The Midyear Roofing Business Review: Seven Numbers Every Contractor Should Check

A midyear review helps roofing contractors identify margin leaks and operational problems while there is still time to act.

The halfway point of the year is one of the most valuable times to stop and look honestly at your roofing business.

By July, you have enough completed and active work to see patterns. You can compare your original plan with what is actually happening. You also still have enough year left to correct problems before they become year-end explanations.

Too many contractors judge performance by one number: revenue.

Revenue matters, but it does not tell you whether the work was priced correctly, labor performed as estimated, cash is being collected, or the company is carrying enough profitable backlog to finish the year strong.

A company can be very busy and still be moving backward.

A useful midyear review should focus on the numbers that tell you where the business is healthy, where profit is leaking and where management needs to act.

Here are seven numbers every roofing contractor should review.

1. Gross Profit Margin by Type of Work

Do not begin with total company gross profit alone.

Break the number down by the type of work you perform.

Commercial reroofing, residential replacement, new construction, coatings, repairs and maintenance do not carry the same cost structure or risk. Combining everything into one company-wide percentage can hide weak performance inside a stronger department.

Compare estimated gross profit with actual gross profit on completed jobs. Then look for patterns.

Are certain systems consistently missing estimated labor?

Are material overruns concentrated in one type of work?

Is your service department producing higher margins but not receiving enough attention?

The goal is to understand which work is producing the return you expected and which work is not.

2. Backlog—and the Quality of That Backlog

Contractors often talk proudly about the size of their backlog.

The larger question is whether that backlog is profitable, executable and collectible.

Review the total value of signed work, the estimated gross profit contained in it, expected start dates and the labor required to complete it. A large backlog does not help if the work was sold at weak margins, cannot be staffed or is delayed by permitting, materials or customer readiness.

Separate backlog into realistic categories.

Work expected to begin within 30 days should not be treated the same as a project that may not release for six months. Jobs with unresolved contracts, missing deposits or uncertain schedules should not carry the same weight as fully executable work.

Backlog should provide visibility.

It should not create false confidence.

3. Labor Performance Against Estimate

Labor remains one of the largest variables in roofing.

You need to know whether estimated hours and actual hours are moving together.

Review labor performance by project, system, crew and estimator. Do not stop at total payroll dollars. Wage increases, overtime and labor burden can change the dollar result even when hours appear close.

Compare estimated labor hours with actual labor hours, followed by total labor cost.

When jobs miss the estimate, determine why.

Was production lower than expected?

Was access more difficult than allowed?

Was the crew properly sized and supervised?

Did material placement create unnecessary movement?

Was rework involved?

A labor overrun is operational information. Reviewed correctly, it should improve the next estimate and the next project plan.

4. Work in Progress and Estimated Cost to Complete

Active jobs can make a profit-and-loss statement look better than reality when percent complete and remaining costs are not accurate.

Every significant project should have a realistic estimated cost to complete.

Project managers must review labor remaining, material still needed, equipment, subcontractors, change orders, closeout costs and known risks. Assuming the original estimate remains correct is not enough.

Pay close attention to jobs that are nearly complete but still carrying unusually high projected profit.

The final portion of a project can become expensive when punch-list work, callbacks, demobilization, documentation and unresolved changes are not managed.

An accurate work-in-progress review allows you to recognize problems while there is still time to manage them.

5. Accounts Receivable and Cash Position

Profit on paper does not pay payroll.

Review total accounts receivable, the age of those receivables and the customers responsible for the largest balances. Pay close attention to money outstanding beyond normal collection terms.

Then compare cash on hand with the obligations coming due over the next several weeks.

You should understand the timing of payroll, supplier payments, subcontractor invoices, taxes, insurance, equipment costs and debt service. Growth often consumes cash before it produces cash, especially when labor and materials must be funded before payment arrives.

Midyear is also a good time to review billing discipline.

Are project managers submitting information quickly?

Are change orders being billed?

Are closeout documents delaying final payment?

Are invoices going out according to the contract?

Collection problems often begin as process problems.

6. Overhead and the Current Break-Even Point

The break-even point you calculated in January may no longer be accurate.

Payroll changes.

Insurance renews.

Vehicles are added.

Software subscriptions accumulate.

Rent, fuel, professional services and financing costs move throughout the year.

Update your actual annual overhead projection and calculate what the company must produce each month to cover it.

Then compare that requirement with actual gross profit production, not just revenue.

This is where some contractors discover that sales have grown while the company’s financial position has not. Added management, equipment and technology may be necessary, but those investments must be supported by enough gross profit.

Knowing your current break-even point helps you price work, set production goals and make better hiring decisions.

7. Bid Volume, Close Rate and Sales Mix

The final number is not simply how much work was sold.

Review how much was bid, how much was won, the gross profit carried in those wins and the types of customers and projects entering the company.

A very high close rate can be a warning sign if pricing is too aggressive. A very low close rate may point to poor qualification, weak proposals, incorrect market positioning or an estimating team pursuing the wrong opportunities.

Also examine your sales mix.

Are you overly dependent on one customer, market segment or project type?

Is service work feeding replacement opportunities?

Are negotiated and repeat-client projects increasing?

Is your pipeline strong enough to support the backlog you will need three to six months from now?

Sales activity should create profitable, operationally compatible work—not simply more work.

Turn the Review Into Action

The value of a midyear business review is not the meeting itself.

The value comes from deciding what must change, assigning responsibility and following through.

Identify the three most important findings.

Establish the corrective action for each one.

Assign an owner.

Set a completion date.

Then review progress weekly until the issue is under control.

Roofing companies rarely lose profit because management lacks data.

They lose profit because the numbers are reviewed too late, discussed without clear ownership or never translated into operational action.

July gives you time to change the direction of the year.

Use it.

Cotney Consulting Group works with roofing contractors to strengthen financial visibility, operational structure, forecasting and management accountability. When growth requires more structure—not simply more effort—the right review can show you where to begin.