6 Things to Consider Before Starting a Water Restoration Business

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Starting a water restoration company can be a profitable business, but it’s important to do your research so your business can be successful. New water restoration business owners should create a comprehensive business plan that includes every aspect of their business. This includes everything from how much it will cost to get started, paying for day-to-day expenses, and how you plan to market your business.

It’s important for new business owners to be realistic about their goals and have a solid understanding of the competition. With a thorough business plan in place, business owners can set themselves up for success.

Here are 6 things to consider before you get started. 

Get your business license and certification

Starting a water restoration business can be intimidating, but there are a few things to keep in mind that will help streamline the process. One of the most important things is to get your International Institute of Cleaning and Restoration (IICRC) certification before you start. 

The certification includes courses that cover industry-specific services or tasks and are available via live-stream or in person. Water restoration professionals can also purchase IICRC manuals for updates on a variety of remediation and restoration projects. In most cases, the one course any technician needs is the Water Restoration Training (WRT) course, which is available in all states. 

Training typically takes 3-4 days to complete depending on the instructor and location and you must pass a final exam with a 75% or above to receive certification. IICRC certification is not mandatory, but claims adjusters and insurance agents are more likely to recommend water restoration companies with IICRC-certified professionals than those without industry certification. 

A IICRC-certified business can also have their business listed on the IICRC website where customers can search and find certified restoration professionals in their state.

Cash flow – Money for Your Water Restoration Business

Before starting a water restoration company, it’s important to note that unless you already have jobs lined up it may take a while for you to start making money. 

Nate Cisney, a restoration consultant and business mentor, recommends having several months worth of savings that you can dip into should you need it. 

“The ramp up time for a water restoration business is typically 3-6 months. You
need to have enough money set aside to cover your expenses during that time until you get paid.” – Nate Cisney, Restoration Made Simple

If you need help to build a cash reserve for your business, there are a few ways to go about financing your startup costs. You can raise money from family and friends, tap into your personal savings, get a bank loan, or bring in outside investors. No matter which path you choose, take time to think about your options and consider talking with an accountant before making a final decision.

Research your target market and competition 

One of the most important things to research before starting a water restoration business is your competition and target market. The restoration industry has a fairly low barrier to entry, so there may be significant competition depending on where you choose to set up your business.

The first thing you will want to consider is whether there are any other restoration companies in your immediate area that offer similar services. After you determine the competition, look at how much they charge and the types of customers they serve. Also take into consideration how they advertise their products and services.

Once you have identified your competitors strengths and weaknesses you will be able to identify areas of opportunity for your business. 

For instance, in Florida the majority of housing is located in condominiums or communities governed by a homeowners association. These dwellings must have insurance and will typically have higher insurance payouts than homes that are not located in an HOA community.      

Building a strong relationship with a property manager can go a long way in helping to grow your business. The toughest part of creating a mutually beneficial relationship is establishing it in the first place. Search online for property management companies in your area to determine a list of potential clients, then reach out to them to schedule a meeting. This first meeting is crucial to establish how reliable you are, so show up early. Bring any licenses, insurance papers and a few photos or videos of your work. You should also be prepared to share reviews or references from satisfied customers to increase your chances of being hired. Even if a property manager has a go-to handyman for certain projects, that doesn’t exclude them from hiring you, too – especially in emergency situations like water damage and mold remediation.

Invest in equipment

One of the most important factors when starting a water restoration business is equipment, tools, and supplies. Make a list of everything you will need, including more expensive items like vehicles as well as smaller items like envelopes and paper clips.

Here are a few necessary tools to invest in.  

Moisture meters

Moisture detectors help identify how much moisture is in a certain area, including places you may not be able to see like behind walls or in the ceiling. This is an important tool to have for the initial water damage inspection as well as to make sure that the drying process is complete once you finish the job. If you look online, you can find moisture detectors for as low as $25 up to $500 or more. An inexpensive $25-$50 meter will typically provide a moisture reading with +/- 5% accuracy, which is sufficient for most home water restoration jobs. 

