Monday 21 December 2015

How to Start A Water Restoration Business

Posted by at 8:59 AM in

How to Start Water Restoration Business

Most new owners start their water restoration business with the dream of becoming a multimillion dollar company. To achieve this you need a business built for growth with an immediate source of sales. As a top restoration industry coach I help new owners gain the traction needed to succeed through accelerating first year sales and putting in place an internal operation built to last.

My personal experience both as a new restoration owner who developed a $5 million business in less than 9 years and sold it for top dollar, and as a business coach who has helped others succeed at launching their new restoration business I have learned what is most important in starting a new restoration business.

While many business coaches tell you that you need to get your business plan in place, secure financing, and talk to people in the industry before jumping in let me guide you in what you really need to know and do to have a successful first year and succeed at growing your restoration business.

Let’s dive into your most pressing personal questions as you begin your journey to startup.

Why should I be interested in this industry?

Forbes Business Magazine selected my company in 2012 with the Colorado Best in Business Construction Award and published an article about us. They titled the article “One Construction Industry NOT in Recession.” Do you see the point? While other construction industry niches come and go and are affected by economic and recessionary influences the damage repair industry is NOT.

Pipes break, freezes occur, and hail comes each and every year and sometimes with greater intensity than usual. While manufacturing has the ability to produce products that will never break that is not the capitalists’ way. We manufacture products to insure they break. Instead of using brass fittings we use plastic ones, water hoses that could be made from reinforced products are made with simple rubber and get brittle and break and so on.

There is no end to the household items that break and cause damage whether by water, fire or smoke. There will always be a lot of ongoing work to be done in our industry year after year after year. This makes the restoration industry a wonderful niche to begin your new business in.

How much money can I make?

The typical water damage dryout (mitigation) job in the U.S. is $2500 from which you should earn a 75% profit margin. The typical rebuild job is $10,000 from which you can earn a profit margin of as much as 50%. If a new restoration contractor focuses on mitigation only it would take 300 jobs to earn $750,000 in annual revenue.

That is a lot of jobs. In fact, the vast majority of mitigation only contractors plateau at around $1 million in annual sales primarily because it is nearly impossible to build a marketing mechanism that will bring in more than 400 jobs year after year.

While you could build a good company on $750,000 in annual sales with a profit margin of $562,500 to pay your fixed expenses, payroll, debt service and other expenses getting to that point of success would take time. What you more likely will experience for year 1 is at a minimum one job a week for 52 weeks. That is doable if you do the right things. 52 jobs produce $130,000 in annual sales and $97,500 in profit.

This picture of reality is a bit dire for your first years’ work. The key is NOT to do mitigation only but begin your business as a full-service restoration company doing both water mitigation and reconstruction services. The truth is that even if you have no experience in construction it is not that difficult to get started.

Don’t let others tell you otherwise. It is vital to your business success to begin as a full-service contractor form the very beginning. You will need some help to set in place an operation that adequately supports construction services but you can do it. As a full-service restoration contractor securing one job a week for 52 weeks your revenue increases from $130,000 to $650,000 and your profit grows to as much as $357,500. You can provide for your family, service your debt and grow your business with that profit!

Don’t even think about starting a mitigation only company if you want to succeed in your first year of business. Full-service is the right choice for many reasons! As a top industry business coach I help restoration business startups be successful.

Visit my website today where you will find over 50 blogs, podcasts and webinars on topics related to growing your restoration business. You will find a Coaching Plan that is uniquely focused on the restoration startup called THE STARTUP IGNITER. You will also find two FREE eBooks titled HOW TO GROW YOUR RESTORATION BUSINESS and STOP YOUR PROFIT KILLERS DEAD IN THEIR TRACKS. There is a lot of support available to you to help insure that your first year provides the traction and operational development to succeed and thrive as you continue growing your restoration business. Visit me at or call me for a FREE 30 Minute Consultation at 800.655.1598.