2022 Scorecard: Reviewing 2022 Trends in the Disaster Restoration Industry

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Welcome to my annual review, update, and predictions for the upcoming year in the disaster restoration industry. Every year, I look into my crystal ball and identify the top issues that restorers may encounter in the next year that may impact the industry and your business. I scan the general business environment as well as key issues from the restoration industry. I then use my 35 years of restoration experience to determine the key issues that restorers should consider when creating their strategic plans for the year.

Before jumping into my thoughts for this year, which you will find in the next article in this issue, I wanted to offer several salient points that were learned from this past year. 

The artificial interference from government regulations has many unintended consequences that will impact businesses. As a business owner, you are not able to influence macro decisions or even the consequences, but you are in control of your business activities. 

Finding employees will not be as big of a challenge as in the past, but you still need to focus on the issues that will create a great work environment. 

Know your costs and take care of your business – this will allow you to adjust your business plan and practices as your business reality changes. 

One trillion dollars is a lot of money and is a number that is hard to comprehend. Over $15 trillion in debt has been created in the last 10 years, which is starting to cause massive disruptions. 

Spend time focusing on the items you can control. If you attempt to change items you cannot influence, you will become very frustrated. 

Most people thrive on social interactions, and it has been very enjoyable to connect in our communities, and workplaces, through industry and community events. 

Technology adaptation traditionally is slower than planned in the short term and faster than expected in the long term. Technological advances will fundamentally change the way we live and work in the next decade and are hard to imagine today. 

As per my usual practice, I will critique and grade my predictions from last year prior to making my predictions for 2023. I feel that this is a necessary practice to establish credibility for my thoughts on the coming year. When I think about the critical issues that impacted restoration last year, I think I still have some credibility, but you can be the judge of that.

Prediction #1: Labor Shortages

Original prediction: The first trend to explore revolves around labor. The factors impacting this issue are many, but the biggest are competition for labor, COVID fears, and government interference with the free market. These factors will continue to cause challenges in finding employees to fill vacant positions. Many companies have had to make changes to their growth plans and capacity due to limited available staff. Many have been able to locate great managers and staff for senior positions in their business – but it does require deliberate activity to locate great people. 

Grade commentary: In many ways, this was an obvious and easy prediction. My expectation and statement was that this would continue through the year but start to ease for management positions. This no doubt was one of the biggest issues for most restoration companies last year. Many of my recommendations were correct and confirmed by the survey and book Why Workers Quit by KnowHow.

Prediction #2: Inflation and Material Availability

Original prediction: Supply chain issues combined with rising prices will continue to be a challenge. I expect this to moderate through the year, but it will impact our ability to complete jobs and also the price we are paying for everything from 2x4s to insurance. These issues are being driven by reopening a shuttered economy, COVID workplace issues, reduction in the domestic energy production, massive government stimulus and incentives for people to not work. These issues all combine to influence everyday business.

Grade commentary: The only miss on this projection was the statement that this would moderate by the end of the year. I was not expecting our government to double down on the policies that lead to rising prices in the first place.

Prediction #3: Mergers and Acquisitions

Original prediction: The competitive landscape of restoration changed dramatically in the past year due to mergers and acquisitions. I expect this trend to continue over the next several years. I also expect to see at least two of the equity companies roll over their equity and either sell to new players or roll their portfolio into another equity-backed industry player.

Grade commentary: The influences that have been driving this trend did not change however the level of acquisitions was less than expected. Several issues impacted the pace of acquisitions. Due to expected changes in tax law (that never materialized), many sellers accelerated their transaction which closed in 2021. One of the equity companies did roll their portfolio but another sale did not materialize. It will happen but has been delayed. Many of the buyers had expected a much higher level of acquisitions that did not materialize. The reasons for the lower level of transactions are many, but the reality is that the volume was lower than predicted and expected. The trend is still intact but was slower than expected.

Prediction #4: The Rapid Development and Deployment of Technology

Original prediction: This process will take years to become fully integrated but the first steps in radical change are starting now. This will include many activities from project management to jobsite tracking and will make a radical difference in operations. 

Grade commentary: While I attempt to make my predictions relevant for the near future, this one was clearly stated to be a longer-term trend. This will definitely occur in the foreseeable future. Understand that technology nearly always moves slower than expected in the short-term and faster than expected in the long term. I think that I am right on for the big picture trends and that the world of flying cars, robots, and artificial intelligence will impact everyday life sooner than most can imagine. 

One trend that may not materialize is the integration of technology. My hope has been that A.P.I. will create a decoder ring that allows software to communicate and transfer information from one platform to another, but I am starting to understand that this is more complex than anticipated and may not ever materialize. 

Since this prediction is incomplete, I am going to make a few tech-related recommendations:

  • Be deliberate and strategic. There will be a lot of technology failures through this process so do your homework and choose wisely. 
  • The technology revolution is real and coming fast. Do your homework, create a nimble company, and look to leverage this technology.
  • Have a cyber plan and protect your business from the many controllable cyber risks.
  • Read books, listen to podcasts, study blogs and be prepared.
  • Realize that there is time and technology will need several years to be sorted out. At the same time, realize that the world will be radically different in 2030 than today.

Making predictions in a very unpredictable world is a risky proposition. My hope is that I identified the key trends that impacted the industry as a whole and more importantly, can help individual companies define an action plan that prepares them to be ahead of the curve and proactively address relevant changes. 

My self-assessment of the key issues reflects that I was able to identify and address the key issues facing restoration professionals. If you feel similarly, then I hope that I have earned your confidence in my thoughts for the upcoming year. 

Keep reading in this issue to see what I predict for 2023 – and beyond!

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Phillip Rosebrook Jr., CR

RosebrookPhillip Rosebrook Jr., CR, is the president and managing partner in Business Mentors, and founding partner of RestorationTrainingOnline.com. He specializes in organizational change, building corporate infrastructure, defining marketing strategy, developing measurements for accountability and creating sustainable business plans. He is a frequent author for C&R, having earned the Golden Quill Award for an article on direction and vision. Phil is a RIA Certified Restorer (#179) and has held numerous IICRC Certifications. He has been active in the restoration industry for over 30 years and served as an industry advisor and consultant for over 20 years.

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