Adam Sand, CEO of a roofing business partner, walks through using a seasonality index to budget your roofing business across weather changes. He covers calculating workdays, setting revenue and profit goals, and managing labor, materials, insurance, and equipment costs to stay profitable year-round.
Are you struggling to budget through roofing's rainy seasons? I'm Adam Sand, CEO of the roofing business partner. Discover the three step seasonality index that turns weather chaos into predictable profits. Stop guessing. Start knowing exactly where every dollar goes month by month.
How does seasonality affect the roofing business's budget? Because each state, in some cases entire regions are different. So we need to establish a seasonality index to accurately budget month by month. So, so what is a seasonal index? We have to start with what do we know? We know the roofs cannot be installed in the rain. We also know the roofs shouldn't be installed below 34 degrees. You know, we don't want to install shingles when it's freezing outside. And they should be installed above a certain temperature. And again, in the southern climates, that number is a fuzzy number because in Canada, we wouldn't want to install shingles above 35 degrees Celsius. But down the states, they're installing them in 50 degrees Celsius because again, Bill's got to get paid. So what we need to know the number of days below 35 degrees in a particular region. We also need to know the number of days of rainfall in a particular region per year. And that would hopefully give us an ideal number of work days per year. Once we know that, then we can think, well, what are our goals? So we're going to have a revenue goal, we're going to have a gross profit goal, and we're going to have a net profit goal. So our gross profit, we have to think, what do you want your gross profit to be? So if you don't have a number, your gross profit goal should be between 40 and 50%. If you're in commercial, maybe it's 30 to 38%. Then you're gonna have a net profit goal. Net profit goal should be somewhere between 10 and 20%. If you're in high volume commercial, maybe that's 5 to 10%. And so if we know these numbers, then we can jump into our sheet that I want to show you guys today. And that's how to calculate the seasonality of your business. So what I've done here is I've pulled the seasonality index for Minnesota and North Carolina. But what this does was tell us, okay, the number of days of precipitation in millimeters, the Minnesota over 34 degree days and the number of rainy days and the same thing for North Carolina. So then what you do is then you can put your revenue goal in here. Your revenue per job, your days per job, number of crew working Days per month. So you could Change this to 22 if you work some Saturdays, right? Or put in here 20. And then your desired revenue earning days per year. Right. You could put it 260. Then your labor and materials budgets, which is usually around 30 and 30. Your commissions, let's put 8% marketing at 5. Your goal is net 10% net profit. That means your total expected cost here is 83% plus 17% left over to run the company. So this is like already taking your profit first, so to speak, and then you've got 17% left over to run the company at a 10% net profit. If we go to 12, then that goes to 15. If we go to 15, then that goes to 12. Then we have to copy the days. So this is like yellow because these are the properties that you can edit. These are the properties that you can't edit because there's calculations that happen in here. This was the number of days for whatever particular state I did the last time. And so what that does, it gives you a number of working days. It gives you kind of a seasonality index, which is a calculation. And then you get to say, okay, what is our anticipated monthly revenue based on our facts and goals? So if our goal is to make 8 million, this tells us ideally what those monthly revenues should be to end up at this total revenue. The same thing here. This tells you how many jobs you're going to have to do per month for a total of 444. Knowing that you have two crew days per job, this tells you how many crews you're going to need from month to month through your seasons. So this kind of allows you to say, well, I'm going to have to flow this much revenue through the business in order to achieve my goals. From there, you're going to get your labor budget, your material budget, your commission budget, your marketing budget. You should be putting away a net profit and how much you've got to operate the company each month. You can always scan this QR code right here. Use the QR code, scan it, and then you can open up that Google sheet on your phone and then send it to yourself. You'll just have to make a copy. There's the what's left over to run the company. And there's levers to pull on all these different categories, such as shopping, your insurance, getting the right vendor, having the right insurance, not being overinsured. I've seen that where the insurance brokers sell you something, where you get insurance and then you get someone else to review your insurance and you're like way over insured in a particular category. Like you would never run into this problem or it's like you'd never have a claim that amount. But you listen to the person who's selling you insurance, who is a salesperson, who usually gets a higher commission on selling you the unnecessary stuff that savvy insurance buyers don't buy. Same thing we're talking about trucks, software. How can you use software to make you more money? How can you reduce the amount of softwares you're paying for that don't make you money? Then there's your management. How much do you have to pay people to manage your business? This is something that you can get killed on. The middle manager stuff the tools and equipment that you're using. Maintaining equipment is better than buying new stuff. Making sure that there's accountability in the business for people that are returning and maintaining and treating equip with respect. Same thing goes with your vehicle. So sometimes maintaining what you have is better than buying new. And of course then there's your office and making sure that you're projecting forward so it's bigger than you need when you move in and it's just what you need when you move out. And you structure your lease deal in accordance with that. It's nice to be in places where you can expand without having to move.
