So You Want To Start A Restoration Company…
Let’s face it, every home, every building has multiple potential causes for water damage. You’ve got washing machine failures, appliance failures, toilets, pipes, etc. It’s no wonder then that many want to know how to start a water damage restoration business. There is so much potential. And everybody knows that mitigation is where the profits are, right? But where do you start?
How to Start A Water Damage Restoration Business: 6 Steps
1. Have the right mindset
Right off the bat, before even beginning this venture, have the mindset of profit first.
What do I mean by that?
Remember that starting a business is not the same thing as getting a job. When you’re starting a business, the ultimate goal is to make profit. In order to make profit, you need to ask yourself, “Is this something simple enough that I can train other people to do and is it something that is definitely profitable?”
Now why do I say this?
Often times businesses get started because someone sees a need/demand for a product or service and thinks, “Hey, I’ll start a business!” But seeing a need/demand is not the only reason to start a business. It also needs to be profitable.
For example, when it comes to lawn mower repairs, is there a need? Yes, probably. But is it profitable? Is it repeatable? Is it something that can easily be taught to employees, or will it take 5 years for someone to become a lawn mower repair expert? If it’s going to take 5 years to train someone how to repair a lawn mower, you’re not exactly thinking profit first if you decide to move forward with that venture.
2. Don’t ask ourself “Can I do this?”, instead ask yourself, “Should I do this?”
There are two sub-steps that will help you:
a) Make sure you have a sound way to get work
b) Make this decision with your head, not your heart
A. Make sure you have a sound way of getting work
As part of the “Should I do this?” step, make sure you have figured out a sound way to get the work. But how? Where do you even begin?
One important thing to remember is this: almost all businesses are based on relationships, big or small.
Take for example: Amazon. Yes, Amazon sells to every Tom, Dick, and Harry BUT at the same time, relationships are very important to them. If there is something wrong with an order, they do everything to make it right. Why? Because they don’t want to ruin the relationship.
The take away point? Relationships MATTER.
With that in mind, there’s a mistake that’s commonly made where people immediately think, “How do I get jobs from the internet and from all these sources I know nothing about?” That’s the wrong place to start.
The place to start is with the relationships you already have. So ask yourself, “What is my network? Who do I know?”
And you may think, “Well, I don’t know any plumbers, I don’t know any agents, I don’t know any adjusters.”
But don’t think about who you don’t know, think about who you do know. Take your current relationships and look for ways to build new relationships.
Why? Because out of all the people you know, how many people may have some sort of relationship with a plumber? With an insurance agent? Chances are someone you know has a connection and can get you a great introduction.
As you work on new relationships, you’ll build those relationships and in time more relationships will come. Never forget that the majority of your business will come from relationships.
How to build a relationship
So let’s say that you find a friend that knows a plumber. Where do you go from there? How do you build that relationship?
When you’re introduced, don’t fall into the trap of overselling your business by talking about how great your company is. Instead, focus on building a relationship. Try to get to know them and find common ground.
For example, ask them about their business and how they came to be so successful? Was it family owned? Or was this business something they scratched out of the ground? Either direction they go it’s a great story and you can learn a lot about them and over time you’ll find more common ground things that you can build off of.
Often times, that’s why they’ll send you business, not because you have the highest power air movers and big dehumidifiers… they don’t care about that. They’ll send you business because they’ll remember the good rapport you’ve built with them.
B. Make this decision with your head, not your heart
Remember the question that can help you think profit first? It was: Is it simple and repeatable?
Well, how do you know if starting a restoration business fits the guidelines of simple and repeatable? Education.
How else can you make an educated decision without learning in detail about the business you are trying to get into?
Sure, you can research a little bit on the internet and get second-hand knowledge, but only an IICRC WRT and ASD class will give you a clear, in-depth look at water damage restoration and all that it involves. You’ll learn how to extract water using different kinds of equipment, how to set up drying equipment, how to monitor with meters, how to find pockets of moisture using an infrared camera, how to calculate the proper amount of drying equipment needed to dry the job effectively, and much more.
