Thinking of Starting a Restoration Company?

Here’s What You Need to Know Before You Begin

If you're considering starting a water restoration company, you're not alone. It’s a high-demand industry with strong margins, recession-resistant services, and relatively low startup costs compared to other trades. But before you dive in, there are key business, financial, and operational realities you need to understand.

1. It’s a 24/7 Business—You Need a Response Plan

Water damage doesn’t wait for business hours. Customers expect emergency response, and insurance carriers often track how quickly mitigation begins.

• What this means: From day one, you need a plan for after-hours calls, weekends, and fast dispatch. That might mean hiring on-call staff or taking calls yourself until the business grows.

2. Licensing and Insurance Requirements Vary

Depending on your state, you may need a contractor’s license, mold remediation certification, and general liability and pollution insurance.

• Pro tip: Research your local requirements early. Restoration is closely watched by regulators and insurance companies, so compliance matters.

3. Cash Flow Timing Can Be Tough

You may finish a job in three days—but not get paid for 30, 60, or even 90 days, especially if you're working with insurance companies.

• What this means: You’ll need enough capital or credit to float payroll, equipment, and materials until payment comes in.

4. You Must Price Jobs Based on True Costs

Too many new companies use flat pricing or underbid to compete. But if you’re not tracking your actual labor burden, equipment usage, and overhead, you’re flying blind.

• Key point: Profitable companies use job costing and financial tracking from the start. Don’t guess—know your margins.

5. You’ll Need Specialized Tools and Software

From moisture meters to dehumidifiers to Xactimate (the estimating software used by insurers), restoration requires both technical gear and digital tools.

• Start-up tip: Buy the essentials, rent what you need for overflow, and learn the software your referral sources already use.

6. Marketing Is About Relationships, Not Just Ads

The majority of jobs in this industry come from referrals—plumbers, property managers, agents, and insurance adjusters.

• What this means: Build trust. Show up on time, communicate clearly, and follow up. Your brand is built one job at a time.

7. This Can Be a Highly Profitable Business—If You Run It Like One

Done right, restoration businesses regularly see net profit margins of 15%–25%. But that only happens when you track financials, manage cash flow, and understand your costs.

Ready to Start Smart?

We work with restoration companies across the country—from startups to seven-figure operations—to help them build financial systems that scale.

👉 Schedule a call here to talk through your financial plan and set up your business to thrive from day one.