4 Common Reasons Why Small Businesses Fail and How to Avoid Them

Author: Linda Light
April 21, 2020

Roofing is a high turnover business; 39 percent of residential roofers went out of business between 2007 and 2012, according to the Joint Center for Housing Studies. Understanding what it takes to run a successful residential roofing business means first understanding some of the reasons why small businesses fail. Knowing what to look out for can keep your business profitable and productive.

Worried contractor talking on a cell phone.
Understanding why small residential roofing businesses fail can help you avoid common pitfalls and set yourself up for success.

Many roofers are (understandably) very focused on mastering their craft and providing high-quality work. However, running a profitable business entails more than pride in your work.

There are a number of reasons for small business failure, but you don't have to fall prey to them. Following these steps can help you avoid some of the more common pitfalls.

Not Defining a Sales Strategy

Generating interest in your services is crucial for attracting customers. You want experienced sales reps selling your brand, so be sure they have professional sales training. Part of your sales program should also include estimating projects accurately, because good estimates are needed to win the work.

The contracting business can be feast or famine. A defined sales strategy — that your reps follow consistently — can help minimize extreme up-and-down cycles and keep the sales funnel full.

Not Making Time for Marketing

Marketing is the hook that gets clients interested in what you do. This means you want to have a strong, recognizable brand that stands for high quality and timely delivery. Marketing tactics come in many formats, including a website, internet ads, social media, email or old-fashioned posters and newspaper pages. Focus on marketing methods that provide you with a return on your investment. You might have to test different tactics, track the results and adjust as needed.

Don't shy away from using modern social media or email surveys to enhance your business. Consider mobile apps that let you schedule Twitter posts or update your website so that you can manage marketing media while you're on the move.

Marketing also includes knowing who your ideal customer is. Understanding the demographics, geography and types of work needed in your area can help you better target and reach clients who might be interested in working with you. Taking on a broad range of work or driving to distant jobs can stretch you too thin and keep you from meeting client expectations.

Not Preparing New Hires

Lackluster employee training can lead to turnover. New hires need to know about company quality standards, processes, safety protocols and behavioral expectations. Lack of training can lead to costly or dangerous mistakes that could have been avoided.

Turnover and labor shortages can occur if your workers don't feel fairly compensated or appreciated. Be clear about the benefits you offer, and consider offering perks beyond insurance, such as continuing education, leadership opportunities or employee outings.

Failing to Establish Processes

Having written plans for all of the work you do helps with more than just completing a project. Processes are the foundation of helping you run your business. For instance, you should draw up a written plan to ensure you get paid and pay your bills in a timely fashion. Establish a formula for client communication to make sure your customers know you are meeting expectations and deadlines, and never extend a project's timeline without talking with your client.

It's critical for you to know your trade and deliver high-quality work. But to ensure your small business doesn't fail, you also need to understand the needs of your business and keep up with skills like communication and marketing. This combination of skills will help you avoid some of the more common reasons why small businesses fail and run a secure and profitable business.

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