I recently discussed the beauty of a 3-legged stool Business Model. This is a great concept since each of your three ‘legs’ or business sectors ((Leg #1- Residential, Leg #2- Commercial and Leg #3- Restoration) feed and support the other two legs!
Which leg of our 3-legged stool Business Model is (potentially) most profitable? I tell every SFS Training group that…
Restoration by far has created more multi-millionaires than any other ‘leg’ of our industry. (For example, restoration losses comprised almost 40% of my gross and yet contributed 72% of my net profit!) HOWEVER…
Restoration has also destroyed more would-be restorers than any other business leg in our industry! Can you ‘slice and dice’ to avoid most of the risks while still cleaning up with restoration? Absolutely!
I suggest focusing on small to medium sized residential water losses! Here’s why…
A) Much of the time smaller losses will be handled by the local agent AND ‘fly under the radar of an adjuster’ or the much-disliked TPA’s! Plus…
B) These smaller residential losses can be handled with limited equipment. Initially get some air movers and a few dehumidifiers and you’re golden! Another advantage is…
C) You (usually) are in and out of the house in less than a week! This means your equipment will be ready to go for another loss! Even better…
D) Payment is usually much quicker on these smaller losses! Some company adjusters and agents have draft authority up to $5,000.00 or even more. They may even write you a check (less the insured’s deductible) immediately upon completion!
NOTE: If you decide to add the ‘restoration leg’ into your business it is essential to (at the very least) attend an IICRC Water Restoration Tech course first. Here’s why…
Screw up a carpet or upholstered piece and at worst you replace the item. BUT damage a family’s health by messing up on water damage mitigation and you may be in litigation for years and/or on the hook for millions of dollars!
SURPRISE! The big profits in water damage comes from renting drying equipment. BUT you can’t ‘rent from an empty basket’! So be sure to plow some of your profits back into more air movers, dehumidifiers and air scrubbers.
NOTE: We have 1,000’s of restoration contractors in our Strategies for Success: Growing Your Business Facebook Group who will help you get started. Plus all are welcome! (You don’t have to be a SFS graduate to join us!)
I sincerely hope this QuickTIP has given some of you ‘residential-or-commercial-only cleaners’ the vision and the courage to at least investigate gingerly ‘dipping your toe’ into smaller residential water damage losses! (Once again, the potential profits can be enormous!)
However, while technical skills, safety procedures AND the right equipment are all important success in restoration depends on one HUGE factor! (Almost all of your competitors are totally clueless!) I’ll share this ‘restoration success secret’ with you folks very soon!
Best wishes and let your SFS Team know how we can help you!
Steve
This is funny because just a minute ago, a mate was talking about how much money he could make by cleaning up water damaged homes. When you think about it, this could be huge. Thanks for the tip!
I am new to the water damage restoration industry. It is nice to know that this is a booming business. Thank you for sharing this post. I learned a lot from you today.