How to Start a Water Restoration Company

The average water restoration service can cost anywhere from $3,000 to $5,000, with larger, more complex problems costing upwards of $10,000 or more. It’s no surprise more and more people are considering starting a water restoration company.

If your area is lacking a quality service, or you have a unique vision that will set you apart from other services in your region, this could be a compelling business opportunity. We’re here to empower you to take the first step with this guide on how to start a water restoration company. 

You’ll discover the pros and cons of embarking on this venture, from budgeting for the initial equipment investment to the legal side of things, finding your first customer, and growing your business sustainably. 

Saving people’s buildings can be an incredibly fulfilling line of work, and it can be very lucrative as well. That’s why we encourage you to take the first step by sourcing your water restoration equipment today at SweepScrub.

You’ll discover the best selection of products from the most trusted brands in the industry here in our catalog, all at competitive prices with great customer service. Reach out today and we’ll help you build your arsenal!

Is Starting a Water Restoration Company a Good Idea?

First, it’s important to set your expectations before starting a water restoration company and determining how viable it is in your specific city.

Assessing Market Demand and Opportunity in Your Area

The frequency of natural disasters such as floods and hurricanes, coupled with the aging infrastructure in many regions, has led to an increasing need for water damage restoration services. 

Homeowners, businesses, and insurance companies are constantly seeking reliable restoration services to mitigate damage and restore properties to their pre-loss conditions.

However, if your area is already home to multiple restoration companies, you might have a hard time gaining market share. You can always find a way to stand out from your competitors, but it’s worth analyzing the market itself to get a better gauge on demand for these services:

• Research Local Disaster Statistics: Areas prone to heavy rainfall, hurricanes, or flooding generally have higher demand.
• Identify Key Demographics: Determine the types of properties in your area, such as residential homes, commercial buildings, and industrial facilities. Will you serve all of these, or narrow your focus to businesses or homeowners specifically?
• Consult with Local Authorities: Local government agencies, real estate agents, and insurance companies may offer insights into the demand for restoration services.
• Analyze Competitors: Identify existing restoration companies in your region and assess their services, pricing, and customer reviews to find gaps in the market you can fill.

If after your research you decide that this opportunity makes sense, great! You just need to come up with an initial investment fund and weigh the potential for profit before actually getting started.

Initial Investment

Starting a water restoration company requires a substantial initial investment, but the profit potential can be significant if managed correctly. 

We’ll offer more information on sourcing your equipment and navigating licensing later on, but here’s a general overview of what you can expect to pay to get your business off the ground: 

• Equipment and Supplies: Water extraction units, dehumidifiers, air movers, mold remediation tools, and safety gear can cost between $5,000 to $50,000 depending on the scale of your operations. 
• Training and Certification: Investing in proper training and certification for you and your staff involves certification courses from organizations like the Institute of Inspection Cleaning and Restoration Certification (IICRC). This can cost up to $2,000 per person.
• Insurance and Licensing: Liability and workers' compensation insurance is essential and can cost several thousand dollars annually. You may need licensing depending on your jurisdiction as well.
• Operational Costs: Renting/purchasing a workspace, marketing expenses, utilities, and payroll are just a few of the initial operational costs, and you should budget another $20,000 to $50,000 for your first year of business.

All in, you’re looking at a minimum of $20,000 to $30,000 for your first year in business on the low end. This is assuming you’re going to operate as a solopreneur without actually hiring any employees.

You can get financing to help cover some of this, but given the current interest rate environment, paying cash is not a bad idea. You’ll pay less in the long run.

Profit Potential

Now, let’s get to what you’re probably most interested in about how to start a water damage restoration company - how profitable is a restoration business? 

It all depends on your local rates and the value you provide your customers. Average rates can range from $1,000 for minor repairs to over $10,000 for extensive restorations. 

But you can earn more by offering additional services like mold remediation, fire damage restoration, and regular maintenance to create more revenue streams.

The number of jobs you secure monthly is the biggest lever you can pull to make more money, which is why having a solid marketing strategy and focusing on repeat business is so important. These are things we’ll cover below as we get into how to start a water damage restoration company.

After covering operational expenses, many restoration companies achieve profit margins between 20% to 50%, depending on efficiency and the scale of operations. As a one-man-shop you’ll probably come in at the high end of that number, but you’ll also be doing all the work.

All that being said, if you’ve decided to go forward with this venture and want to take the next step, great! Learn how to start a water restoration company below.

How to Start a Water Restoration Company: Step-by-Step Guide 

Starting a water damage restoration company, at its core, is not all that different from any other business venture. Once you’ve gotten the legal side of things handled, it’s just a matter of sourcing your equipment and getting to work! 

From coming up with a business name to creating a website, forming a mission statement, there are a ton of minor elements associated with starting a business. 

Far too often we see aspiring entrepreneurs get bogged down by the little details that really don’t matter all that much - like whether you should start an LLC or S Corporation, the color of your logo, etc.

We’re not going to cover any of this. Instead, we’ll focus on the steps that actually move the needle towards signing your first contract and providing your first service. 

So, here’s how to start a water restoration company step-by-step.

Legal and Licensing Requirements

While you shouldn’t stress too much about the legal structure of your business, you do need to create a business of some sort to remove yourself from liability and enjoy tax benefits.

Your best bet will typically be either an LLC or corporation. Weigh the pros and cons of each before registering your business with the appropriate state authorities.

