Gary A. Cohen, Vice President, Certified Contractors Network
For roofing contractors, success is often attributed to craftsmanship, reputation and customer service. While these factors are undeniably important, they alone do not guarantee sustained profitability and growth. The reality is that many businesses struggle not because they lack skill or dedication but because they fail to manage their numbers effectively.
Understanding the financial health of a business requires more than glancing at a checkbook balance or celebrating a surge in sales. In fact, these alone can be misleading. Understanding your company’s financial health demands a disciplined approach to tracking key performance indicators (KPIs) and using them to make informed decisions. The best companies in the industry that are consistently profitable and expanding operate with a clear, strategic understanding of their numbers.
At Certified Contractors Network (CCN), we emphasize the importance of financial literacy and strategic decision-making through our Managing by the Numbers program, designed to help contractors master the financial side of their business, giving them the tools and knowledge to scale profitably and sustainably.
Many contractors and business owners fall into the trap of relying on misleading metrics. They might celebrate gross revenue growth without examining their profit margins. Or they may be swayed by fluctuating cash balances without considering their actual financial position. Here are some of the most common numbers that mislead business owners:
■ Gross revenue: While important, it doesn’t tell the full story. Revenue without profit is just vanity.
■ Cash-based net income: This can fluctuate dramatically and doesn’t necessarily reflect profitability.
■ Current cash balance: A strong cash balance today doesn’t mean the business is financially healthy.
■ Recent sales trends: One good month does not define long-term success.
■ The “market” price: Basing prices solely on competitors’ rates will lead to financial instability.
■ Gross profit percentage: While useful, it doesn’t reveal whether fixed costs are covered.
Understanding these financial illusions is the first step toward making better business decisions. Instead of relying on incomplete or misleading data, business owners need a structured way to analyze their true financial performance.
Leading roofing companies don’t just track their numbers; they track the right numbers. By focusing on data that provides actionable insights, businesses can make strategic decisions that lead to sustainable growth. There are numerous metrics to track across the functional areas of your company. Here are just a
few examples.
One of the most critical KPIs for any sales-driven business is NSLI. This metric measures how effectively a company converts its leads into actual revenue.
Formula: NSLI = Net Sales / Leads Issued
By monitoring NSLI at both the company and individual sales representative levels, business owners can identify trends, spot weaknesses and optimize their sales processes. If a sales team is generating a lot of leads but not closing deals, it might indicate a problem with sales training, lead quality or pricing strategy.
Every dollar spent on marketing should be tracked for its return. Successful businesses measure the effectiveness of each campaign, whether it’s digital advertising, direct mail or referral programs. Understanding the cost per lead and the revenue generated from each marketing channel ensures that resources are being allocated efficiently.
Many contractors struggle with job costing, often underestimating labor and materials expenses. Consistently tracking actual job costs versus estimated costs helps refine pricing strategies and avoid margin erosion.
A profitable company doesn’t just sell well; it delivers efficiently. Metrics such as on-time completion rates, labor efficiency and rework percentages help ensure that projects are being completed profitably and without unnecessary waste.
While financial data is crucial, customer satisfaction is an equally vital indicator of long-term success. Tracking customer satisfaction metrics such as likely to recommend (LTR) or net promoter score (NPS), referral rates and repeat customer revenue provides insight into brand loyalty and service quality.
Numbers alone won’t drive a business forward: leadership will. The most successful companies understand that managing by the numbers isn’t about crunching figures in isolation. It’s about using data to make strategic decisions that align with long-term goals. Leaders who thrive in this environment embrace the following principles:
■ Intentional decision-making: Every business move should be backed by data, not gut feeling.
■ Continuous improvement: Monitoring metrics allows for real-time adjustments and long-term refinements.
■ Accountability: Data-driven performance reviews hold teams accountable and foster a culture of excellence.
■ Innovation and adaptation: Market conditions change, and the best leaders use numbers to anticipate and adjust.
For contractors who want to grow beyond just surviving year-to-year, a numbers-driven approach is essential. It’s not about working harder, it’s about working smarter. Companies that understand their financials, track their KPIs and continuously refine their operations are the ones that build sustainable, scalable businesses.
A key takeaway for business owners is that managing by the numbers does not require an accounting degree. It requires commitment to tracking the right data and using it to inform decisions.
For those who want to simplify this process, utilizing tools such as customizable KPI dashboards can provide real-time insights into marketing, sales, production and financial performance. These tools take the guesswork out of decision-making, allowing business owners to focus on growth rather than firefighting.
Accurate and robust financial statements are the foundation of sound decision-making. Business owners should use accrual basis accounting that complies with generally accepted accounting principles (GAAP). Unlike cash-based accounting, which only records transactions when money changes hands, accrual accounting provides a more comprehensive view of a company’s financial health by recognizing revenue and expenses when they are earned or incurred. GAAP-compliant financials ensure consistency, transparency and comparability, allowing business owners to make more informed strategic decisions. Without reliable financial statements, companies risk operating blindly, making decisions based on incomplete or misleading information that could lead to cash flow issues or long-term financial instability.
Managing by the numbers isn’t just a finance strategy – it’s a leadership philosophy. By understanding which numbers truly matter and using them to drive strategic decisions, business owners can position themselves for long-term success.
The difference between businesses that struggle and those that thrive isn’t just the quality of their work, it’s the quality of their decision-making. Numbers provide the roadmap but it’s up to the leader to follow it. This is why most business schools across the country are focused on teaching data-driven decision making.
By adopting a disciplined, data-driven approach to business management, contractors can achieve more predictable revenue, higher profitability and greater peace of mind. After all, success isn’t just about how much money comes in – it’s about making sure it stays in the business and works for the future.
The best contractors aren’t just great at their craft. They’re great at building businesses. And that starts with managing by the numbers.
Gary A. Cohen is Executive Vice President of Certified Contractors Network (CCN) and is responsible for the day-to-day operations of the company. CCN is the leading comprehensive training, coaching and networking membership organization in North America. Gary is also a 30-year veteran of the home improvement
industry, spent 11 years at the Robert H. Smith School of Business at the University of Maryland as a Professor of Business and served four years as Associate Dean of the business school. Gary has been a certified leadership coach for the past 18 years. His email address is gary@contractors.net.
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