Restoration Overhead: How Much Is Too Much?
Overhead can quietly eat away at your profits—especially in the restoration industry. Trucks, tools, office rent, software subscriptions, insurance… it adds up fast. But how much overhead is too much for a restoration business? And what can you do if it’s already too high?
In this article, we break down typical restoration overhead costs, what percentage of your revenue it should represent, and how to start trimming the fat without cutting essential operations.
What Counts as Overhead in a Restoration Business?
Overhead includes all the indirect costs of running your business—expenses that don’t directly tie to a single job but are necessary to keep your company operating. Examples include:
Office rent and utilities
Admin and management salaries
Marketing and advertising
Insurance (general liability, auto, etc.)
Software (CRM, estimating, accounting)
Vehicle leases and fuel not billed to a job
Equipment maintenance
Training, certifications, and licensing
These are not COGS (Cost of Goods Sold) like labor and materials—these are ongoing expenses that happen whether or not you're working a job.
What’s a Healthy Overhead Percentage in Restoration?
Every business is different, and it greatly depends on how you are tracking your labor, but here’s a general benchmark:
20–29% of Revenue: Lean operation with strong cost controls
30–39% of Revenue: Watch this carefully—profit may be squeezed
40%+ Overhead: Too high for most restoration businesses, especially if net profits are below 20%
If you’re grossing $100,000/month and spending $30,000+ in overhead before you even pay your techs or buy materials, your net profit margins are likely at risk.
Why Overhead Bloats in Restoration Companies
Restoration business owners often ramp up overhead as revenue grows, expecting future jobs to “catch up.” But without strict budget planning, costs can spiral.
Common issues include:
Hiring admin staff too early or too fast
Buying vehicles or equipment on credit without tracking ROI
Paying for unused software or overlapping subscriptions
Marketing spending without tracking conversion rates
Carrying unproductive employees due to weak performance tracking
Restoration Budget Planning: Keep Overhead in Check
To manage restoration overhead costs, you need to budget intentionally—not just react to expenses as they hit the bank account.
Here’s how to start:
Create an Overhead Budget: List all fixed costs and track them against monthly revenue
Use a Percentage-Based Rule of Thumb: Set a target (e.g., keep overhead below 20% of revenue)
Review Contracts & Subscriptions Quarterly: Eliminate tools that aren’t used
Outsource Where It Makes Sense: Use fractional services for bookkeeping, marketing, etc.
Watch Payroll Closely: Ensure admin and management wages stay proportional to revenue
What If My Overhead Is Already Too High?
If you’re already at or above 30% overhead:
Start with your P&L: Break out each overhead category and rank them by dollars spent
Calculate ROI: Is each cost helping you earn more—or just adding comfort?
Cut or renegotiate fixed costs (leases, insurance, software) where possible
Hold off on new hires unless revenue supports the added burden
Even a 5% drop in overhead can mean tens of thousands in profit over a year.
Final Thoughts
Overhead isn’t bad—it’s essential. But uncontrolled overhead kills profit in restoration companies that are otherwise doing solid work. Regular reviews, strategic budget planning, and job-cost awareness are the tools that will keep your business healthy and profitable.
Want help identifying where your overhead is leaking?
We’ll help you break down your financials and create a sustainable restoration budget.
👉 Schedule a call with Kiwi Cash Flow