From there you can obtain necessary licenses and permits, which vary by state and locality. You should also secure insurance coverage, including general liability, property insurance, and workers' compensation to protect your business from potential risks and liabilities.

If you’re starting as a solopreneur without employees - which we recommend - the legal and licensing side of things will be far more simple. It’ll be more affordable, too, and you’ll earn more.

Sourcing Equipment at SweepScrub

Equipping your water restoration business with the right tools is essential for delivering quality service. The basics include water extractors, dehumidifiers, air movers, and mold remediation tools.

While the upfront investment can be overwhelming, do not make the mistake of cutting corners and going with the cheapest option. You ultimately get what you pay for, and you may find yourself dealing with subpar restoration results that leave customers unsatisfied. 

Worse, you could end up with faulty equipment that has to be replaced earlier than anticipated, meaning you actually pay more in the long run.

The point is, investing in reliable, efficient equipment from trusted brands will ensure your operations run smoothly and effectively. That’s why you can count on SweepScrub for all the essentials.

We’ve curated the best selection of equipment from trusted brands so you can shop with confidence knowing you’re setting yourself up for success. You can choose from individual components or save money and streamline the process with complete kits, including:

• Water Damage Restoration Silver Package I: Our most affordable kit that contains 4 low-profile air movers, 1 compact dehumidifier, 1 HEPA air scrubber, and 1 flood pumper.
• Water Damage Restoration Gold Package I: This more advanced package features everything from the Silver package along with a commercial-grade ozone machine.
• Water Damage Restoration Platinum Package I: For a more thorough restoration this kit includes everything from the Gold package along with a heated cavity wall dryer for more extensive water damage.

There are plenty more kits in our catalog as well depending on the scale of your business. Take a look around, or better yet, get in touch with our team for personalized recommendations on the equipment you should start with. 

After all, our customer service is what has earned us the trust of thousands of businesses over the years. You can reach us via phone, email, or live chat today to jumpstart your water damage restoration business on the right foot.

Hire and Train Staff or Educate Yourself

Whether you plan to hire a team or start as a solo operator, you need to make proper training a priority. If you are going to hire staff so you can focus on growing the business, recruit individuals with experience in water damage restoration or related fields. 

On the other hand, if you’re starting alone, consider enrolling in certification courses from organizations like the IICRC to gain the necessary knowledge and skills. 

There’s nothing wrong with learning on the job when you are hired by a company, but you don’t want to be learning on the job when you’re securing operating your own business. This could lead to bad word of mouth as clients end up disappointed in your work. 

Develop a Marketing Strategy

There are so many ways you can find clients, but it’s hard to sell water damage restoration services unless you’re going around an area recently affected by a natural disaster. You need a marketing strategy that brings customers to you.

In this day and age, a high-quality website is non-negotiable. It’s easier than ever to get one up and running, too. Similarly, you should leverage social media platforms to promote your services. 

Show examples of past work on your website as you gain experience, client testimonials as they come in, and make it easy for prospective clients to get in touch with you.

Local advertising, such as print ads, radio spots, and community sponsorships, can help you reach potential clients in your area as well. 

One of the best ways to get consistent customer engagement is by networking with insurance companies, realtors, and contractors. You might consider offering them a cut of sales they help you generate through referrals.

Set Up Operational Procedures

Even if you’re starting out on your own, you need to develop standard operating procedures (SOPs) so that eventually you can replace yourself with a staff. This allows you to turn your attention to the business.

This includes guidelines for using equipment, handling hazardous materials, and maintaining safety standards. Regularly review and update these procedures to adapt to new technologies and industry best practices.

Customer Service Considerations

While your focus should be on providing an exceptional service, you also need to train yourself in customer service. When just starting out you likely won’t be able to justify hiring a customer service representative, but eventually, that’s not a bad idea.

Develop protocols for responding to inquiries promptly, providing clear communication throughout the water damage restoration timeline, and addressing any concerns or issues.  Training your staff in customer service helps them represent your business professionally. 

Offering follow-up services and maintaining a relationship with clients can lead to repeat business and referrals. The flip side is true as well - if you leave a client hanging, bad word of mouth can take a serious toll on your ability to generate future business.

Prioritizing Cash Flow 

One of the primary reasons a business fails is poor cash management. You need to carefully monitor your expenses and revenue and make sure you're staying in the green.

Establishing a line of credit or securing a business loan can provide a financial cushion during slower periods. Timely invoicing and follow-up on payments ensure steady cash flow and financial stability.

Preparing for Taxes

The last thing we want to cover in our guide on how to start a water restoration company is understanding and preparing for taxes. 

This is an essential aspect of starting a water restoration company, and any business for that matter. Keep accurate records of all income and expenses, and consider hiring an accountant or using accounting software to manage your finances.

Familiarize yourself with tax deductions and credits applicable to your business, such as equipment depreciation and business-related travel expenses. Paying estimated taxes quarterly can help avoid large tax bills at the end of the year.

Parting Thoughts on How to Start a Water Damage Restoration Company

There you have it, the basics of how to start a water restoration company. The truth is, there is so much that goes into starting a water restoration business, and really, any company. 

We don’t want you to get overwhelmed by the little details, though. Focus on the big things that actually move the needle. Get your legal requirements handled, source your equipment, and start finding customers. The rest can be handled as you go.

So, take the first step today by reaching out to SweepScrub to source all the equipment you need. Our solutions are going to help you perform an exceptional service for your customers, one that will keep them coming back for more and spreading positive word of mouth.

Begin your journey into the exciting, lucrative restoration industry with us today!