The Recession of 2008 began with the busting of an $8 trillion housing bubble. Some industries were decimated by the fallout, companies reduced to rubble, and millions left unemployed. The construction and remodeling industry was one of the hardest hit.
For those companies who survived many feel the fear of another recessionary or economic downturn that could affect their business and livelihood again. They are looking for diversification and any safe haven that might be available to them. In 2012 Forbes Business Magazine awarded my company Best in Business Construction Services in Colorado. They wrote a feature article about our company titled, One Construction Industry Not in Recession. The article begins, “Recession has hit hard nearly every sector of U.S. business, and one of the most hard hit is the construction industry. But one Colorado company has experienced significant upside growth each and every year of its eight-year history.” How did we do this? Our construction niche was not new build or remodeling, but insurance damage repair which has shown itself to be recession proof and resilient. All other construction is discretionary except for damage repair which has grown to become an $800 billion industry. This is the only niche in construction services for which you never have to worry whether there will be work for you tomorrow.
The amount of work does not ebb and flow but stays steady year after year. Many remodelers are aware of what I have just said but have no idea how to break into the ranks of restorers. The key is not local marketing which takes a lot of time and yields meager results. It is not through pay-per-click, website SEO, lead generation, or referral websites such as HomeAdvisor, all of which charge a lot of money for relatively few job conversions.
Here is the key that unlocks the door to this industry. The insurance damage repair industry has been in a decade long trend that according to industry experts continues to accelerate. Most Insurance companies no longer manage their claims volume internally. They have found cost savings by outsourcing claims management to Third Party Administrators. These TPAs establish a pool of preferred contractors to whom they send direct repair assignments on a rotation basis.
Assignments means that there is no bidding for the work, no competing with others, no one is going to take the job away from you, and customer pricing negotiations don’t exist. The assignment is yours and you are expected by the customer, the insurance company, and the Third Party Administrator to do the work as a representative of the carrier. Now you know the answer to the question about who controls direct repair assignments. The question now is who are they and how do you sign up?
In my role as an industry business coach I have helped many remodelers start up a restoration division within their remodel business. What’s more is for those remodelers who want to do only the rebuild work they can still get into the industry and are not penalized for not providing water mitigation service. For remodelers performing rebuild services requires just about a zero cost investment to become a program contractor. Of the 10 National Third Party Administrators who manage the bulk of damage repair claims my client contractors are typically added to 5 or 6 or so within four months. Every time they are added to another TPA they get a boost in revenue. Every time they are added to another carrier client of the TPA they get a boost in revenue. Each time they are added to another internal carrier program they get a boost in revenue.
Imagine being added to a large volume major insurance carrier through its TPA beginning with their managed repair program. Later you are added to roofing services, then to large loss, later to fire and smoke, and finally to Consumer Services. Every time you are added to another internal program you get a boost in revenue. Multiply that by the nearly 30 insurance carriers my company served as a preferred contractor and you can only imagine the amount of work that could catapult your company to new levels of growth and development. If you want to diversify and protect yourself, your business, and your future from the next construction downturn you may be interested in the recession proof insurance damage repair industry too. There is a safe haven available to those who want it.
Reference: The Startup Igniter – Race to Success with Rock Solid Sales Sources and a Ready-for-Growth Business Foundation http://growmyrestorationbusiness.com/successes/