Sure, you’d have to foot the bill for the classes, but it’s a small price to pay in order to make sure you’re getting into an industry that is the right fit for you and profitable.
3. Consult an accountant and business insurance agent
So let’s say that you’ve taken the IICRC WRT and ASD course, you’ve learned the fundamentals of water damage restoration and you’ve decided that you can turn this into a profitable business. The next step is to consult an accountant and business insurance agent.
Go find a good accountant and allow that accountant to advise you on how to structure your corporation and what tax-related things you’ll need to set up. It may cost a couple hundred dollars, but will really help you to get started on the right foot.
Next, consult with a good insurance agent, not a home insurance agent, but one that specializes in business insurance. They can advise you on how to handle risk management and help you get started.
4. Buy/Rent Equipment (Recommendations) - What Equipment Is Needed to Start A Water Damage Restoration Business
I get asked this question quite often: “What kind of equipment should I get when just starting a restoration business?”
Before choosing equipment, first decide: are you going to try and keep yourself as debt-free as possible or do you have a $200,000 SBA Loan that you want to spend right off the bat?
In all honesty, this is a business most people can start with almost no loan. You could even get started for as little as $10,000. That’s gonna be a really basic setup but not having that weight on you allows you to start generating profit right away.
That’s really important because profit that is generated is going to help fuel the business, but just paying off equipment is like having your truck stuck in the mud. You can get moving, but it’s going to be really, really hard and you’re gonna have to work yourself to death to pay it off.
So, if you are trying to get started and want to work with what you’ve got, I recommend purchasing enough equipment to either stake a job or handle one very small job.
And if you get a big job and don’t have enough equipment? Well in that case, you can do a couple things: You can then purchase the equipment you need for that job, or if you’ve established a relationship with a rental company in your area, rent the needed equipment. That way, you avoid losing jobs and avoid having tens of thousands of dollars of equipment just sitting in a warehouse.
Here’s a list of recommended equipment to purchase when starting a restoration business:
- Water extractor or wet dry vac: If you aren’t ready to invest in a water extractor (if you are, we recommend this one), get a wet dry vac from your local hardware store. It won’t tide you over forever, but it’ll get you through for some time.
- Moisture meters:
- 1 IR Camera:
- 1 XL Dehumidifier OR 2 Large Dehumidifiers
- My suggestion: A good rule of thumb when deciding on how many dehumidifiers, air movers, and AFDs (air filtration devices) to purchase is:
- For every 1 XL Dehumidifier, buy 7-8 air movers, and 1 AFD
- For every 2 Large Dehumidifier, buy 10 air movers, and 1 AFD
- XL Dehumidifier recommendations:
- Large Dehumidifier recommendations:
- My suggestion: A good rule of thumb when deciding on how many dehumidifiers, air movers, and AFDs (air filtration devices) to purchase is:
- Air movers
- My suggestion: Get 7-8 air movers if you have 1 XL Dehumidifier or get 10 air movers if you have 2 large dehumidifiers
- Air mover recommendations:
- Air filtration devices (AFDs):
- My suggestion: When you buy one XL Dehu (or 2 large dehus), buy one 500 CFM AFD, I recommend this and not going with larger units. It works better to have smaller units spread out because they can capture in different areas versus having just one really big one in one spot.
Sample List # 1 – This list contains: 1 hygrometer, 1 moisture meter, 1 IR camera, 2 Large Dehus, 10 air movers, and 1 AFD.
Sample List #2 – This list contains: 1 hygrometer, 1 moisture meter, 1 IR camera, 1 XL Dehumidifier, 8 air movers, and 1 AFD.
If one of these lists is a perfect fit for what you need to get started, or if you would like a customized quote with different equipment reach out to Neil and he’ll get you set up!
You can email Neil at firstname.lastname@example.org or call his direct line 470-655-8399.
