How to Scale a Services Business Like a Tech Company | Sam Allsopp Interview

A roofer's path from zero to $50m without acquisitions

Neal Roofing and Waterproofing went from zero to roughly $50m in revenue in six years without buying a single competitor, profitable every year. Sam Allsopp and Andrew Neal split the work from the start, Allsopp generating demand and selling jobs while Neal built them, so the company was a marketing and sales operation that happened to install roofs. Its constraint kept moving as revenue grew, and each stage broke something that had worked before.

Takeaways

• Roofing is run as a sales system. Sam Allsopp describes Neal Roofing as a customer acquisition and sales system that happens to install high-quality roofs. It buys market share through marketing and sales spending, then protects that spending with fulfillment quality and reputation.
• Marketing averages 7% of revenue. That rises to about 12% in months when the company pushes to fill backlog. The right percentage depends on the company's territory and vertical, and on how fast it wants to grow.
• Lead costs have multiplied. Facebook leads that cost about $20 when Neal Roofing started now run around $120, as private-equity-backed roofers and revived competitors run growth playbooks. The company advertises on PPC, LSA, Facebook and every major lead aggregator.
• Speed to lead wins the job. Neal Roofing calls or texts a new lead within a minute. On marketplaces where homeowners request three quotes, the first three companies to reach them get to sell, while those calling days later are ignored.
• Job costing exposed underpriced salespeople. Three salespeople were selling at half the price and barely profitably, which Sam says could have seriously hurt the business. Compensation is now tied to profitability and the outside team uses a one-call-close model, with hard cancellations around 10%.
• Greenfielding beats buying competitors. Neal Roofing walked away from a letter of intent for a northern roofing company and greenfielded into that market instead. Sam would not buy a business with $3m to $4m of EBITDA when he can build one quickly.

The scaling stages

1. Up to $6m the work was making demand reliable and the sale repeatable, with two or three lead sources and a sales team of one or two people.
2. $6m to $14m professionalized sales with a meeting cadence and KPIs on when to give a rep more leads or replace them, and added CSRs to book appointments plus lead aggregators.
3. $14m to $25m added management layers so Sam could leave day-to-day work, including a sales manager and a manager over the CSR appointment-setting team.
4. $25m to $36m made production the constraint, so business services was built out for permitting, customer service, receivables and payables, with field supervisors reporting to project managers.