Ask a home improvement contractor what his biggest challenge is at the moment, and if the answer isn’t finding qualified employees or affordable subcontractors, it may be his rapidly expanding backlog.
While too little work in the pipeline makes for anxiety, too muh can be just as threatening to cash flow.
Design/build contractors with a stellar local reputation may not concern themselves with clients who have to wait six months or even year to get their kitchen started. Those homeowners understand that they have to get in line, and have seen enough to know that their new kitchen will be worth the wait.
But with a roofing company, many of those jobs were sold because the roof was shot. If they’re not in an emergency situation, those homeowners might wait, but not a year, or even six months. They called you because they needed their new roof yesterday.
At Weather’s Mercy
What complicates the situation for roofers, besides the nationwide shortage of skilled trades, is weather. In many parts of the country, a re-roof can only be undertaken when the weather is 40° F or greater. If the temperature falls below that, the materials being installed may not perform to spec. If it rains (or hails, or sleets) the roof becomes too dangerous to work on.
When weather forces postponement, even the most rigorously prepared schedule has to be reworked. “Every rain day or extreme temp day we deal with sets them [the contractors] back even further," explains American Standard Roofing, in Southfield, Mich. "Many jobs [that] were scheduled for installation that day are now added to backlog, and have to be moved in to the already existing future load."
But companies will take the jobs on anyway. Last year the Better Business Bureau launched “an industry-wide investigation on roofing contractors in Texas” after receiving numerous complaints from customers who’d paid deposits only to be put on a perpetual waiting list in the aftermath of multiple hail storms. Among those the BBB heard complaints about was Bow-Tie Roofing of New Braunfels, Texas.
“For some, the paid work was eventually completed,” the BBB noted. “However, Bow-Tie along with many other roofing companies became inundated with contracts as a result of the hailstorms and severe weather ... A snowball effect ensued. Bow-Tie continued to bring on new customers who made upfront payments for services, and the company’s backlog grew.”
By the spring of 2017, some homeowners who’d signed contracts with Bow-Tie had waited as much as a year with no roof. Bow-Tie apologized for the delay and explained that they now had an “extremely long back log” of contracts “that they were trying to fulfill.” In April 2017 the company was abruptly sold, and, shortly thereafter, closed, leaving $250,000 in cash and accounts receivable unaccounted for and the old and new owners pointing fingers at each other to explain why customers who’d paid deposits would not now, or ever, get a new roof from Bow-Tie.
Build A Backlog Report
Under ordinary circumstances backlog is manageable for most companies. But if the amount of work a company has contracted for far exceeds its ability to fulfill the terms of all those contracts, chaos can ensue.
“When you look closer to why construction businesses fail, an excessive backlog is one of the most common reasons," writes David Drumi, president and founder of Direct Surety, which provides contract surety bonds to contractors. He adds that “winning more work than a contractor can presently fund is really an indicator of poor management performance rather than wise business strategy.”
Drumi suggests companies track workflow with a backlog report, “identifying all jobs awarded and in progress including anticipated start dates and projected durations.” That report monitors volume, resources, and working capital needs.
Activine in the scaffolding industry from nearly 30 years, Marc Wilson outlines a system for measuring future revenue, including components such as: jobs in progress; jobs under contract but not started; jobs “won per verbal notice, but not yet started or under contract;” jobs bid and likely to come in; and “unexpected work, extras, walk-in, etc. based on historical experience.” He provides a spreadsheet, broken out by quarters.
Wilson suggests sales take on responsibility for logging quotes or bids, that each of those be documented, and that “the status of each active job and bid should be updated every week or two.”
Communication Is Key
The homeowner waiting six months for a new kitchen may be a little impatient for the job to start and the work to be finished. A homeowner waiting for a roofer is often under far more stress, especially if the roof has been damaged by a storm. Unreturned calls greatly exacerbate the situation.
A best practice in the roofing industry is communicating with customers by phone, text, or email from first call through final walk-through. Just because the job is a few months down the road doesn’t mean communication should halt. Even a client whose roof is intact but who signed for a replacement will get antsy when month after month goes by, and he or she hears nothing.
Start with the estimate. A weather event can make for weeks of lead-time with an estimate, and keeping clients informed will go far to allay concerns. Whether it’s an office administrator, the salesperson who sold the job, or the production manager who sets the schedule, don’t wait for homeowners sitting on a contract to call. When they do, chances are they’ll be annoyed.
If your backlog is months out, schedule periodic phone calls to clients whose jobs are in the pipeline, reminding them of the approximate start date, or notifying them of any schedule changes. If they do call, respond that day if possible. Be prepared to schedule emergency services, when necessary, and prioritize these.
Once a firm start date is on the board have someone call ahead to let clients know when the crew will be arriving. “Continuing communication throughout the process with your customers is critical to ensuring their satisfaction," says Nate Stein, a blogger for roofing CRM vendor AccuLynx. "At the end of a job, most roofing contractors provide a warranty and final sign-off. Go the extra mile—offer a sit-down final consultation, with before and after photos, and detailed descriptions of the job performed. Additionally, ask for feedback.”