How To Start A Restoration Business

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How To Start A Restoration Business: Easy Way To $10K?

How To Start A Restoration Company: What Do You Need To Know?

Over 200 severe weather and climate events have been recorded in the U.S. over the past 36-years. These events have resulted in a boom industry of restoration, with a cost of over 1 billion.

Each region in the country is subject to different types of damage. The southeast experiences more tropical cyclones than the rest of the country, and winter storms are the most severe in the Gulf Coast states and the east coast.

Flooding can be a serious threat to most states, including Texas and the lower Mississippi Valley. California and California are the hardest hit in the west. Extreme storms can be seen in the south central states.

Due to the increasing severity of natural catastrophes, starting a restoration firm can prove lucrative. However, planning is crucial for any new venture.

This guide will help you decide if this is the right business for you.

And at the end, you’ll find answers to some of the most frequently asked questions on how to start a restoration business…

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Table of Contents

Things To Consider To Get Started Restoration Company

Before hiring employees or purchasing any tools and equipment, there are some things to be aware of.

To Franchise Or Start From Scratch?

There are two choices when it comes to starting a business in water restoration. The company can either start from scratch or purchase a franchise. Each approach has its advantages and disadvantages. The individual circumstances surrounding an aspiring entrepreneur will determine which option is the best. Both approaches, however, should be well researched before settling on one.

While buying a franchise can speed up the start-up of the business, it will likely require more upfront capital. A franchise usually requires some training, and sometimes even work for another franchise before the business can be launched.

On the other hand, running a restoration business independently will require more knowledge as there will be no one else to provide assistance as in the case of a franchise.

Researching and seeking out the help of a mentor or partner is one way to figure out how things should be running and working.

One perk of starting a business from scratch is that it allows the owner to be creative on how the business can stand out in the competition.

Is There A Need For Restoration Services In Your Area?

Customers are the backbone of any restoration business, home-based or franchise. Assess if the local area or region needs restoration services including the type of restoration work.

Research into the history of natural and severe storms in the area or region over the past several years. Look into the existing restoration companies. It is important to determine if those companies are very busy, or if their business is slow.

Do You Have The Appropriate Training And Certifications?

Before opening, it is important to check that all the necessary certifications are in place for the type and amount of work involved.

It can feel slow to get started in the restoration business. There are two specific skills needed for handling this type of business: analyzing and remediating damages. There are safety guidelines to follow, for instance, when dealing with mold.

Start planning early on by finding out when the necessary certification courses in your region start.

Moving Forward And Project Considerations

Restoration is primarily based on projects just like any other business in the construction industry. Before beginning building the business, one should decide on what types of projects to do. All types of work require different skills, equipment and tools.

For the first-timers in this industry, start by focusing on a single area, like fire restoration for example. Then, add services from there.

Location

The geographic location of the business is a big factor in the services being offered. For example, there may not be enough work available in the northeast area, but there could potentially be more mold remediation work in the southeast because of the warmer weather.

A coastal area could have water restoration from flooding as the primary focus of the startup. It could be easier to market the services to a niche audience if the business is focused only on restoration.

Permit, Licensing And Insurance Considerations

The construction and restoration industry requires permits and licensing. Start by getting a business permit to set up the company name as well as the preferred type of business. It is possible that a contractor’s license is necessary depending on what the state or area requires.

Many states mandate contractors to be licensed when performing work above a certain amount. The range can be anywhere from $1,000 to $4,000.

Information about the qualifications is available at the office of the local county clerk. Each state has its own licensing requirements. For a nominal fee, the clerk will provide a form to fill out and submit.

A construction permit, also known as a “building permit”, may also be required depending on the local regulations and the type of work involved. Becoming familiar with the filing process would be easy as each permit is issued per project.

Besides the permits, getting the right insurance policy is as important. The state sets the amount and type of insurance depending on what kind of restoration business is involved. Insurance must cover the equipment from theft, the company against lawsuits, and workers against injuries. Make sure, above all, to choose a reliable insurance company.

Employee Hiring Considerations

It would be difficult to manage a restoration company with no employees. Managing all aspects of marketing, estimation, remediation, reconstruction and repair alone is simply impossible. Therefore, it is important to first determine the type of job and then hire the right people.

It’s going to benefit the business especially during its early stages if at least one person who holds certain certifications can manage the operations. On all job sites, training and certification are a must.

If there are two people working in the company that can lead a work team, the owner can do two different jobs or continue to work at a location if one of them is not available.

It can be challenging to estimate how many jobs can be accepted in a given time frame. This will depend on the size of the team. Make sure to hire at least one employee with some certifications. This person can be in charge of managing the daily operations of the business. Once more projects start coming in and the workload increases, more people can then be hired

Remember too that once someone is hired, that person becomes an employee and thus needs to be compensated even if there’s no work coming in. Do not hire too many people in the early stages.

Equipment And Supplies Purchasing Considerations

High-quality equipment is essential for any restoration project. To purchase tools and equipment, a commercial vehicle is required. This vehicle has two main functions: transportation and marketing.

The company name, address, and phone number should be clearly written on the truck. If the truck is properly labeled, it will make the company appear more professional and organized.

The equipment needed to be purchased will depend on the type of services offered. 

