Why Water Restoration is a good Business

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Restoration Companies help Consumers and Business owners

Homeowners and Business owners typically call a water restoration business on one of their worst days.  They are usually completely stressed out by what has happened. A water damage restoration company can help calm the clients down and provides options for the next steps.

The people are affected by a tragedy that is very disruptive to their life.  Yet, the restoration process begins immediately and in many cases is completed within a few days.  

Having a professional restoration service respond quickly, and guide a family.  Benefits that family or business to a high degree.  

So as a business model, this is a very helpful and necessary business.  

What do water restoration companies do?

A restoration company must restore the damage and preserve and safeguard the property and its contents so that additional harm does not occur. They are also responsible to mitigate the situation so that nobody else is harmed in the process.

Restoration firms are the first responders when a home is damaged by floods, fires, water damage, sewage backups, and other major calamities.

Mitigation vs Restoration

Mitigation is the act of minimizing the damage after a disaster, while the restoration is returning to pre-disaster condition.

A water damage restoration business is almost always both a mitigation and restoration company.  

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Full Project

The full project entails an inspection to ensure that water is not leaking from within the walls; This process warrants a careful assessment of what will be done at the exterior of the property. The need for this service should not be underestimated by anyone who has dealt with serious damage due to flooding, fire, smoke, and water damage.

Water Damage restoration is a good business. It helps consumers who have an incredible need and it is a profitable business as well.

That means that they will first mitigate the damage.  Firstly, by evaluating the situation and identifying and potential hazards.  Then addressing any potential dangers, stabilize the situation.  This can be something like turning off water on the property.  And extracting the bulk standing water.

Then the company will remove damaged materials such as furniture and carpet.  If it's damaged they will start removing drywall, and insulation.  The goal is to get to the structural materials.  

The water restoration business then brings in drying equipment. Such as air movers, air scrubbers, and commercial dehumidifiers.  

After the structure is dried out with the water damage drying equipment.  The restoration business will use moisture meters to document the full drying process.

Then the restoration services begin.  This is the part where the restoration business will return the property to pre-loss condition.  This includes applying antimicrobials to prevent mold.  And reconstructing all the affected areas of the property.  

How much is the restoration industry worth

The water Restoration industry is worth Approximately 210 Billion.  And as the climate changes and there are more aging homes, it is projected to grow.  Over the last 5 years, the industry has grown at a rate of 1.8% annually (compared with manufacturing growing only .6%).  

This means that there will continue to be water damage restoration business in the foreseeable future.  

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Is Water Restoration hard?

Water restoration is a challenging business. Since there are many difficult parts to operating a successful water damage restoration company.  You will need to employ skilled and certified employees.  You will need to invest in quality equipment.  And the nature of the job is physically demanding.  All of this while empathizing with customers who are having one of their worst days ever.  

How do restoration companies make money?

Restoration Companies earn money by billing for their services.  

Direct bill

The most common method of earning money is by billing directly to the person or company that incurred a loss.   The cost of the service will depend on the scope of work that is needed. The firm generally has a different rate for each task they perform.  And, often there are additional costs associated with travel time and equipment use.

The problem with this method is that it can be very expensive considering how much work needs to be done after a disaster strikes.  And they are often expensive to use if the loss is small.  

Billing Insurance

The other main method a restoration business uses to earn revenue is by billing insurance.  Nearly every homeowner or business owner will own insurance.  You will need to contact the insurance company to be certain of their coverage and its limitations.  A good resource is the insurance agents that sold the policy.  

The coverage should cover the need for providing restoration services.  

Third-Party Administrators

Another revenue source for revenue is through Third Party Administrators.   These are companies contracted by insurance carriers to provide restoration services.

They will take the homeowner's payment and withhold an amount for their work. Then they pay the rest directly to the contractor.  This is not always a guaranteed source of income. And you'll need adequate documentation to be sure that your company gets paid in full.

And the main downside is, they earn revenue by billing the carrier or homeowner and keeping a certain percentage for themselves.  

Is it hard to start a water restoration business?

Generally, it's not easy to start any business.  A water restoration business is more challenging than many.  In addition to the normal challenges involved with starting a business. Water restoration takes skill, equipment, and soft skills.  Helping homeowners or business owners deal with a disaster is both challenging and rewarding.

Individuals generally need to lease space and buy equipment. It may be unrealistic for an individual to perform all aspects of the job themselves. So it's necessary to hire staff. This means you must create policies and procedures. Then, you'll need to hire employees who can do the work safely and efficiently.

There is also the need to adequately market your damage restoration business, and perform sales activities.  And don't forget the Accounting, equipment maintenance, and the physical nature of the jobs themselves.  

