Add a Zero: Proven Strategies for Growing Your Restoration Business | Part 2: Uninsured

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Publisher’s Note: Welcome to the second article in a 3-part series on proven strategies to grow your restoration company. Throughout this series, Jeff will walk through topics like playing the insurance game, TPAs, multi-family losses and contracts, diversified revenue streams, marketing and online presence, and MUCH more. Read Part 1 HERE.


Most restoration companies that don’t work with insurance tend to acquire a good portion of their business through direct commercial relationships, referrals, and cultivating a positive reputation through word-of-mouth and reviews.

As a buyer of restoration companies, I always seek out those with a diverse customer base and a small concentration of large customers—ideally, every customer accounts for at most 10% of their revenue. The typical restoration company generates about 80% of its revenue from residential and 20% from commercial. Subsequently, increasing market share in the commercial sector is a surefire way to increase your top and bottom line while diversifying your business.

The easiest way to break into the commercial sector is through property managers. Property managers can be categorized into two groups: multifamily and commercial.

Multifamily
https://www.nmhc.org

Multifamily includes apartments, condos, townhouses, and similar properties. Marketing to multifamily property owners and managers can be advantageous in several ways. First, multifamily properties are often managed by professional property management companies, which means there is a higher likelihood of regular maintenance and repair work. This allows for establishing ongoing relationships with property managers and owners, leading to repeat business and a stable revenue stream. Multifamily properties have multiple units, which means the potential for larger-scale restoration projects is higher than for single-family homes. Finally, marketing to multifamily property managers can help establish yourself as an expert in the field, building a reputation for quality work and professionalism that can lead to referrals and new business opportunities.

The best way to meet multifamily property managers is by joining the National Apartment Association (NAA), a non-profit trade association of apartment communities, owners, and vendors in the United States. (Visit their website for more information at www.naahq.org) Joining your local chapter is an excellent way to meet many property managers who can refer projects to you. You’ll find a local chapter of the NAA in most large metropolitan markets. They organize monthly meetings, social events, trade shows, conferences, and other opportunities. For example, I live in Phoenix, Ariz., where our local version of NAA is the Arizona Multifamily Association (AMA).

Our active engagement with the NAA and local apartment associations has proven critical to our company’s growth over the past decade. The multifamily sector has become a primary source of revenue and referrals for us, both locally and nationwide. Our multifamily revenue now surpasses an impressive $75 million annually.

Among the multitude of events that we regularly attend, one stands out as a favorite: the reverse trade show, hosted by local apartment associations. This unique event provides property managers and owners the opportunity to sit at tables, while vendors like us make the rounds, engaging in interviews and discussions, and exploring potential partnerships and business opportunities. The reverse trade show format, akin to speed dating, proves highly effective in forging meaningful connections and generating valuable business. I highly recommend it to anyone in the industry.

Our company’s deep engagement with apartment associations has been pivotal in our ongoing success and remarkable growth trajectory. We remain enthusiastic about continuing to cultivate relationships and fostering new business opportunities through these invaluable channels.

I advise anyone seeking to generate property manager referrals to join the board or a committee of your local chapter. Investing time in these associations is more critical than investing capital, as members tend to be very loyal to individuals and companies who participate in volunteer activities, particularly committee and board positions. 

Joining is the first step; building and maintaining relationships with other members is crucial to generating business. As an owner, estimator, project director, or business development person, I encourage you to get involved. The return on investment in this vertical is high because each building has many individual units, and they experience a high frequency of losses and incidents. The severity and size of those losses range the entire spectrum.

Commercial

Commercial property managers are responsible for large commercial buildings like high-rise offices, shopping malls, and hospitals. Many commercial property managers belong to groups like the Building Owners and Managers Association (BOMA) and the International Facilities Management Association (IFMA). BOMA (https://www.boma.org/) is a professional organization for commercial real estate professionals based in the United States and Canada. Its membership includes building owners, managers, developers, leasing professionals, corporate facility managers, asset managers, and vendors of products and services needed to operate commercial properties. IFMA (www.IFMA.org) is an international association for facility management professionals. Joining these organizations is an excellent way to get to know these property managers. 

Both BOMA and IFMA members manage more significant buildings with more enormous losses. There tends to be a property manager or a facility representative at each building, as well as regional property managers that can influence referrals on multiple buildings. BOMA and IFMA members are very loyal, even more so than Apartment Association members. Both organizations are precious for referrals, but only once you’ve done your time. When I say time, I’m talking about two to four years invested in serving on committees and board positions before you’re likely to see a significant return on your investment.

The return on investment in commercial is not as high as multifamily. Though buildings are more significant, they have fewer units than multifamily, so losses are less frequent. The severity and size of those losses ranges the entire spectrum.

Hospitality (i.e., hotels and motels)
https://www.ahla.com (National)
https://azlta.com/ (Local)

Our company engages with hotels primarily through national accounts but not so much locally. This group is much easier to target for local restorers. Remember, just because the hotel says Hilton, Marriot, or Hyatt doesn’t mean those entities own the property. Most hotels are owned by local community members, who may own one or more properties. Less than 5% of all significant branded hotels are owned by corporate. Those prominent brands simply manage them. Sometimes these brands can refer a national vendor for services, but the owners trump the management company. Get to know your local hotel and motel owners, regardless of the brand on the marquee.

