Data recovery companies offer hardware and software-related data recovery. They salvage computer files from damaged, failed, corrupted, or inaccessible storage media. Please note that some data recovery companies may also offer automated data entry and processing services.

In the United States of America, there are about 367 registered data recovery companies employing about 2,266 people, and the industry rakes in a whooping sum of $11 billion annually. The industry is projected to continue to grow at a 10.9 percent rate.

Steps on How to Start a Data Recovery Service in 2022

1. Conduct Market Research

The first step in the market research process for your data recovery services business is to develop a market-based research question in line with your overall business goal and objective. You should source information that will help you maximize your business, information that will give you easy access to reliable techniques that will help you operate your business with less stress, and of course, build the business to profitability.

a. Who is the Target Market for a Data Recovery Business?
  • Government Agencies
  • Schools
  • Transport and Logistics Companies
  • Busy businessmen and businesswomen
  • Hotels
  • Hospitals
  • Banks, Insurance Companies, and other related Financial Institutions
  • Blue Chips Companies
  • Corporate Organizations
  • Manufacturers and Distributors
  • Real Estate Owners, Developers, and Contractors
  • Research and Development Companies
  • Entrepreneurs and Start-Ups
b. Is Data Recovery Service a Profitable Business?

Yes, the data recovery service is a profitable business because people need data recovery solutions when they are not able to access their files and folders because of virus attacks, accidental deletions, inaccessible partitions, corrupt documents, unexpected systems shutdowns, error messages while opening a file and other reasons. Data recovery services will be profitable in the future as well if recovery experts can adapt to technological changes.

c. Are There Existing Niches in the Industry?

Though there is no niche area in the data recovery service, it is common for some data recovery services to specialize in any of the following;

  • Hard Drive recovery
  • RAID Recovery
  • Tape Recovery
  • Optical Recovery
  • Removable Recovery
  • Digital Recovery
d. Who are the Major Competitors?
  • KLDiscovery Ontrack LLC
  • DriveSavers Inc.
  • Gillware Data Recovery
  • CBL Data Recovery.
  • Stellar Data Recovery.
  • Seagate In-Lab Recovery.
  • SalvageData Recovery.
  • Secure Data.
  • Seagate In-Lab Recovery
  • WeRecoverData
  • Disk Doctors
  • DataTech Labs
  • SERT
  • Data Mechanix
  • Ace Data Recovery
  • ESS Data Recovery, Inc.
e. Are There County or State Regulations or Zoning Laws for Data Recovery business?

No, there are no county or state regulations or zoning laws for data recovery services business, but players in this industry are expected to work with the existing regulations governing similar businesses in the county or state where their business is domiciled.

f. Is There a Franchise for Data recovery business?

Yes, there are franchise opportunities for data recovery services, and here are some of them;

  • Concerto Networks Franchise.
  • Electronic Restoration Services Franchise.
  • Nerds On Site Business Opportunity.
  • PC-ER Franchise.
  • Tech Hero Franchise.
  • Veteran Tech Brigade Franchise
g. What Do You Need to Start a Data Recovery Business?
  • A Feasibility Report
  • Business and Marketing Plans
  • Business Licenses and Permits
  • Office Space
  • Computers, Laptops, and Servers
  • EIN (Employer Identification Number)/Federal Tax ID Number.
  • A Corporate Bank Account
  • Hardware Equipment and Tools
  • Software Apps (Disk Drill Data Recovery, EaseUS Data Recovery Wizard, Recuva)
  • Employees
  • Startup Capital
  1. Memorable Name ideas for Data Recovery Business

  • Blue Gates© Data Recovery Company, Inc.
  • Denis Whitley® Data Recovery Services, LLC
  • We Recover© Data Recovery Company, Inc.
  • Data Solutions® Data Recovery Company, Inc.
  • Data Serve™ Data Recovery Company, Inc.
  • Jerry Smith™ Data Recovery Company, LLC.
  • Data Doctor© Data Recovery Company, LLC
  • Data Guys® Data Recovery Company, Inc.
  • Data Pros© Data Recovery Company, Inc.
  • Garry Mackson© Data Recovery Company, Inc.
  • Phil Jones® Data Recovery Company, Inc.
  • Zenith Group® Data Recovery Company, Inc.
  • Daniel Marshal® Data Recovery Company, Inc.
  • Call Back® Data Recovery Company, Inc.
  • Ed Landers® Data Recovery Company, Inc.
  • Sally Abrahams© Data Recovery Company, Inc.
  • AB and Co™ Data Recovery Company, LLC
  • Chris Norman® Data Recovery Company, Inc.
  • Baston Brown® Data Recovery Company, Inc.
  • Tri ICT™ Data Recovery Company, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for Data recovery services?

Even though there are several business structures for a data recovery business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Data Recovery Business?
  • General Business License
  • Health and Safety Permit
  • Zonal Permits (Applicable in some cities)
  • Signage Permit
  • Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Data Recovery Business?

