6 Reasons Why Water Restoration Businesses Fail (and How to Make Sure Yours Doesn’t)

Are you thinking about starting your own water restoration business? Have you already started your company?  Well then, let’s have a little chat. 

In general, while most businesses will look successful for the first year of operation, they can begin to fizzle out towards the fifth year. Around 70% of businesses are nonexistent before the ten year mark. That includes water restoration businesses. 

When you look at the statistics of the rate of failure, you may feel a bit hesitant to try.

Main Reasons Restoration Businesses Fail

Of course, there could be many reasons why a business will not see longevity. One of the main reasons: no one’s buying what you’re selling basically.

But, you’re trying to launch a restoration business, which means you have an established market of necessity. Unless indestructible building materials are invented, people stop flushing large things down the toilet, or natural disasters cease to exist, the revenue is there for the taking. 

That being said, here are some other reasons (both in a general business sense as well as specific to the restoration business) why your business may end before it gets a chance to grow.

1. Not Having a Strong Business Plan

There’s no point in even opening the doors at all if you don’t have a viable business plan.
Ask yourself, How much capital do I need to start a restoration business? 

If you want a bank or financial institution to back your business, you have to demonstrate that you’re reliable, and having a strong business plan helps you do just that. It takes a considerable amount of research to figure out what aspects of restoration you want to implement, how you plan on getting jobs, the average amount of revenue you can expect, and  the amount of investment in employees, equipment, training, marketing, etc. 

You then need to ask, “What’s my budget going to be?
What are my goals? How are we going to reach them?”

A good business plan will ensure that everyone internally is on the same page about what the expectations for the company are, in terms of operations, profit projections, potential problems, and goals.  

Periodically reviewing and adjusting the business plan can have a positive impact, especially when goals are met. 

If coming up with a water restoration business plan seems overwhelming, you may want to consider either enlisting a professional company to help you or consulting a successful restoration business owner for advice that specifically relates to the industry and market you’re in.

2. Good Work Isn’t Enough if You’re Not Profitable

Will you be helping the community by restoring the lives of disaster-ravaged families? Yes. But you’re in business to make money and no profit means that you’re just maintaining and it’s not sustainable in the long run. Most water restoration businesses that fail are guilty of this, so don’t be one of them!

There’s also the technical side of things we need to mention here.

Maybe you are focusing more on the processes of structural drying, fire, or mold remediation and getting the latest or best equipment. Then, you are concentrating on how the equipment works, demolition, and debris removal, etc. The focus is put on the work itself as opposed to how to maximize the work profit.  

Training for you and your techs (if you have any yet) is essential.
To help with this training, we put together bundled pricing for all the recommended training.
Focusing on technical training can help increase the average dollar sale, which will create massive change to your overall profitability. 

3. Pricing Like a Tech Instead of a Business Owner

Many techs that become business owners keep a technician mentality. 

This means the technical side of the company is good! They also tend to focus on the new technology and techniques, also important. But It doesn’t matter if you have the best equipment in the industry or do the best job. If you aren’t properly charging for the usage, your profitability will suffer. 

In fact, if all companies are charging the same thing (using the same price list), the ones that do the worst job may have more turn over, little overhead, little training, and can still be more profitable! 

Training is needed to make sure your pricing matches your overhead and quality of work, so make sure to watch our Estimating and Negotiating livestream training. Having an understanding of line items and negotiating your estimates with insurance companies will help you get paid for the work you do and get a return on the investments you have made for that equipment and technical training.

4. Competing with Other Water Restoration Businesses

While there is camaraderie in the restoration industry, let’s not forget that you will be competing with other water restoration businesses in your service area. Unless they are employing unscrupulous business tactics, they aren’t the enemy, but even if there are plenty of jobs to go around for everyone, you still want your company to be the preferred choice. 

You should have a marketing strategy that is always ongoing and that changes with the fluctuation of the industry as well as the needs of potential clients. You should always be aware of how other companies in your area are performing. In addition, looking at the success of companies in other areas that aren’t your competition could help you discover something that can give you an edge in your domain. 

The best competitors learn from each other. 

There is a “Big Mac” and a “Big King” to match. When Coca Cola made Coke Vanilla, it was only a matter of time before Pepsi had Vanilla Pepsi. Research and learn from (but don’t steal) their ideas. Or better yet, be innovative enough to be the big dog. Be the competitor that others are trying to catch. 

You can use all the marketing tricks available to draw in business but remember that something as simple as failing to provide a quality of service that either matches or exceeds your competition, could be your undoing. So, your product must match your marketing. 

Don’t say you’re the best…. Prove you’re the best in your area.
Don’t just say you’re fast and available, when you get an opportunity, show them.

5. Burning Out Because the Business Starts Running You

This one really isn’t considered as much as it should be in the restoration industry.  You are most likely starting off small with a few technicians, or maybe just one…. you. You’re all set to go with the proper equipment and training, getting a fair amount of jobs, and starting to build a reputation for your water restoration business.

But you can’t predict when a disaster will happen; which is why you offer emergency restoration services. Your technicians are pushed to the limit. If you don’t have a good process in place and there is inadequate training on that process, the result is eventual burnout. 

Imagine receiving multiple emergency calls. By the time the technicians return from the site at some ungodly hour, they are too tired to tend to unloading or reorganizing the equipment. Now the truck is in disarray, and subsequent calls keep coming in. 

Your business won’t last due to a high turnover rate of technicians, or your inability to keep up with the workload and deciding to give up. 

Don’t blame the millennials for not wanting to work. Maybe your process is the issue. Be honest with yourself, and if you need help to start your journey of running a profitable water restoration business, Reets Drying Academy is your answer.

Come meet us in person and receive your IICRC WRT/ASD training on water damage restoration and structural drying, where you will also learn processes to make your business sustainable and profitable.

6. Not Having the Right People on Your Team

“You’re only as good as your weakest link.” 

Your water restoration business is only as good as the people who are on your team. Therefore, it’s in your best interest to carefully evaluate anyone you bring into your company, regardless of their position. 

Do they share your vision and goals for the company and offer ways to support and improve?
Can you trust them or do they have their own agenda?
Will the processes and procedures you implement be followed?
Are all involved invested in the success and growth of the company?

This is vital. You can’t expect to succeed in the battlefield of restoration with people in your midst that are attempting to undermine the bottom line. 

Sometimes it’s not even malicious.  Everyone isn’t necessarily a good fit for what you are trying to accomplish and that ends up tanking your business from the inside out.

The same energy that you put into researching how to start a business should be applied to figuring out who will be best to help you avoid failing. And guess what, the leader of the team is a part of the team too. 

As the leader, is your vision clear? Are your goals clear? 

The Takeaway

While there is never a guarantee that your business will flourish, knowing and avoiding some of these pitfalls of starting a disaster restoration business can certainly lead to success! 

For more ideas, read: 7 Habits to Help You Make More Money in Water Damage Restoration