A water restoration company is a business that is responsible for cleaning up the aftermath of a water-related catastrophe that damages homes and business properties. A water restoration company also works to restore the property to its normal condition.
Available data shows that the American restoration industry has grown to an astonishing $210 billion annual market. This points towards a skyrocketing market for home and commercial restoration in the coming years.
We all can agree that hazards and disasters can happen at any moment, but one thing is sure, disasters happen often. Reports have it that more than 14,000 people experience water damage every single day, and damage from “water leaks and frozen pipes cost consumers and insurers more than $10 billion every year in the U.S.”
You need to understand that water damage is also extremely expensive, with an average costs to repair water damage ranging from $1,038 – $3,607, and can approach well over $6,000 if the damage is severe. We also know that with water damage, there is always the danger of mold growth. Mold damage can occur no matter when a home or commercial property was built.
Steps on How to Start a Water Restoration Company
Table of Content
Conduct Market Research
The first step in the market research process for your water restoration business is to develop market-based research questions in line with your overall business goal and objective. In this regard, you should source information that will help you maximize your business, give you easy access to techniques and equipment that will help you operate your water restoration business with less stress and increased profitability within the shortest time frame.
a. Who is the Target Market for Water Restoration Business?
The target market for water restoration business should include the public sector; government ministries, agencies, and parastatals (public works department), organized private sector, households, property owners, facility managers, boarding houses/campuses, playground/parks, estates, and communities, farm settlements, campgrounds, and corporate organizations.
b. Is Water Restoration Business a Profitable Business?
Yes, the water restoration business is quite profitable because countless government buildings, schools, and private business facilities are affected by water disasters each year.
c. Are There Existing Niches in the Industry?
There are no niche areas in the water restoration business. However, understanding the classes of damage is important to not only potentially preventing an incident, but more importantly, to understand where you stand in the eyes of the industry. These classes and many more activities can serve as niches to choose from in this business.
- Class 1 damage – it involves part of a room that has absorbed little moisture. It’s the least level of damage.
- Class 2 damage- this is when it has affected an entire room and has absorbed into carpeting and walls.
- Class 3 damage – when it must have absorbed up into the walls, saturated most of the area, and may have come through the ceiling. Class 3 damage is considered the worst.
- Class 4 damage – this stage requires specialty drying due damage done to materials such as hardwood, stone, and concrete.
- Removing drywall
- Carpeting and flooring as well as cleaning up debris
- Drying and getting the humidity
d. Who are the Major Competitors?
- All American Water Restoration
- RVA Restoration
- United Water Restoration Group of Charlotte
- Dalworth Restoration
- Utah Water Damage and Mold Removal by AAA Restoration
- 24-7 Restoration, Inc.
- ASAP Restoration LLC
- Certified Restoration Inc.
- Utah Disaster Restoration Services
- Anytime Restoration Services
- DRYmedic Restoration Services
- Putman Restoration of Shreveport
- Lotus Restoration Services
- Disaster MD Restoration Services
- AdvantaClean of Spring
- Big Guys Restoration & Flooring
- American Response Team
- Oklahoma Disaster Restoration
- AWR Restoration & Cleaning
- Boss Disaster Restoration, Inc.
This industry is highly competitive as everyone is still vying for market share and brand awareness in the industry. Have it in mind that floods ranked #1 in the United States for natural disasters and just as little as two feet of rushing water can easily carry a car away.
Even with the level of competition and innovation going on in this industry, you still have a very large opportunity to leverage and achieve financial sustenance.
e. Are There County or State Regulations or Zoning Laws for Water Restoration Business?
No, there are no county or state regulations or zoning laws for water restoration businesses, but players in this industry are expected to work with the existing regulations governing similar businesses in the county where their business is domiciled.
f. Is There a Franchise for Water Restoration Business?
