Getting Started in the Seamless Gutter Business

Starting a new business isn’t hard—thousands upon thousands of people do it every year.  Every one of these new companies expects success.  Their owners certainly wouldn’t start with the intention of failing.  However, the Small Business Administration says that two years after startup, one-third of all new businesses are out of business.  At the five-year mark 56% of them are gone.

So, starting isn’t hard—succeeding is what is hard.  Before you start a business you need to decide that you are going to be part of that 44%, learn why and how they succeed, and take the necessary steps to be sure that your success happens.

A major reason many new businesses fail is unrealistic expectations about what the business will produce.  Their owners dream that they will “make a ton of money,” work fewer hours per week, and have to answer to no one (besides their customers).

The important point is that thousands of people have started their own successful small businesses, enjoyed a comfortable lifestyle, supported their families, and given good jobs to the people who worked for them.  But, as the anvil salesman in The Music Man said, “You gotta know the territory.”

Do you know your territory and market?  You must know how to make and install quality seamless gutters.  You must know how to estimate and price your product in a competitive market.  You must be able to hire and supervise other people who will work for you.  You must be able to market your company and sell contractors or homeowners on buying your services.  You must be able to manage a business.

These are all things you can learn, if you are willing to work at it.  Often regional junior colleges offer courses specifically aimed at people who want to learn how to start and run their own business.

The seamless gutter industry is not a new technology just being introduced into the housing market.  It is a mature product with a mature market.  In virtually every region there are already people doing this kind of work.

How are you going to find a place for your company in the market?  How are you going to differentiate your company?  Lower prices (and lower profits), better quality, some specialized market niche?  What?  And how?

A common route is to acquire the necessary equipment and tools and set yourself up in business on a small scale.  A good way to start is to sit down, think about what you want to do, and develop a business plan.  This will force you to think about various business issues and make some very specific decisions instead of just having vague ideas in your head. These include:

·        What is your business concept? What is the market you are going to try to serve? How will you structure your business? What is your strategy for success?  Who will do the marketing and the scheduling?  Who will do the work?  Will you work alone, or hire employees to assist with the work?  Who will pay the bills, keep the books, write the checks, and file the tax reports?  Who will handle these chores if you get sick or injured?

·        What is the current marketplace, how big is it?  Who are the customers and your competition?  How much of the market do you think you can win?  How will you do it?

·        How much money will it take?  What equipment do you have to buy (trucks, trailers, gutter machine, other machines, hand tools, handling equipment, office equipment, supplies, gutter coil, other inventory, etc.)?    How rapidly can you capture jobs and start earning income?  How rapidly can you grow your customer base and income? How will you pay yourself—and your employees—during the startup period?  Are your assumptions realistic?

Who do you see as your customers?  General contractors?  Roofing contractors?  Homeowners?  How are you going to make them aware of your company and get their business? How will you publicize your company?  Advertising, flyers, signs, radio, TV, direct contact selling? 

Realistically, it will take a while to capture business for your new company.   You must have the capital available to cover expenses (including your payroll and your own living expenses) during this ramp-up period.  If the housing industry is currently on the rise, and existing gutter production capacity in your area is unable to meet the growing demand, you may rapidly capture business and achieve a good cash flow.  What happens if the housing market slows down? How will it affect you?  You might want to ask your financial adviser to perform a sensitivity analysis to forecast how a downturn in the building market might affect your business income and your ability to pay the monthly bills.

You will need the help of a lawyer to determine the business structure (sole proprietorship, partnership, or corporation) and handle the legal issues of setting up the business. An accountant or tax adviser will be needed to help you make decisions regarding accounting procedures and the federal, state, and local tax issues.  What about Workmen’s Compensation and general business insurance?  What about licenses?

And then there is a finance company to obtain the loans required to support your purchase of equipment and your business operations during the startup period and beyond.  And, if you are married, you will undoubtedly need the strong support of your spouse.

Starting a business is a complex process, but thousands of other entrepreneurs have done it and are part of the 44% living a comfortable life running their own businesses and making their contribution to the economy of these United States.  Before you jump in, do your homework—but come on in, the water’s fine.