What Return on Assets (ROA) Really Means for Restoration Contractors
When you’re running a restoration business, it can feel like the only numbers that matter are revenue and cash flow. But there’s another powerful measure that shows how well you’re using what you already have: Return on Assets (ROA).
What Is ROA?
ROA tells you how much profit your company generates for every dollar tied up in assets. The formula is:
ROA = Net Income ÷ Total Assets
Think of it as asking: “Are my trucks, tools, and systems actually earning their keep?”
Types of Assets in a Restoration Company
In restoration, assets aren’t just trucks and dehus. Here’s a breakdown of what’s on your books — and how each can affect ROA:
Vehicles – trucks, vans, trailers, box trucks, even specialty vehicles.
Drying Equipment – dehumidifiers, air movers, desiccant units.
Extraction Tools – portable extractors, truck mounts, pumps, injectidry systems.
Reconstruction Equipment – saws, power tools, scaffolding, generators.
Technology – laptops, tablets, Xactimate licenses, CRM platforms, thermal imaging cameras, LiDAR tools.
Warehouse & Facilities – storage buildings, offices, rented warehouse space.
Inventory & Supplies – consumables like PPE, chemicals, antimicrobial solutions, and tarps.
Financial Assets – cash on hand, AR balances, and prepaid expenses.
Intangible Assets – trademarks, customer lists, and goodwill (if you’ve acquired another firm).
Each of these represents money tied up in your business. ROA helps you see how much profit those investments are actually generating.
Why ROA Matters in Restoration
Asset-heavy model: Restoration requires a lot of gear, and idle equipment eats into profitability.
Utilization is everything: A truck or dehu that sits in the warehouse doesn’t just sit — it drags down your ROA.
Competitive insight: Companies with higher ROA are using their equipment, staff, and systems more effectively than those with lower ROA — even at the same revenue levels.
Financing decisions: Before you finance a new fleet of vans or buy more desiccants, ROA helps you decide if your current assets are paying off.
Benchmarks for Service Companies
Service-based companies typically aim for 5–10% ROA. That said, many of our clients far exceed this.
Below that range, you may be tying up too much in equipment or underpricing jobs.
Higher ROA usually indicates strong utilization, disciplined cost control, and smart pricing.
How to Improve ROA in Your Restoration Business
Track equipment utilization. If half your dehumidifiers are gathering dust, consider selling, renting out, or delaying new purchases.
Increase billing accuracy. Use tech (like LiDAR or AI inventory tools) to capture more billable line items per job.
Balance reconstruction vs. mitigation. If reconstruction assets are underused, reallocate crews and promote mitigation-heavy services during storm season.
Leverage partnerships. Rent specialty gear from suppliers when needed rather than owning everything outright.
Tighten overhead. Idle warehouse space, unused software licenses, or non-productive admin staff can weigh down your total assets without contributing to profit.
Monitor AR (Accounts Receivable). Slow collections inflate your asset base without improving profitability.
Restoration is an asset-intensive business — from box trucks and dehus to software platforms and warehouse space. ROA shows you if those resources are generating the profit they should, or if they’re sitting idle while dragging down your returns.
By tracking ROA and focusing on utilization, efficiency, and accurate billing, you’ll not only improve profitability but also make smarter decisions about when to buy, rent, or hold back on asset growth.
👉 Want to see ROA — and other key efficiency ratios — inside your financial reports? Schedule a call with Kiwi Cash Flow today: https://calendly.com/kiwicashflow