Yes, there are franchise opportunities for water restoration businesses. Here are some of them;
- ServiceMaster Clean/ServiceMaster Restore
- Rainbow International Restoration
- Paul Davis Restoration
- Restoration 1
- 911 Restoration
But before you consider starting a water damage cleaning and restoration business, you ought to investigate whether franchising might be the right move for you. Check if it suits your dreams and visions for your business, check if it suits your long term and short time goals.
g. What Do You Need to Start a Water Restoration Business?
- A Feasibility Report
- Business Plan
- Licenses and Permits
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Equipment and Utility trucks
- Cleaning supplies
- Startup Capital
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a water restoration business are;
Water Restoration Business Name ideas
- Wipe Clean© Water Restoration Company, Inc.
- Clean and More® Water Restoration Company, Inc.
- Jason Macel© Water Restoration Company, Inc.
- Go Green® Water Restoration Company, Inc.
- City Clean™ Water Restoration Company, Inc.
- Anthony Lawson™ Water Restoration Company, LLC.
- James Kingston© Water Restoration Company, LLC
- The Restorer® Water Restoration Company, Inc.
- Allen World© Water Restoration Company, Inc.
- Like Pro© Water Restoration Company, Inc.
- Tony Morgan® Water Restoration Company, Inc.
- Cleanest Group® Water Restoration Company, Inc.
- We Remove® Water Restoration Company, Inc.
- The Base® Water Restoration Company, Inc.
- Go Getter® Water Restoration Company, Inc.
- Red Berret© Water restoration company, Inc.
- Gleaning and Co™ Water Restoration Company, LLC
- Chicago City® Water Restoration Company, Inc.
- Bally White® Water Restoration Company, Inc.
- Make Clean™ Water Restoration Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Water Restoration Business?
Although there are some options when it comes to the business structure of a water restoration business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers need to protect themselves from lawsuits, while avoiding the double taxation.
Also since it is taxed like a partnership, it can be more flexible than a corporation and a sole proprietorship – seems like the best of all worlds. Please note that an LLC will need an EIN if it has 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 Water Restoration Business?
- General Business License
- Health and Safety Permit
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections (If you have an office)
d. What Type of Certification is Needed to Open a Water Restoration Business?
- Water Remediation Certification and a Contractor License
- Certified Mould professional
- IRI Water Restoration Certification
- Microbial Remediation Supervisor
- Building Moisture and Documentation (BMI)
You need to know that standards exist which those who are starting a water restoration business will need to be aware of, the most commonly cited mitigation industry standard is the Institute of Inspection Cleaning and Restoration Certification S500 Standard and Reference Guide for Professional Water Damage Restoration.
Note that this standard outlines the process, procedures and recommendations for qualified mitigation efforts including understanding how to properly dry various affected building materials in residential as well as commercial properties.
e. What Documents are Needed to Open a Water Restoration Business?
- 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
- Company Bylaws
- Memorandum of Understanding (MoU)
It is very important to state that licenses for water damage restoration businesses are typically regulated locally. You need to research your location because they can all vary in different areas. But one document you should have in mind is the service contract or agreement.
In this business, we strongly advise that you ask your clients to sign a service agreement before starting a new project. Have it in mind that this agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions.
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a water restoration business, usually you may not have any need to file for intellectual property protection or trademark. This is so 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.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Water Restoration Business?
When it comes to starting a water restoration business, the startup cost can range from $20,000 to $80,000 and higher depending on how much equipment the business owner decides to purchase.
b. What are the Costs Involved in Starting a Water Restoration Business?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $3,300.
- Marketing, Branding and Promotions – $2,000.
- Business Consultant Fee – $2,500.
- Insurance – $12,400.
- Rent/Lease – $80,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $130,000
- Start-up Inventory (cleaning chemicals and materials) – $10,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Utility Truck and Equipment – $70,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Water Restoration Business?
- The Choice of Location
- The Required Licenses and Permits
- The Type of Facility
- The Cost for Branding, Promotion, and Marketing of the Water restoration business
- The Cost of furnishing and equipping the facility
- The Cost of Insurance
- 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
- The Cost for Grand Opening of the Water restoration 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 water restoration business because you are expected to go out in the field to offer your services. You may just decide to operate from a small office space or just lease a storage facility for your working tools and equipment.
e. What are the Ongoing Expenses of a Water Restoration Business?
