I had an amazing discussion with a dude who makes $3.2 MILLION in revenue out of his roofing business. He was in the same spot as a lot of us before his business - poor upbringing, had kids early, and at one point he was even homeless. He worked dead-end jobs and was flat broke. He used to be a rapper as well!
Now, he has about 50 employees, 3 crews and full-office staff, 22 real estate properties, and his business is still growing. His name is Eric Reno and he’s here to tell us the hard truth about starting your business from the ground up.
Everything evolves and grows a little bit at a time as long as you are consistent with what you do. As you’re taking one bite after another, you’ll have more problems and that’s alright. There should be things about your business that make you nervous, this means you’re taking chances.
“It’s like growing pains when you’re a teenager. Your business is growing, so in turn, you’re hitting anxiety, but you’re also fired up because you are reaping the benefits when you get those.”
As you grow, you get more financial backing. You can bring in more employees, an office manager, an accountant, or just somebody to help you however you want to structure your style of business.
Don’t stretch it out and put yourself into a losing situation. “You don’t want to take liability for something you’re not ready to do”, says Eric.
“If somebody asked me to build an entire house for them, even though there’d be good money in the end, I probably wouldn’t take that opportunity because I don’t have the resources to do so.”
It’s in taking incremental steps that you will grow - just like your first job, your first roof, or your first landscape job. It’s probably small-scale but you’re nervous as hell. You think it’s going to go wrong and it goes okay, so you do it again. Now there’s a 9,000 square foot house that needs roofing and you go for it because it’s just a bigger scale of your previous job. That’s a win for you.
Another fear that some people might have when starting a business is keeping up with their expenses. When you start taking on big projects, expenses are also expected to increase. You invest in equipment or you take on loans to scale up your business. There’s bigger money at stake but high-paying jobs aren’t always guaranteed and you’re running the risk of losing it all.
Don’t live above your means. When you’re running a business and you decide to live above your means, you will eventually get in a place where you have to make X amount of dollars which is a high amount to sustain your living. Then you end up not paying your bills and losing your guys - always verging on bankruptcy. Extra tip? In a business, you should ALWAYS have enough money for running costs.
“In my business, I need $150-$180 thousand in running costs. I can’t go below that because that’s what it takes to run my business while I’m waiting for payment.”
Know that gap and don’t go below it. Growing your business should be at the top of your list, "not your personal Gucci closet or your car collection,” as Eric said.
“I have a company, called Romeo Computer Company (RCC) that does my website. They do my SEO and my Facebook postings and all that costs me about $1200 a month. That keeps me on the rankings on Google. I pay Angie’s list $2,800 a month. I know it sounds high, but it’s what generates me cash. Without Angie’s List, my business wouldn’t be where it’s at today.”
Eric also invests in old-school marketing. They send out flyers, shirts, and yard signs. They also do direct mails and send out postcards to five neighboring cities every spring. This costs him about $16,000!
“But again, the roofing margin is so high that one siding job pays for that. We need such a little return to break even. Even if people don’t call, they still see the logo and the yard signs in their neighborhood and they’ll call you next time.”
And if you don’t have that much budget, Eric has the best advertising tip for someone who is just starting with their own business - KNOCK ON DOORS.
“Knocking on doors is still free. If I see a bad roof, I’ll stop in the driveway and I’ll knock on their door.”
“We’re all on a payroll. It took a long time to get here, but yes, every two weeks, we get paid. I get a salary. Taxes are automatically taken out and sent to the IRS. We still have to pay high five-figure margin at the end of the year because of the business that we do.”
Think about it, running a good business means running a good credit. Without credit, it’s going to be hard for you to buy a car, finance a house, or even get a loan for your business. We all start under the same system that asks you to become a citizen first before establishing a business. You have to be able to re-invest if you want to stay in the industry and the bank’s not going to give you any money if you don’t have a track record.
And that’s it. That’s five hard truths when starting your business from the ground up from Eric Reno. Be sure to check him out on YouTube where he gives roofing tips and advice for beginners in the industry.