Drying fans

Air movers, or drying fans, have several functions including ventilation, drying, and water restoration projects. Air movers are key for decreasing drying time on the job. There are several different types of air movers including centrifugal, axial, and low-profile or compact. 

Centrifugal air movers produce powerful, focused air movement while axial air movers are designed to produce a lot of airflow capable of moving high volumes of air across large spaces. Low-profile air movers take up much less space than traditional air movers allowing you to save space when transporting them to job sites without sacrificing performance. 

Commercial air movers typically start around $100 and go up in price depending on speed and power. Before you buy, consider which type works best for the homes you plan to work on and the square footage.

Dehumidifiers 

Low grain refrigerant (LGR) dehumidifiers are the most common dehumidifiers used by water restoration professionals. LGR dehumidifiers pre-cool the intake air which allows for more water removal and greater energy efficiency. These are some of the most powerful and effective dehumidifiers for the restoration industry and typically cost $1,000 or more. 

Conventional dehumidifiers are the most basic type of dehumidifier. They remove water from the air by condensing moisture and are most commonly used in higher humidity conditions. Conventional dehumidifiers start around $500 and are more portable but don’t have the same power you can expect from an LGR dehumidifier. 

Determine whether a low-grain or conventional dehumidifier will be most effective for your water restoration business and purchase the one that will help you provide the best experience for your customers.  

If you’re looking to save money, you may want to consider renting or leasing some equipment instead of purchasing it. This can be a good option to help you maintain your cash flow as you start your business.

Building the right team

Hiring the right people is essential to the success of your water restoration business. You typically only need 2-3 people to get started. Bringing on a skilled worker who is familiar with the industry can save you a lot of time and money. Your restoration team is often the face of your business when interacting with customers. Hiring friendly workers your clients can trust is an important part of building your brand and will encourage happy customers to leave reviews online about their positive experience.

Connecting with a business coach or consultant who is familiar with the restoration industry can save time and help you to make more money. A trusted adviser can help you identify and appeal to your target market, determine your tax and insurance obligations, as well as any legal issues you should know about.

Seasons may also determine how busy you are. Spring, summer, and winter tend to be the busiest times for water restoration services. Depending on where you set up your business, weather and temperature could play a major role in the number of jobs you are able to complete. You may also face long periods of downtime in between jobs or an overwhelming amount of job referrals. Make sure you consider equipment, the services you provide, and the availability of your team. As you grow your business, more jobs may require you to hire additional employees.

Set up your accounting / know how to bill customers 

As a new business owner, there are a lot of things to think about in order to increase revenue and help your business grow. But one of the first things you need to do is to set up a proper accounting system and learn how to bill your customers for the services you perform. This will help you keep track of your monthly expenses, revenue, tax obligations and any other costs. 

You can set up your accounting system using an online accounting software or hire an accountant to do it for you. If you decide to handle accounting activities yourself, make sure you choose a system that is easy for you to use. 

Every water restoration business relies on insurance – it pays for everything. The vast majority of water claims are paid for entirely by homeowners insurance. It’s your job as a business owner to learn how to bill the insurance company correctly and negotiate the cost of your services to make sure that you get paid profitably.  

You can also choose to hire an insurance biller who will ensure that your claims are filed correctly. When hiring an insurance biller, whether they will work for you directly, or as part of an outside billing company, consider creating a commission structure that incentivizes them to get more money from the insurance company. 

Summary 

Now that you know what it takes to get your water restoration business up and running, it’s time to get started! Whether you’re still in the early stages of creating a business plan or are starting to purchase equipment and build out your team, we hope these tips will help you set you and your water restoration business up for long-term success.  

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Julia Lorei

Julia Lorei is an IICRC certified water restoration technician and IRIEDU certified water restoration specialist based in Deerfield Beach, FL. She is the owner of AAA Water Restoration, a family-owned water damage and mold remediation company serving the South Florida area since 2016.

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