- Cost of your supplies such as pipes, cleaning chemicals, cleaning towels, hand gloves, facemask et al
- Utility bills (gas for utility truck, internet, phone bills, signage, sewage et al)
- Truck maintenance and repair
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (Owner) – $75,000 per year
- Accountants (Cashiers) – $35,000 per year
- Cleaning and Restoration Technicians (Cleaners) – $30,000 per year
- Utility Truck Driver – $26,150 per year.
g. How Do You Get Funding to Start a Water Restoration 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
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Like Pro© Water Restoration Company, Inc. is a licensed water restoration company that will provide services to a wide range of clientele. The business will be located in will in North Charleston, South Carolina – United States of America and we will cover other neighboring cities. We chose to operate in this city because we know that our services will be in high demand due to the growing activities in the real estate and construction industry.
b. Products and Service
We will offer a wide range of restoration and cleaning services to both residential and commercial customers, including water damage restoration, fire damage restoration, mold remediation, storm damage restoration, and cleaning services (carpet, upholstery, air ducts, sewage and biohazard cleanup, and odor removal).
c. Mission Statement
Our mission is to establish a water restoration business that will create a standard of excellence in the industry. We want our water restoration business to be listed amongst the top 10 water restoration businesses in the United State within the first 5 years of operation.
Our vision is to establish a standard and world-class water restoration business that will be the “go-to” water restoration service in the United States of America.
d. Goals and Objectives
The goals and objectives of the water restoration business is to restore facilities to their original state after water disasters and related damages.
e. Organizational Structure
- Chief Executive Officer (Owner)
- Accountants (Cashiers)
- Cleaning and Restoration Technicians (Cleaners)
- Utility Truck Driver
Just like we stated earlier, your success in this business will be dictated by a lot of things and marketing is a benchmark. Marketing here is not all about minor background marketing but a concrete plan organized and outlined for achievements. Things to consider may include.
a. SWOT Analysis
- Excellent operational history
- Attention to detail.
- Accurate estimates with no hidden costs.
- Experience and trained professionals.
- Excellent customer testimonials.
- Reliable and efficient service delivery.
- Not enough clientele to run at full capacity immediately
- The owner is new to large scale marketing
- We will need a loan to purchase equipment and a utility truck
- Lack of economies of scale.
- Increase in water and related disasters.
- Favorable government policies
- Build upon existing clientele
- Online market, new services, new technology, and of course the opening of new markets.
- Loans diminish profitability until they are paid off
- The first year will be financially tight while we gain customers and pay off loans
- Competition in the area could increase
- Management of employees requires time, money, and efforts
- The environmental department could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses.
b. How Do Water Restoration Companies Make Money?
A water restoration services business makes money by charging clients to clean up their facilities after water damage.
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 your water restoration business and the services your offer by sending introductory letters alongside your brochure to facility managers, real estate companies, corporate organizations, campuses/colleges, residents, the government, and other key stakeholders throughout the city where your water restoration business is located.
- Advertise on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business to give your business an online presence
- Directly market your services
- Join local water restoration businesses and commercial cleaning associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Service?
Water restoration companies charge $2,500 on average for simple mitigation jobs and higher fees depending on the extent of damages done to a property and the resources and time required to restore the facility to its original state.
b. How Much Profit Do Water Restoration Business Owners Make a Year?
You will only need about 300 mitigation projects (small jobs) in a year to earn $750,000. And if you add some high-value projects, your annual revenue could reach as high as $2.4 million.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the water restoration business
- The location the water restoration business is covering
- The management style of the water restoration business
- The business approach of the water restoration business
- The advertising and marketing strategies adopted by the water restoration business
- The number of years the water restoration facility is in business
d. What is the Profit Margin of a Water Restoration Business?
