A strong sales year cannot fix an ownership deadlock
Kato Roofing closed after it could not get required bonding signatures, even as sales and bookings were strong. The lesson for owners is clear: key approvals and backup plans need to be set before a dispute puts jobs at risk.
A full sales pipeline can make a service business look safe. But booked work does not matter if the company cannot approve, fund, or complete it. One roofing contractor’s sudden closure shows how an ownership dispute can block the work that keeps a company alive.
Kato Roofing stopped operating on Sept. 15 after nearly 50 years in commercial roofing, according to Roofing Contractor. Majority owner Tori Hagen said efforts to find new owners, add partners, and save current projects did not work.
Hagen said disagreements among the owners helped cause the closure. The company could not get required signatures for bonding in July. That problem cost it several projects, including its three largest awards of the year.
Those lost projects were not small. Hagen said their value equaled 100% of the company’s sales from the prior year. Losing that much awarded work can quickly change payroll, cash flow, and plans for crews and equipment.
Sales did not solve the approval problem
The closure did not follow a weak start to the year. Hagen said CEO Danny Shaw had led the company to its strongest first half of sales. Bookings were on pace to rise 300% from the prior year, according to Roofing Contractor.
Those numbers make the main lesson easy to miss. Sales and bookings are only part of business health. An owner also needs working rules for signatures, bonding, banking, contracts, and major spending.
When more than one person owns a company, each key approval can become a point of risk. A dispute can slow a decision. If a bond, loan, or contract has a hard deadline, a delay can turn into lost work before the owners settle the issue.
Kato Roofing tried other paths. Hagen said the company sought new ownership and partners while trying to preserve projects. Those efforts failed, and she said continued operations were “no longer financially viable,” according to Roofing Contractor.
Owners should map who can stop a job
This case comes from commercial roofing, where bonding can be required. But the wider lesson applies to plumbing, HVAC, cleaning, lawn care, and other service firms. Every company has approvals that one person can delay or deny.
Those approvals may include a bank draw, a vehicle loan, a large material order, a lease, or a customer contract. An owner should know who must sign each item and what happens if that person is not available. The answer should not wait until a deadline is close.
A healthy backlog can also hide how much work depends on a few awards. Kato Roofing’s three largest awards equaled a full prior year of sales, Hagen said. Owners can review their pipeline by customer and job size, not just by the total dollar amount.
That review should separate a lead, a signed job, an awarded project, and work that can actually start. Each stage carries a different level of risk. A job that still needs a bond or another owner’s signature should not be treated like cash in the bank.
What to do this week
An owner does not need to predict every dispute. The goal is to find the approvals and large jobs that could cause the most harm if they stall. A short review with the other owners and trusted advisers can expose those weak points.
- List every step that needs more than one owner’s signature. Include bonds, loans, leases, large purchases, and major contracts.
- Ask the company’s lawyer, banker, and bonding contact what happens if an owner cannot or will not sign. Review the current ownership agreement with them.
- Sort booked work by customer, job size, and approvals still needed. Mark any group of jobs that would leave a large hole if lost.
- Write a simple backup plan for payroll, crews, customers, and open jobs if a key approval is delayed. Give each task to a named person.