5. Get the Right Contracts and Documentation Forms
However, unless you are in California, Florida, or Texas, you’re going to have to take them to your lawyer and have them created for your state. This is because contract law is state specific.
You won’t need all the contracts provided in the package. He gives you more than enough, but that’s ok! You’ll just pick the ones you actually need and have your lawyer make those specific to you.
Some people may ask, “Well, why would I buy those when I gotta take them to my own lawyer?”
Because if you go to your lawyer and ask them to write a contract for you, they’re going to ask you, “Well, what do you want it to say?” That’s the part you don’t know!
That’s why you buy the contract package from Ed Cross. It will provide your lawyers everything they need and you’ll just need to ask them to make it work for you depending on the state you live in.
It’s going to save you a lot of money because it’s much cheaper to buy that package, give it to your lawyer and say, “Make this work for me,” instead of having them build contracts from scratch. Trust me, that’s gonna be the fastest, most reliable way.
Oh, and one more thing: Don’t just have contract. Know how to use that contract correctly. That’s really important because if it’s not used correctly, not filled out correctly, or not done at the right time, it may not be of value.
Documentation forms you'll need:
As you’ll learn in the IICRC WRT and ASD class, documentation of each job is part of the standard.
My suggestion: If you’re just starting off, stay away from documentation software. Just stick with paper and pen because you need to learn that before you use the software.
With that being said, here are some documentation forms you’ll need. You will learn how to use these when you take the IICRC WRT and ASD class:
- Scope Sheet/Water Damage Report
- Moisture Readings Documentation
- Download documentation forms for free HERE
6. Learn How Much To Charge
Knowing how to charge in order to make a profit is such huge step in the process of starting a restoration business. If you don’t know how or what to charge, you need to take an estimating class.
Taking an estimating class is NOT an expense, it is an investment and you need to make that investment early. We recommend coming to our Restoration Estimating and Negotiating class
Now, when you come to class we won’t tell you how much to charge. That’s not going to help you in the long run. Instead, we’ll teach you how to figure out how much you want to charge in order to make profit AND how to justify your charges AND how to negotiate and get paid.
Again, taking an estimating class is something that will bring a return on investment. Remember, think profit first. Don’t neglect this aspect of education because having that foundation of knowing how to set your prices and justifying those charges will help you reach the goal of making a profit.
So there you have it, the 6 things Wikipedia never told you about how to start a restoration business.
- Remember to have the mindset of profit first before jumping into the restoration business.
- Figure out if this a service is simple enough for you to train other people and if it is something that is definitely profitable.
- Make sure that you have a sound way of getting work by establishing business relationships.
- Once you do, you can then move onto asking yourself, “Should I do this?” by scheduling to take an IICRC WRT and ASD course.
- After learning more about what this industry involves, move forward and consult an accountant and business insurance agent.
- You can also begin buying equipment, or establish a relationship with a rental company that delivers in your area.
- As you’ll learn in the IICRC WRT and ASD class, documentation is part of the standard, so make sure you have documentation forms to fill out.
- Also, make sure that you have work contracts that will hold up in court.
- And be sure to take an estimating class to learn how to charge properly and be able to justify those charges.
- Starting with these steps will save you a lot of heartache and trouble.
Of course, these are just suggestions to get you on the path to starting a restoration business. Nothing can entirely prepare you for everything you may encounter in this industry, but investing in your education and having the mind set that you can never stop learning will help you become a profitable business!
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Jeremy Reets started working in water restoration in the family business in 1990. He is known as the innovator of the TES/ETES drying systems, a discipline of drying called Directed Heat Drying™ and the Evaporation Potential formula.
Jeremy opened Reets Drying Academy and flood house in 2005 to provide water damage restoration education. Jeremy and his brothers also own Champion Cleaning Systems, Inc., a multi-million dollar water damage mitigation company that his family started in 1970.
In 2011, Jeremy began ReetsTV, a series of online water restoration training packages designed specifically for restoration company’s everyday needs, another first in the Industry.