractors and their employees to keep track of their jobs. Many contractors don’t necessarily consider roofing as a repeat customer industry. Yet, if a windstorm, hurricane, or another type of natural disaster hits, the roofing company can access its database of clients. They can then reach out to see which of them may need roofing services again. This type of stored information can be a valuable asset to the business.
The overall economic health impacts the value of a business. As such, it is important to know what post-pandemic revenue and profit margins look like for the roofing industry. Half of the roofing companies expected an increase in their revenue from 2019 to 2020. These industry trends help determine the financial health of the business. It is also valuable to know other ways in which the industry and the respective roofing company were impacted by the pandemic and the overall economy. For more information see How Does the Economy Impact the Value of a Business?
There is increasing demand to offer products and services that are environmentally friendly. The roofing industry is no different. The ability of a roofing company to offer solar panels sets them apart from competitors who do not. The business can benefit by adding solar panels to its list of products/services. Or, they can partner with an existing solar company to meet their client’s needs. Keeping up-to-date with market demands is key to the most valuable roofing companies. When valuing a roofing company, a business appraiser will compare it to similar businesses. Offering environmentally friendly products and services will differentiate you from competitors.
Understanding the effect of these value drivers will help you know how to increase the value of your roofing company. Whether you are looking to buy or sell a roofing company, you need to know how to value your business. Determining the value of a roofing company can be complicated. As such, a business valuation professional uses their judgment, experience, and relevant information to determine the value. Peak Business Valuation, business appraiser, is here to help you with any questions you may have. We are happy to help you understand the value of a roofing company. Schedule a free consultation using the link below.Schedule Your Free Consultation Today!