These are some of the certifications you can work towards achieving if you want to run a data recovery business;

  • TTR Data Recovery service & fiscality certifications: ISO 9001, SOC TYPE II, PCI, GSA Certification
  • IACRB Certified Data Recovery Professional (CDRP)
e. What Documents are Needed to Open a Data Recovery Business?

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own Data recovery business in the United States of America;

  • DBA
  • EIN
  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit and Building Approval
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document
  • Contract Document
  • Company Bylaws
  • Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a data recovery business, usually you may not need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Data Recovery Business?

When it comes to starting a data recovery business, the startup costs could range from $20,000 to over $150,000 depending on how much equipment the business owner decides to purchase and the office space leased. Please note that this amount includes the salaries of all staff for the first month of operation.

b. What are the Costs Involved in Starting a Data Recovery Business
  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
  • Marketing expenses – $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The total cost for hiring a business consultant including writing a business plan – $2,500.
  • The total cost for the purchase of insurance – $2,400.
  • The cost for renting or leasing operational office space – $45,000.
  • Other start-up expenses including, commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
  • Operational cost for the first 3 months (salaries of employees, payments of bills and software renewal fees et al) – $15,000
  • The cost for the purchase of software apps: $50,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $1,750
  • The cost of purchase and installation of CCTVs: $2,000
  • The cost of launching a website: $2000
  • Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Data recovery business?
  • The size of data recovery services business
  • The choice of location
  • The required licenses and permits
  • The type of facility
  • The additional services offerings
  • The cost of hiring and paying a business consultant and attorney
  • The cost for branding, promotion, and marketing of the data recovery services business
  • The cost for furnishing and equipping the data recovery services business facility
  • The cost for insurance policy covers
  • The cost for registering the business
  • Source of your supplies and ongoing expenses
  • Cost of recruiting and training your staff
  • The cost for the purchase and customizing of uniforms, shoes, and caps for your employees
  • The cost for the grand opening of the data recovery services business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

You don’t need to build a facility for your data recovery business because the business can be operated from a leased or rented office space or warehouse. You may just decide to operate from your home and just lease a storage facility for your working equipment.

e. What are the Ongoing Expenses of a Data recovery business?
  • Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
  • Salaries of employees
f. What is the Average Salary of your Staff?
  • Chief Executive Officer (President) – $65,000 Per Year
  • Operation Manager – $45,000 Per Year
  • Human Resources and Admin Manager – $42,000 Per Year
  • Sales and Marketing Executive – $30,000 Per Year
  • Accountant – $32,000 Per Year
  • Data Recovery Experts (Computer Engineers) – $36,500 Per Year
  • Client Service Executive (Help Desk Office) -$28,000 Per Year
g. How Do You Get Funding to Start a Data Recovery Business
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source soft loans from your family members and your friends.
  1. Write a Business Plan

a. Executive Summary

Our data recovery services company will be based in Silicon Valley – California, but operate all over the United States and the globe. The company has been able to secure a standard and well–positioned office facility in a conducive business district in Silicon Valley. We are set to compete in the highly competitive Data Recovery Services industry not only in the United States but also in the global market.

b. Products and Service
  • Hard Drive recovery
  • RAID Recovery
  • Tape Recovery
  • Optical Recovery
  • Removable Recovery
  • Digital Recovery
c. Mission Statement

Our mission is to provide professional and highly reliable data recovery services that will assist businesses, and individuals in retrieving their data when their hard-drive crashes. We want to build a data recovery company that can favorably compete with other leading brands in the industry.

Vision Statement

Our vision is to establish a standard data recovery company whose services and brand will not only be accepted in Silicon Valley – California but also throughout the United States of America and other countries of the world.

d. Goals and Objectives

The goals and objectives of the data recovery business are to deploy data recovery solutions to businesses who can’t access their files and folders because of virus attacks, accidental deletions, inaccessible partitions, corrupt documents, unexpected system shutdowns, error messages while opening a file, etc.

e. Organizational Structure
  • Chief Executive Officer (President)
  • Operation Manager
  • Human Resources and Admin Manager
  • Sales and Marketing Executive
  • Accountant
  • Data Recovery Experts (Computer Engineers)
  • Client Service Executive (Help Desk Office)

Marketing Plan

a. SWOT Analysis
Strength:

The strength of the data recovery services business is that we have certified data recovery engineers and technicians under our payroll. So also, we operate in a location where we can easily collaborate with other key stakeholders in the ICT industry.

Weakness:

As a new data recovery company, it might take some time for our organization to break into the market and gain acceptance especially from top profile clients in the fast-growing Data Recovery Services industry; that is perhaps our major weakness. Another weakness is that we may not have the required cash to promote our business the way we would want to.