Water restoration projects require air movers as well as air scrubbers and dehumidifiers. Water damage often needs to be repaired during fire restoration so most likely, the same equipment will be required.

Power washers, moisture meters, extractors, water damage equipment, and other small items such as power cords and safety equipment are some of the important tools that the crew would need. Again, the type of equipment that needs to be purchased depends on the type of restoration work that the company does.

It is important to stock up on supplies and equipment before starting the restoration business. However, it’s easy to get carried away with initial purchases. 

Purchase only the equipment needed in order to get started on the restoration projects. It is important to not overspend. Once the business grows, more equipment can then be added.

Training And Certification Considerations

Particularly important for the restoration and construction industry is training and certifications. The company is responsible for the crew who is working on a restoration project, including the homeowner’s safety and health.

Some types of damage are hidden in walls and under cabinets, so they may not be visible. All of these damages need to be completely remediated, if not removed, to prevent any future problems.

Marketing Considerations

Although having the right equipment and trained crew will make the restoration company more competitive, finding enough jobs or projects is just as important as this needed to grow the business.

A lot of new businesses have difficulty letting the people in a local neighborhood know they exist and what they offer. At first, it’s going to be difficult to find satisfied customers who are willing to spread the word.

This is where marketing plans come into play. Below are some examples of marketing strategies:

  • Company name/ Logo (Properly marked on the company vehicle)
  • Business Cards
  • Networking
  • Website
  • Google My Business
  • Brand Awareness
  • Referral Marketing
  • Directory Listings

Marketing is a creative undertaking business owners must engage in if the business is to succeed. It is important to consider where customers are located and how the company’s name and information reach the target market.

Setting Business Goals

Business goals vary depending on the kind of restoration service being offered. The goals of a water restoration business may differ from that of a fire restoration service.

When people are going through a traumatic experience, a restoration company can help. Most people don’t anticipate having their home destroyed by fire or flood. It leaves them feeling vulnerable and scared.

Photo Above: A water damage restoration business provides water remediation services for places damaged by water.

A reliable water damage restoration company can bring back peace of mind and restore people’s lives quickly and safely. Knowing that the business is helping people in their trauma can give a positive feeling.

But running a business that achieves or exceeds its profit goals is an even greater feeling. If the business is not making any profit, it’s impossible to continue working and helping those people in need.

It is possible to make a profit with realistic goals and continue providing services for the community.

For each job type the service provider performs, establish realistic profit margin goals. Different streams of revenue include fire cleanup, mold remediation, reconstruction, and water damage restoration, among others.

Make sure to calculate the cost of these jobs. And to that cost, add a percentage which represents the profit margin.

The net profit of the business is the amount of revenue of all completed jobs, minus any costs. The overhead expenses, such as rent for office space and insurance premiums, must be taken out of the net profit calculation at the end. And the business performance can be assessed by checking the quarterly net profit.

Tips For Increasing Your Net Profit

To ensure the restoration business is financially sustainable, profit goals need to be established and net profits monitored. 

The first year of the business may bring in little profit as some of the money will be used to invest in new equipment and get the business started. The net profit should increase after the first year. 

There are many ways to increase the net profit. Here are some of them:

  • Cut costs on equipment: Buy in bulk to reduce the overall cost of equipment and supplies.
  • Cut costs on subcontractor work: As much as possible, do in-house work. This eliminates the need to constantly hire subcontractors. Also, paying subcontractors by the job, not the hour, will also save you a lot of cash.
  • Cash flow management: Because small expenses can quickly add up, it is important to pay as much attention to them as to larger ones. Spend every dollar carefully, track it all, attribute it to the right job, and claim it as tax write-off if necessary.
  • Do what generates money: Determine which job offers the highest profit margin, and then work on obtaining those jobs. The team should set monthly targets so that everyone understands the priorities.

Time management is another aspect that impacts any business’ profit margin. Both the owner and employees want to make the most of the time spent in working. This is easy to calculate for the employees since the owner already knows how much they are paid and what they accomplish each work day.

Make Your Restoration Business Plan

A restoration business is a complex undertaking that requires careful planning. One would  need a business plan that includes equipment purchases and certifications as well as marketing. 

With the right information, the financing and the proper funding, anyone can start a restoration service. A well-crafted business plan doubles its growth potential.

It is important that the future restoration company owner understands all licensing and certifications that are required for the business. There is a lot to learn about how to restore a property that has been severely damaged by water, fire, or mold.

The art of restoring personal possessions is not an easy task. It’s often done under the influence of emotional homeowners who feel displaced, unhappy, or even traumatized.

There are many practical tips and tricks that can be used to dry out certain materials. Mold is also a scientific concern. In restoration work, it is crucial to know how it grows and where it can be found. It’s vital for both the clients’ and crew’s health.

The structural integrity and safety of buildings are also important factors in health and safety. In flood and fire conditions, engineering and construction principles must be tested. Each restoration is unique and the clients rely on the ability of the restoration service provider to accomplish it.

The work will be easier and more efficient if the right equipment is in place. Water damage is an urgent situation and requires that a restoration company arrives quickly. The more water, fire, and mold remain in an area, the more serious the damage will be.

If the equipment is well-maintained and has the right size, work can be started right away. This can be crucial for time-sensitive jobs. It could mean the difference between landing a job or being replaced by a competitor.

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