The profit margin of a water restoration business is not fixed. It could range from 45 percent to 80 percent depending on the nature of the water restoration job to be carried out and of course the time, equipment, and tools required to carry out the contract.
e. What is the Sales Forecast?
Below is the sales forecast of a water restoration 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): $420,000
- Second Fiscal Year (FY2): $880,000
- Third Fiscal Year (FY3): $1.5 million
Set Up your Office
a. How Do You Choose a Perfect Location for Water Restoration Business?
- The demography of the location as it relates to the frequency of water disasters
- The demand for the services of water restoration businesses in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of water restoration facilities and other businesses like commercial cleaning companies that also offer water restoration services in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
Irrespective of the business size, location is one crucial thing which would hit a business hard when made wrongly. You have to note that your location decision has a direct effect on the operation’s costs as well as your business ability to serve customers.
Once you’ve made this decision, it can be very difficult and costly to undo. This is because the cost of moving an operation is often significant and you run the risk of inconveniencing customers and staff. This is why you need to get it right once and for all.
b. What State and City are Best to Open a Water Restoration Business?
- Warwick, Rhode Island
- Mount Pleasant, South Carolina
- Los Angeles, California
- San Antonio, Texas
- Cambridge, Massachusetts
- Chattanooga, Tennessee
- Lewiston, Maine
- Grand Rapids, Michigan
- Chandler, Arizona
- Colorado Springs, Colorado
- Philadelphia, Pennsylvania
c. What Equipment is Needed to Operate a Water Restoration Business?
- Moisture Meters
- Air Movers
- Axial Air Movers
- Centrifugal Air Movers
- Low-Grain Refrigerant Dehumidifiers
- Compact Air Movers
- Air Scrubbers
- Utility Truck
When it comes to hiring employees for a standard water restoration business, you should make plans to hire a competent Manager (you can occupy this role), Accountant, Water Restoration Technicians (Professional Cleaners), and Utility Truck drivers.
Launch the Business Proper
No water restoration company opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening party if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the water restoration business, you will officially inform people in your city that your water restoration business is open for business.
a. What Makes a Water restoration business Successful?
- Choose a good location and reliable equipment to launch the business
- Partner with facility managers
- Hire only competent, hardworking, and trustworthy staff
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your water restoration business
- Leverage all available online and offline platforms to promote your water restoration business.
b. What Happens During a Typical Day at a Water Restoration Business?
When work resumes, the staff or marketing team goes out to source for business. Before a deal is sealed, a water restoration company is expected to carry out an inspection of the location and the nature of the water restoration job to be carried out. This will enable them to know the nature of the equipment to be deployed to the site.
Once the deal is sealed, the water restoration company does the job as agreed by both parties. If after the job is carried out and the clients aren’t satisfied, the water restoration company is expected to go back and do a thorough job at no extra cost to their client.
The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Water Restoration Business?
- Ability to Pay Attention to Details
- Good managerial and human development skills
- Good Accounting and Bookkeeping Skills
- Visionary Leadership
- Team-building & Interpersonal Skills.
- Excellent communication and negotiation skills.
- Organizational skills.
- Problem-solving ability.
- Good Supervisory skills
- Experience in managing commercial cleaning services business
- Experience in managing people
- Experience in business administration
- Experience in handling cleaning chemicals and handling power cleaning machines and equipment.
9. Discuss with an Agent to Know the Best Insurance Policies for You
Insurance protection is very necessary in any business that wants to succeed and grow. In this business, you will surely depend on your water damage restoration insurance to provide protection for both your vehicles and business. We believe that the insurance can include a BOP with general liability, workers’ compensation, commercial truck insurance and other coverage that provide protection against costly lawsuits.
In the United States, insurance usually are required by law. If you earn income by providing water damage restoration services to either residential or commercial properties, make sure you’re familiar with the local rules and regulations where you work.
- Workers Compensation Insurance
- General Liability Insurance
- BOP insurance
- Commercial vehicle policy