Opportunities:

The opportunities in the Data Recovery Services industry are massive considering the number of individuals and corporate organizations whose businesses depend on data and any loss of data can shut down their business. As a data recovery services company, we are ready to take advantage of any opportunity that is available in the industry.

Threat:

Cloud computing, or online data storage, represents the latest threat to our business. On a consumer level, cloud computing services, such as Google’s Drive and iCloud et al are part of what we will be contending with. Other threats that we are likely going to face are unfavorable government policies and the arrival of a competitor within our location of operation.

b. How Do Data Recovery Companies Make Money?

Data recovery companies make money by offering the following services;

  • Hard Drive recovery
  • RAID Recovery
  • Tape Recovery
  • Optical Recovery
  • Removable Recovery
  • Digital Recovery
c. Payment Options
  • Payment via bank transfer
  • Payment via credit cards
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
  • Payment via bank draft
d. Sales & Advertising Strategies
  • Introduce our data recovery services business by sending introductory letters alongside our brochure to corporate organizations, schools, the government, and other key stakeholders throughout the city where our data recovery services business is located.
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get our message across
  • Creating a basic website for your business to give our business an online presence
  • Directly market our services
  • Advertise our business in community-based newspapers, local TV and radio stations
  • List our business on yellow pages ads (local directories)
  • Encourage the use of word-of-mouth marketing (referrals)

Financial Projection

a. How Much Should You Charge for your Service?

The amount to charge for your data recovery service should depend on some factors. For example, the cost to recover files from a USB flash drive starts at $95 for up to 3GB of data. This is for a corrupted file system or accidentally deleted files. But basic hard drive data recovery costs average between $100 and $700, based on these factors. This price typically depends on the severity of damage and what is required to reach the point of data extraction.

b. How Much Profit Do Data Recovery Business Owners Make a Year?

A typical data recovery business owner will make between $75,000 to over $150,000 per year.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the data recovery services business
  • The location the business is covering
  • The management style of the data recovery business
  • The business approach of the data recovery business
  • The advertising and marketing strategies adopted by the business
  • The number of years the data recovery service is in business
d. What is the Profit Margin of a Data Recovery Business?

The profit margin of a data recovery service is not fixed. It can range from 45 percent to 80 percent depending on the nature of data to be recovered and of course the time, equipment, and tools required to carry out the job.

e. What is the Sales Forecast?

Below is the sales forecast for a data recovery business. It is based on the location of the business and other factors as it relates to such startups in the United States;

  • First Fiscal Year (FY1): $240,000
  • Second Fiscal Year (FY2): $380,000
  • Third Fiscal Year (FY3): $400,000
  1. Set Up your Office

a. How Do You Choose a Perfect Location for a Data Recovery Business?
  • The demography of the location especially as it relates to data storage and ICT driven businesses
  • The demand for the services of data recovery businesses in the location
  • The purchasing power of businesses in the location
  • Accessibility of the location
  • The number of data recovery services and other businesses that also offer data recovery services in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What State and City are Best to Open a Data Recovery Business?
  • San Francisco, California
  • New York City, New York.
  • Los Angeles, California
  • Chicago, Illinois
  • Las Vegas Nevada
  • Silicon Valley, California
  • Miami, Florida
  • Dallas, Texas
c. What Equipment is Needed to Operate a Data Recovery Business?

You should be prepared to purchase data recovery software applications and hardware equipment. You will also need computers and laptops, servers, storage, and internet facility, telephone, fax machine, and office furniture.

  1. Hire Employees

When it comes to hiring employees for a standard Data recovery services business, you should make plans to hire a competent Chief Executive Officer (President), Operation Manager, Human Resources and Admin Manager, Sales and Marketing Executive, Accountant, Data Recovery Experts (Computer Engineers), and Client Service Executive (Help Desk Office).

  1. Launch the Business Proper

You may have to organize an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party. With a proper launching of the business, you will be able to officially inform people in your city that your data recovery service is open for business.

a. What Makes a Data Recovery Business Successful?
  • You are on a retainership with the government of your city or state or even the federal government
  • You are generating profits from the business
  • Your customers are happy and satisfied with your services and they are freely recommending your services to their friends, family members, and business partners.
  • Your employees are happy and satisfied with the organization.
b. What Happens During a Typical Day at a Data Recovery Business?
  • The office is open for the day’s work
  • The to-do list of the company is reviewed (especially as it relates to outstanding jobs)
  • Employees go straight to their job description
  • Reports are written and submitted to superior officers
  • The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Data Recovery Business?
  • Excellent computer and technical skills
  • Ability to Pay Attention to Details
  • Good managerial and human development skills
  • Good Accounting and Bookkeeping Skills
  • Team-building & Interpersonal Skills.
  • Excellent communication and negotiation skills.
  • Organizational skills.
  • Problem-solving ability.
  • Good Supervisory skills
  • Experience in managing ICT related services business
  • Experience in managing people
  • Experience in business administration
  • Experience in handling data, software, and hardware.