Thinking of Starting a Restoration Business? Here’s What You Need to Know—Financially
The restoration industry can be highly profitable—but only if your financial plan is as strong as your equipment. Whether you're looking to launch a water mitigation company or offer full-service restoration, it’s easy to underestimate the startup costs, cash flow pressures, and overhead risks involved.
Here’s a financial breakdown of what you should keep in mind before starting a restoration business—and how to position yourself for long-term success.
1. Startup Costs: Restoration Isn’t a Low-Cost Business
Even if you start small, restoration requires capital investment. You’ll need vehicles, drying equipment, software, training, and insurance before your first job ever hits the schedule.
Sample Restoration Startup Budget:
Category Estimated Cost
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Truck or Van $20,000 – $50,000
Air Movers & Dehumidifiers $10,000 – $30,000
Business & Liability Insurance $3,000 – $8,000 (annual)
Software (Xactimate, CRM, QBO) $200 – $500/month
Licensing & Certification $1,000 – $3,000
Branding & Website $1,500 – $4,000
Tools, PPE, and Supplies $2,000 – $5,000
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Estimated Total Startup Range $37,700 – $100,500+
Pro tip: Don’t spend everything upfront. Focus on acquiring what you need to profitably complete the first 3–5 jobs. Reinvest as cash flow allows.
2. Cash Flow Timing: Restoration Work Pays Late
Most jobs, especially those involving insurance, pay 30–90 days after work is completed. That means you’ll be covering payroll, equipment usage, and materials long before any money hits your account.
Financial risks include:
Waiting for adjuster approvals
Delayed customer payments
Financing job costs out-of-pocket
Solutions:
Open a line of credit before you need it
Forecast cash needs 30–60 days ahead
Monitor accounts receivable weekly
Require deposits for self-pay jobs
Without cash flow forecasting, even profitable businesses run out of money.
3. Job Costing: Your P&L Doesn’t Tell the Whole Story
Many startup owners focus on total revenue—but fail to calculate actual profit per job. Estimating errors, labor inefficiency, and missed line items can turn a $7,000 job into a $400 profit—or worse.
Track these job costs:
Labor (including taxes, insurance, and benefits)
Materials and consumables
Equipment use and maintenance
Subcontractors
Project management time
Allocated overhead
Use job costing to find out which services and job types are actually profitable—and which ones are dragging you down.
4. Know Your Overhead Before You Hire or Expand
Adding trucks, staff, or office space without understanding your break-even point is a common mistake. Restoration business overhead includes:
Admin wages
Office rent and utilities
Vehicle payments and fuel
Software and insurance
Marketing and sales costs
Financial tip:
Keep overhead below 25% of revenue if possible. Don’t hire for growth—hire to maintain profit after you’ve confirmed demand.
5. Budget and Forecast from the Start
A restoration business is not something you can run off a bank balance. You need:
A monthly budget with categories for COGS, labor, overhead, and owner draws
A 12-month forecast that anticipates cash gaps and seasonal slowdowns
A method for comparing budget vs actuals to stay on track
Use tools like QuickBooks Online + a financial dashboard (or a service like Kiwi Cash Flow) to visualize your numbers and make informed decisions.
6. Separate Owner Pay from Profit
Taking draws or swiping the business card for personal expenses without a clear plan leads to a blurred financial picture.
Establish:
Guaranteed payments or payroll for yourself
A separate account for profit distributions
A rule for retained earnings so you’re not cash-strapped every time tax season hits
Final Thoughts
Starting a restoration company can absolutely be a profitable, scalable venture—but only with a disciplined financial plan. Before you chase leads or buy more equipment, make sure you understand how money moves in and out of the business. Restoration is high-revenue—but only becomes high-profit with strong financial controls in place.
Ready to build your restoration startup on solid financial ground?
We help new restoration owners create budgets, set up job costing, and stay cash flow positive.
👉 Schedule a planning call with Kiwi Cash Flow