Government (i.e., cities, counties, municipalities, state, and federal agencies)
https://nspma.com/
https://www.naco.org/

There are countless cities, making them your most promising prospects. There are also several departments that can refer you for work. Among them are facilities, construction, risk management, and sometimes claims. We have one city that’s been a customer for 15 years. We probably average $1M per year and have also done several multi-million-dollar jobs for them. We have another city that only used us once, to my knowledge. Still, after a significant local event, they awarded us 110+ buildings for several million dollars on each building – parks and recreation facilities, fire and police station, city hall, etc. It was an incredible opportunity.

Retail
https://www.icsc.com/

We have several national account customers in retail and banking. The frequency is high, and annual revenue is high. Unless your company has national reach, pursuing such accounts is not worth the time investment. Then again, according to IBISWorld, there are more than 170,000 small specialty retail stores in the U.S., stores that the 15,000 small specialty restorers have a good shot at landing as customers. 

Schools
https://www.facilitiescouncil.org/
https://nspma.com/
https://www.urmia.org/home

Schools have never been a significant source of revenue for us. I’ve personally been involved with one university for about a decade. This school is a top 25 university in the U.S., and their annual spend on restoration services is between $5-$7M. They use their best performers on regular rotation. Split among five vendors, our revenue averages a little over $1M per year and has for the past decade. That said, we’ve done several individual jobs for significantly more than $1M.

Healthcare (i.e., hospitals, assisted living, senior living)
https://www.ashaliving.org/
https://www.ahcancal.org/

Healthcare is perhaps the most complex vertical, but also among the highest margin, given the nature and complexity of patients and the buildings they occupy. The approach to getting your foot in the door in healthcare is similar to other commercial verticals, only more specialized. You need to provide additional training and resources to ensure that when you win this work, your team knows the rules of engagement of working inside a healthcare facility.

Once your team is adequately trained, generating business is also complex, because hospitals are large and complex. At least four to five departments can refer you for work within any given hospital. Your primary referral source is in facilities management. These men and women typically work in some engineering capacity. They may or may not perform small day-to-day or routine projects. Still, they typically need outside resources to tackle medium or large-scale projects resulting from damage or other business interruptions.

Other departments include infectious control, environmental, risk management, and the construction department, all of which may be involved in different projects and losses outside the scope of facilities management. For example, the construction department will manage day-to-day capital improvements in the hospital, adding a wing or doing substantial renovations. In the case of water, smoke, or fire, facilities will typically not be involved because it falls under the budgets and constraints of the construction department.

The construction department may refer you in these cases or use large-scale prime or general contractors to handle them. Sometimes the hospital may not refer a subcontractor because they’ve already outsourced it to the general contractor. I once experienced this when there was a multimillion-dollar project inside a hospital with which I had an excellent relationship. Still, the general contractor made the referral since it was part of the construction capital project. Even though it was a hospital where we were engaged weekly, we missed out on a multimillion-dollar opportunity. 

Hospitals are not cost-conscious. Speed and getting rooms back online are typically more important than the cost of restoration services, which is peanuts compared to lost revenue when patient rooms and other portions of their facility are down for business. 

We have enjoyed more success with local hospitals, where decisions are made locally, versus corporate-run facilities. We have dozens of examples of a single hospital generating $1M or more annually by becoming their go-to service provider.

Organizations like the American Hospital Association (AHA) and the American Society for Healthcare Engineering (ASHE) tend to have local chapters where, again, you can donate your time and resources and become a member. The AHA is a healthcare industry trade group representing nearly 5,000 hospitals and health care providers. Visit their website to find out more, www.aha.org. ASHE is the largest association devoted to professionals who design, build, maintain, and operate hospitals and other healthcare facilities. Their 12,500 members include healthcare facility managers, engineers, architects, designers, constructors, infection control specialists, and others. Visit their website to find out more, www.ASHE.org. 

Depending on the size of your business, you may not have the resources or staff to get involved in more than one or two associations. If you don’t have substantial time or dedicated staff, you must choose one vertical you most want to expand your market share. The worst thing you can do is join three, four, or even dozens of associations and not have sufficient time to commit. At that point, you’re simply spending money with no end in sight and no return on your investment. I encourage you to choose one vertical and join one association. As you grow your market share in that vertical, feel free to expand to a second or even a third. Keep in mind you may need someone other than yourself to get involved in different associations.

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Jeff Moore

After earning his degree from Southern Methodist University, Jeff Moore began his career at ATI in 1994 as a restoration technician, working his way through the ranks of every division of the company, both in the field and at the corporate level. He served as Executive Vice President from 2012-2019 and has served as Co-President with his brother since 2019, Ryan Moore. At the helm of the company, Jeff is responsible for the day-to-day operations, focusing on the future of the organization and revenue generation, including Sales, Marketing, and Mergers and Acquisitions. He is driven and has a passion for differentiation through technology and innovation.

Jeff serves on the Board of Directors for RIA, continually advocating for the restoration industry. He holds several advanced designations with RIA, CR, WLS, and CMP. He also has his Master Designations with IICRC for Fire & Smoke, Water Restorer, and Textile Cleaner.

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