Financial Performance Standards for Residential Roofing Contractors in Business Administration

The national average sales for the upper 20% of residential roofing contractors are slightly greater than $3 Million per year. A typical small roofing contractor will have a couple of crews working various projects and frequently sub out jobs. In addition, the owner acts as a project manager and there are one to two estimators depending on the volume of work.

For readers, their primary concern is the profitability of residential roofing contractors. A simple answer is 14%. But it is never that simple. Each contractor is different in how they exist as a legal entity; how much is paid to the owner as compensation; and how is the company organized or structured? All of these questions greatly impact the ability of a residential roofing contractor to generate a net profit of more than 14% annually. For those readers that are homeowners and wondering how much your local roofer is earning off your roof, you may believe that 14% is excessive. The simple truth is that it is NOT. Earning 14% versus the risk the contractor assumes for call backs, leak damage and injuries on the job site is acceptable. Given the nature of what is involved and the risks, 14% is actually low. 

Take a look at a simple profit and loss statement for a residential roofing contractor:

XYZ Roofing Inc.
Income Statement
Year Ending 12/31/19
Roofing Contracts (347 Jobs)                        $4,618,900
Inspections/Certificates (587 Units)                   279,300
Service                                                                 48,500
Total Sales                                                                         $4,946,700  
Costs of Construction:
   Materials                                                        1,849,800
   In-House Labor                                                 581,600
   Out-Sourced Labor                                             97,300
   Other (Debris Removal/Safety/Tooling)         205,200   
   Sub-Total Costs of Construction                                    2,733,900  
Field Production Profit                                                     $2,212,800
Indirect Costs of Field Operations:
   Estimators/Inspectors/Project Management    249,500
   Transportation (8 Vehicles)                               92,300
   Insurance (WC, GL, E&O, Bonds)                  119,700
   Equipment                                                          43,700
   Other                                                                   67,600
   Sub-Total Indirect Costs of Field Production                   572,800
Gross Profit                                                                        $1,640,000
Overhead:
  Officers/Staff                                                     467,700
  Facilities                                                            151,200
  Office Operations                                                93,600
  Taxes & Compliance                                        211,100
  Capital                                                                 59,800
  Sub-Total Overhead                                                           $983,400
Net Profit (After Taxes)