SummitPentagon Premier Roofing Business Plan — Break-Even
The revenue and job volume needed to cover overhead at each crew count, and when the business crosses its own break-even.
Break-Even
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- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. Why Most Roofing Companies Fail to Make Money
- 3. Insurance Is the Defining Cost
- 4. The Economics of One Roof
- 5. SWOT and Competitive Position
- 6. Customer Acquisition
- 7. Service Mix and the Commercial Question
- 8. Crews, Subcontractors and the Certificate Trap
- 9. Funding: SBA and What Beats It
- 10. Working Capital
- 11. The Five-Year Build and Its Gates
- 12. Licensing, Bonding and Compliance
- 13. People and Production
- 14. Financial Projections
- 15. Break-Even
- 16. Sensitivity and Scenarios
- 17. Risk Management
- 18. Implementation Timeline
- 19. Returns
- 20. Key Performance Indicators
- 21. Key Assumptions
- 22. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
|
Measure |
Value |
Basis |
|---|---|---|
|
Gross margin, Year 5 |
35.4% |
After materials and crew labor |
|
Variable overhead |
(9.1% of revenue) |
Sales commission and workers’ compensation, which scale with jobs and payroll |
|
Contribution margin |
26.3% |
What each additional dollar of revenue leaves behind |
|
Fixed cost base, Year 5 |
$1,159k |
Marketing, owner, administration, vehicles, yard, technology, licensing and non-comp insurance |
|
Break-even revenue |
$4.41m |
Fixed cost divided by the contribution margin |
|
As a share of Year 5 revenue |
68.6% |
|
|
Margin of safety |
31.4% |
|
|
Interest, Year 5 |
$88k |
Across nine facilities |
|
Break-even revenue including finance cost |
$4.74m |
The operative measure |
|
As a share of Year 5 revenue |
73.8% |
|
|
Margin of safety including finance cost |
26.2% |
|
|
Equivalent replacement jobs |
272 job-equivalents |
At the Year 5 average ticket |
|
Value of one percentage point of gross margin |
$64k |
At Year 5 revenue |
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Revenue, $’000 |
535 |
1,625 |
2,960 |
4,538 |
6,424 |
|
Contribution margin |
21.7% |
22.8% |
24.2% |
25.3% |
26.3% |
|
Fixed cost base, $’000 |
227 |
433 |
676 |
913 |
1,159 |
|
Break-even revenue, $’000 |
1,046 |
1,899 |
2,793 |
3,609 |
4,407 |
|
Position against break-even |
Below |
Below |
Above |
Above |
Above |
A margin of safety of 26.2 per cent means revenue could fall by roughly a quarter before the overhead base is exposed. That is a reasonable buffer at maturity and it does not exist in Years 1 and 2, when the business is below break-even by design and funded to be there. It is also worth reading against the seasonality in Section 10.1: a trade whose revenue swings 40 to 60 per cent between peak and off-season months will be below break-even for part of every year regardless of how the annual figure looks.