Owning a contracting business has its ups and downs. And when the “downs” outnumber the “ups,” it can be a little frightening.
Keeping your cash flow steady and your employees busy is what makes a business successful, but when economic conditions, weather, or simply a slowdown in new business all hit at the same time, it can present a challenge.
But if you had an additional source of solid income for your business, one that would keep your contractors busy in the field while bringing in a new source of revenue, your bottom line (and you) could stop worrying.
We asked Steve Gilbert for advice, since it wasn’t that long ago that he was looking for a way to grow revenue in his family business, Gilbert Home Comfort (GHC), founded by his father in the 80s and specializing in plumbing and heating. While business wasn’t bad, Gilbert saw a need for specialized services in his area, and so it was an opportunity to differentiate their business from others doing the same thing. First GHC added HVAC. Eventually, Gilbert decided to add spray foam insulation.
In a recent interview, Gilbert said the company grew from a volume of $600,000 in sales per year to about $5 million, companywide, with approximately $400,000-$500,000 of that attributed specifically to spray foam insulation.
That’s where Ted Medford and Profoam came in. Profoam is the number one spray foam insulation and equipment supplier in America. Medford, Profoam’s owner and president, began as a spray foam contractor and became a successful spray foam equipment distribution company in addition to working for a spray foam manufacturer. With over 20 years of experience, he knows the ins and outs of every angle of the industry. Medford helped Gilbert figure out the right way to incorporate spray foam insulation into his already existing business, so that it would be a profitable endeavor.
Why spray foam, we asked Gilbert. Why not some other product or service?
Spray polyurethane foam (SPF) has become an amazingly multipurpose product that crosses over into a multitude of markets, from construction to oil and gas. Spray foam fills a multitude of functions, from insulation to commercial air barriers for new construction. It also has become a burgeoning business for industrial construction applications like insulating tanks and pipes as well as providing general sound barriers. Businesses and consumers alike now understand its cost-saving benefits and diverse uses. For Gilbert, it was the way SPF worked seamlessly with the already established HVAC part of his business. With his business focus on energy efficient products, SPF just made sense.
As has been noted in several entrepreneurial magazines as well as the mainstream media, the spray foam industry has been growing at a fast clip as it gains widespread acceptance across the country. Because of this, it is no surprise that more and more contractors, like Gilbert, are entering this newly created segment of the market to enhance their revenue.
According to SprayFoam.com, the make-or-break consideration when becoming a spray foam contractor is the required investment in time, energy and money that will be concentrated in several areas, including equipment, materials, training and marketing. The majority of the initial investment will be for the actual spray application equipment itself. The investment will vary based on the types of applications a contractor intends to do, and whether they opt for standard or top-of-the-line equipment.
Many people considering adding spray foam insulation to their repertoire of products are worried about the investment and whether or not it will pay off. Profoam provides not only equipment you can trust, but also support for its business partners. Medford and his team have a 95 percent or higher success rate in helping new SPF contractors enter into the business. Below is a sample Profit and Loss report that shows what a typical Profoam contractor might make in a single year, showing a typical net profit of $112,700 after expenses.
Considering spray foam insulation isn’t quite that easy, though, and there are still a few other factors to consider. Location certainly is one criteria to look at, but since spray foam keeps things warm in the winter and cool in the summer (in addition to the noise-reduction capabilities), virtually any location would benefit from SPF. In Iowa, Gilbert used location to his advantage. When other companies were limited by the weather, Gilbert worked with heaters and closed-cell spray foam insulation that allowed him to work in colder weather when other contractors couldn’t deliver.
Additionally, according to SprayFoam.com, there are a myriad of types of spray foam applications and specialties. That’s why when you are in the middle of making your plan, you might want to decide to specialize in a specific market and application, such as commercial roofing or residential insulation, provided it ties in with your current client base. You should consider not only the type of work you want to be engaged in, but also any other contractors who may already be doing that type of work in your area. Gilbert’s advice is to focus on strategically creating and expanding your business, but emphasizes the word “strategic.” He says new installers shouldn’t necessarily attempt every application to start. However, over time, specialty niche applications, like insulating rural agricultural buildings, barns or storage tanks, can generate a very steady income, especially if there is little or no competition.
Spray foam can be used across multiple industries and has many diverse applications, such as:
Concrete lifting and slab jacking
Refrigerated warehouses/cold storage Marine flotation (docks, ships, buoys, fishing boats, etc.)
Pipeline ditch foam for erosion control
Pipeline coating, sealant, and installation
Water and sewer pipe coating and insulation
Liquid storage tank insulation and containment
Protective coating and insulation for barns, silos, livestock pens, and kennels
Building and construction
geothermal energy systems
LEED certified building in architectural designs
Water containment for ponds, pools and water tanks across industries
Again, you want to make sure that whatever SPF applications you choose to provide fit in with your current client base. Again, as with any successful business, it all comes down to recognizing the specific needs of your service area. And perhaps the most important aspect of this is that once you decide on a market segment to go after, it will help you determine the type of equipment, training, and materials you will need to succeed. Things brings us back once again to Profoam.
Choosing the correct partner in any new business venture is vital, and the SPF contracting business is no exception. The learning curve to success can be long and hard without the right partner to guide you. As we mentioned earlier, Profoam specializes in helping companies successfully enter into the spray foam insulation business. Since the company was founded by industry professionals who understand needs of SPF contractors, they also understand the importance of a company that could offer ongoing professional training and support. Medford personally works with new SPF contractors to make sure they’re on the right track. He knows that systematic training and comprehensive understanding of SPF can be the biggest asset for a new contractor in helping them build a successful business.
For example, training offered by Profoam includes learning the technical aspects of the business such as foam processing, equipment operation, and maintenance or troubleshooting of the equipment. It also includes opportunities for SPFA PCP Certification, and non-technical areas such as labor management, how to accurately bid projects, closing the sale, invoicing and lead generation through marketing.
Speaking of marketing, one of the most critical facets of running a successful spray foam operation is knowing how to market it. You can have the best product, the best prices, and the best employees, but if no one knows about it, it’s not doing anything to generate new business. Profoam realized the importance of marketing a long time ago and developed an ongoing program for its partners as part of their training, including graphic and marketing professionals services at no extra charge as part of the company’s plan to help its new SPF contractors. Contractors entering the SPF business also learn about the importance of an online presence, networking, using social media as well as print and other legacy forms of advertising. Again, Gilbert can attest to this point. Without marketing his company, and its focus on energy efficient products, he would never have built his company from $600,000 to $5 million in sales per year. So whether you’re an experienced business professional or new to entrepreneurship, Profoam can help guide you in creating a marketing plan that leads to success.
When all is said and done, Profoam will help you gain a complete knowledge of the business, not just from one or two days in a classroom, but from Profoam’s custom-designed, continuous training curriculum.
And Profoam’s management learns from their partners as well, many times hearing of new and unique ways that SPF can be used in a previously unknown segment of the industry. Ted Medford and his team of professionals continue to improve and grow as the industry changes, too, passing on cutting-edge industry tips to the rest of the Profoam network.
With a business platform like that, the ups and downs of your current contracting business will be a lot more up than down.
If you are interested in exploring the benefits of expanding your current business into SPF, you can visit Profoam’s website at www.profoam.com or download Ted Medford’s free “5 Step Guide to getting started in the spray foam industry” here.