Did you know that 80% of roofing companies close their doors after the first two years of operation?
Not only that but 96% of roofing companies fail within the first five years of business according to the Small Business Administration.
Why?
One major factor behind this is the prevalence of 1099 salespeople—independent contractors rather than W-2 or salaried employees. While this practice benefits roofing businesses in several ways, it also brings significant risks that affect homeowners and the industry at large. Creating a lot of distrust between homeowners and roofing companies.
Not only that, but commission-only sales positions may encourage unethical practices that a person might not do if they were guaranteed finances to take care of their families. Sadly, we see the negative impact this has on homeowners, which is why all of our Project Managers at Linta Roofing are salaried staff members. But why is this such a pervasive issue in the roofing industry?
Why Do Roofing Companies Hire 1099 Salespeople?
Many roofing companies hire independent contractors (1099 salespeople) to reduce costs and liability. Unlike full-time employees, these contractors do not receive benefits like health insurance, and the company is less accountable if things go wrong. If a salesperson behaves unethically or makes mistakes, the company can avoid much of the legal responsibility. This is because they are independent contractors and not employees. This setup reduces overhead for roofing businesses, especially in an industry known for its seasonal ups and downs.
Additionally, by offering commission-based pay instead of salaries, companies can afford to hire more salespeople. They can do this because if a sales representative is commission only, they don't pay anything until a job is sold. This approach provides the business flexibility in scaling operations but often leads to other, more serious problems. One of these problems can be a numbers focused mindset on part of the salesperson.
The Numbers Game: A 1099 Roofing Salesman Mindset
Roofing companies using 1099 salespeople can promote a numbers focused approach to sales. Since there’s often little upfront investment in training, some businesses hire a large number of salespeople, hoping a few will succeed. For example, if only 5 out of 30 salespeople perform well, the company still profits.
However, this strategy leads to unqualified individuals representing the company, which can be harmful to homeowners. These contractors are often under pressure to generate as many leads as possible, even if it means pushing homeowners toward unnecessary actions—like filing insurance claims for damage that doesn’t qualify. This flood of false claims damages trust in the roofing industry as a whole.
Ethical Dilemmas in the Roofing Industry with 1099 Salespeople
When salespeople work entirely on commission, the pressure to close deals can lead to unethical behavior. In some extreme cases, 1099 salespeople have been known to create fake damage on roofs to trigger insurance claims. This practice, known as manufacturing damage, has become a serious issue within the industry. Contractors are incentivized to prioritize their paycheck over honesty, putting homeowners in vulnerable positions.
Roofing companies often ignore these dishonest practices because they can distance themselves legally from their contractors. While such behavior damages the company’s reputation, it is typically the individual salespeople who bear the legal consequences.
Lack of Training and Accountability in 1099 Roofing Sales
Another significant issue with the 1099 model is the lack of proper training. Since companies typically don’t invest much in these contractors, salespeople are often left to learn on their own. As a result, many inexperienced salespeople go out into the field without the knowledge necessary to give proper advice. Homeowners end up interacting with salespeople more focused on closing the deal than providing honest guidance.
The top performers within these companies may receive some training, but salespeople can be seen as disposable—part of the numbers game. Unfortunately, this dynamic creates a situation where homeowners may receive poor advice from individuals who aren’t trained to handle complex roofing issues.
This structure incentivizes aggressive business growth and pushes the numbers game even further. Homeowners might unknowingly be participating in a system that drives up their costs. When unnecessary insurance claims are filed it raises insurance premiums for everyone. Meaning that innocent people are negatively impacted by these deceptive practices – and don’t know it.
Why Hiring a Salaried Roofing Contractor Makes a Difference
Seeing the cutthroat nature of success in the roofing industry as told by the Small Business Administration, it’s no wonder that companies place a lot of pressure on their sales people to push for the almighty dollar. Which inevitably leaves the homeowner with a less than satisfactory final product and less money in their pocket.
The widespread use of 1099 salespeople in the roofing industry contributes to the reputation problem that contractors face. The lack of training, ethical pressures, and numbers-driven hiring practices hurt both homeowners and the roofing industry as a whole.
At Linta Roofing, we take a different approach. Rather than relying on 1099 contractors, we hire our salespeople as W-2 employees. Because our employees are salaried, they have no reason to pressure homeowners into unnecessary insurance claims or quick sales. And no matter who you choose, this is a great way to mitigate unnecessary damage to your home.
By looking for a roofing company who invests in their employees, you can better ensure that they are well-equipped to provide you with honest advice and peace of mind.