All of these factors together make this a challenging industry to start a new business.

Who is the largest restoration company?

Belfor property restoration is the largest restoration company.  With over 11,000 Employees operating in offices spread out globally.  Perhaps the best-known restoration companies are ServiceMaster Restore and ServePro.  

How much money does restoration make?

The majority of restoration businesses earn between One Million and Five Million Annually.  For many small mitigation and restoration projects, the price lands at around $2700.  But keep in mind this is with high margins.  

Larger Restoration projects can scale quickly in price.  A large amount of damage can warrant significant remediation, and restoration with reconstruction services.  There is no cap on these situations but most water damage restoration companies can expect to see a few per month.  The range for these larger projects is approximate $10,000 - $60,000.  

Despite how much money restoration makes, it's probably a good idea to have some savings on the side. A career in this industry can be exciting and rewarding.  But it is not always stable or lucrative.

This image taken from  Restoration and Remediation Magazine shows the self-reported revenue breakdown.  We can see that the share of business at the top end is decreased.  And that there is a larger share of businesses at the bottom and middle.  

This indicates that larger companies are losing share, and smaller companies are gaining traction.  As the years go by there are more small restoration companies opening up and competing with larger ones.  

It's also not surprising. As consumers have prioritized quality and customer service it's natural for them to choose local providers over large national chains. And the smaller companies do not have the overhead that larger players usually do.

How do restoration companies work with insurance

A water restoration company works with insurance carriers by remediating moisture damage and returning the property to pre-flood status. In turn, the restorer will be seeking reimbursement for their services.  

Often it is an insurance agent themselves that will refer work to the restoration service industries. So a small business needs to make a connection with insurance agents.  

How to Start a restoration business

So you decided to get into the water damage restoration industry.  Congratulations on this big step.    It can be difficult to get into the industry, but it is of course possible.  Here are a few steps to take towards starting your own business of disaster restoration.

Is it a good fit for you

The first thing we recommend is to be sure that this business is a good fit compared with other businesses.    The restoration industry is very competitive.  

Consider your motivations for having your own business.  If you desire to help consumers in their time of need; this could be a good fit.  And if you feel comfortable with natural disasters, job sites, and all the typical business challenges.  

Then the next step is to get a certification.

Get certifications

A great way to test the viability of this kind of company vs other business ideas you have is to get a restoration certification.  We recommend starting with a WRT /  ASD certification.  This is a Water restoration technician / Applied Structural Drying certification.  This class can seem expensive but should be a really good way to determine if this is for you.  And if you start this business you will need to gain certification anyway.  

Some training facilities have a "Flood House."  Which is a real property that you will flood.  And then throughout the class remediate the water-damaged materials. This will give you valuable hands-on experience.

Make a Business Plan

You should make a business plan.  This doesn't need to be a complicated document. But it is important to think through all the steps you need to take.  And it will provide a foundation as your business grows.

The Small Business Administration has a cool -- free tool to help you make a business plan.  

Writing a good business plan can even help you receive funding.

Make a Marketing Plan

Your Marketing Plan.  This is an area we are experts in.  Generally speaking, your marketing plan should address who you want to work with, what you will say to them, and where you will reach them.  

If you would like help making a Marketing Plan - we have a course on how to do this.

Buy the right gear

Buying the right equipment is a contentious subject.  Major brands are vying for your investment.  And startups and knock-offs are coming from China.  We will discuss some of the major categories, but this is by no means in-depth.  

Air mover - a glorified fan.  Okay, maybe not that simple.  It is important to have sufficient airflow to dry out materials. And this can be a great time saver if you are working on larger properties.  Air movers form part of the backbone of your drying equipment.

There are axial fans and centrifugal fans.  They both have advantages and disadvantages.  You will likely want to invest in some of each, to have flexibility.  It's important to have enough air circulation on the job site.  

Water Removal Vacuum - probably the most widely used tool in restoration work. Many companies are making them, we recommend finding a name brand with your local distributor.  

Air scrubber -  This is a tool that filters the air.  It will remove mold spores and other pollutants.  This is a very versatile and important tool to have.  

Dehumidifier -  This is another key piece of equipment.  For a long time, there were only conventional dehumidifiers.  They were not able to extract as much water vapor as necessary to dry structural materials.  Recently Low grain refrigerant dehumidifiers have become available.  They will speed up the drying process.

Get going

The final step in our list is to get going.  It's no easy task to get started.  Like it's no easy task to carry upstairs heavy drying equipment.  But the key is to get started.  Don't get stuck in "analysis paralysis".  Just take some proven strategies and get going.  

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