Starting a restoration company can be a rewarding venture, a blend of hands-on repair skills and sharp business savvy. The industry pulls in billions of dollars annually, thanks to consistent demand for water, fire, and mold restoration across residential, commercial, and industrial properties.
This guide will take you through the practical steps of validating your business concept, securing funding, obtaining the right licenses, and acquiring equipment to help you launch a successful restoration company in the U.S.
Step 1: Plan your business and validate your market
Start by researching your local service area. You can talk to insurance agents, plumbers, and property managers. They are excellent sources for understanding referral opportunities and the volume of restoration work available. This gives you a real-world picture of demand.
Next, identify your direct competitors. Use Google Maps to find restoration companies within a 30-mile radius. Review their websites and customer reviews on platforms like Yelp to understand their service offerings, response times, and reputation.
Estimate your startup costs
A realistic budget is your foundation. Initial costs can range from $30,000 to $60,000, depending on the scale of your operation. This figure covers your initial equipment, vehicle, and certifications.
Speaking of costs, plan for major purchases. A reliable used work van might cost $20,000. Core equipment like commercial dehumidifiers run about $2,500 each, and you will need several. Air movers add another $300 per unit.
Many new owners underestimate their equipment needs. You might think one dehumidifier will do, but a typical water damage job often requires three to five units running simultaneously. Starting under-equipped can slow down jobs and hurt your reputation.
Also, factor in certifications and insurance. An IICRC Water Restoration Technician (WRT) course costs around $900. Initial general liability insurance can be between $1,200 and $2,500 annually. These are non-negotiable for professional operation.
Here are 3 immediate steps to take:
- List five local competitors and their primary services.
- Call two local insurance agencies to inquire about their vendor requirements.
- Draft a startup budget with estimated costs for a van and three dehumidifiers.
Step 2: Set up your legal structure and get licensed
First, form a Limited Liability Company (LLC). This structure protects your personal assets if the business is sued. A sole proprietorship offers no such protection. Filing for an LLC with your state's Secretary of State typically costs between $100 and $500.
An LLC also offers pass-through taxation, meaning business profits are taxed on your personal return. This simplifies your accounting. You might consider an S-Corp election later for potential tax savings once your company becomes more profitable.
Secure the right licenses and permits
Many new owners get tripped up by licensing. Requirements vary by state. For example, Florida and California require a specific contractor's license for restoration work, which can cost over $500 and take months to obtain. Check your state's contractor board website for its rules.
For any work on homes built before 1978, you will need the EPA's Lead Renovation, Repair and Painting (RRP) certification. This is a one-day course that costs around $300. Also, secure a general business license from your city or county, usually for under $100.
Here are 3 immediate steps to take:
- File for an LLC with your state's Secretary of State.
- Research your state's specific contractor license requirements online.
- Find a local EPA-approved provider for the RRP certification course.
Step 3: Secure the right insurance and manage risk
Your first move is to get General Liability insurance. You should aim for a policy with at least $1 million in coverage. This will typically cost between $1,200 and $2,500 annually and protects you from third-party property damage or injury claims.
Cover your specific restoration risks
Many new owners find out too late that their General Liability policy excludes mold. You must add a pollution liability endorsement to cover this. This add-on might cost an extra $800 to $2,000 per year, but it is absolutely necessary for restoration work.
Also, consider Professional Liability insurance, often called Errors & Omissions. It protects you if a client claims your work was faulty. In addition, you will need Commercial Auto insurance for your work van, which runs about $1,500 to $3,000 annually.
Once you hire your first employee, Workers' Compensation is legally required. Rates vary widely by state. For providers, you might want to look at companies like Hiscox, The Hartford, or Next Insurance. They specialize in policies for contractors and understand your specific needs.
Here are 3 immediate steps to take:
- Request a quote for a $1 million General Liability policy.
- Ask any potential insurer about adding a pollution liability endorsement for mold.
- Contact an insurance provider that specializes in contractor policies.
Step 4: Find a location and buy equipment
You will need a physical base for your van and equipment. Look for a 1,500 to 2,500 square foot unit in a light industrial or commercial zone. This provides enough room for storage and a small office without paying for unused space.
When you negotiate a lease, you might want to ask for a shorter term, like one to two years. This gives you flexibility as you grow. Some landlords may also offer a tenant improvement allowance to help you build out your office.
Once your location is secured, focus on your equipment. Beyond dehumidifiers and air movers, you will need an air scrubber (around $1,200) and a quality non-invasive moisture meter ($500-$800). A portable extraction unit is another key purchase, which can run from $2,000 to $4,000.
Some new owners try to save money with consumer-grade gear, but this is a mistake. Commercial equipment is built for the demands of restoration work. Suppliers like Jon-Don or Aramsco sell individual units, so you can buy what you need without large minimums.
Here are 4 immediate steps to take:
- Research commercial listings for a 1,500-2,500 sq. ft. space.
- Ask a potential landlord about a one or two-year lease term.
- Price out a portable extraction unit and an air scrubber from a supplier like Jon-Don.
- Create a purchase list that specifies only commercial-grade equipment.
Step 5: Set up payment processing
In restoration, you will often work with insurance proceeds. A standard approach is to collect a 50% deposit upfront to cover initial costs. The final 50% is due upon project completion and customer sign-off. Always get this in a signed contract.
A frequent misstep is not having a way to collect payments on-site. Waiting for checks slows your cash flow, especially for smaller jobs or when you collect a customer's insurance deductible. You need a mobile payment solution to get paid faster.
For restoration companies that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone - just tap and done.
At just 1.99% per transaction with no hidden costs or extra hardware needed, it's a strong offer. Other providers often charge between 2.5% and 3.5%. It's particularly useful for collecting customer deductibles on the spot or for smaller, non-insurance cash jobs.
- Get Started: Download JIM app for iOS
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers
Here are 3 immediate steps to take:
- Draft your standard payment terms, such as a 50% deposit policy.
- Download the JIM app to see how it works on your phone.
- Add a clause to your service contract that specifies payment due dates.
Step 6: Secure funding and manage your finances
An SBA 7(a) loan is a solid option for initial funding. You can often secure $50,000 to $150,000 with rates around Prime plus 3%. Lenders will look for a credit score above 680 and a detailed business plan.
Another route is equipment financing. Since the equipment serves as collateral, these loans are often easier to get. This lets you purchase your extraction units and air movers without depleting your cash reserves from the start.
Plan your working capital
You should have at least six months of operating expenses in the bank. This covers payroll, rent, and insurance. For a new company, this means having $20,000 to $40,000 set aside as working capital.
Many new owners run into trouble by not having enough cash on hand. Insurance companies can take 30 to 90 days to pay an invoice. Without a cash buffer, you might struggle to cover payroll or buy supplies for the next job.
Here are 3 immediate steps to take:
- Check your credit score to see if you meet the 680+ threshold for an SBA loan.
- Contact a lender about equipment financing for your initial purchase list.
- Calculate your estimated operating expenses for six months to determine your working capital needs.
Step 7: Hire your team and set up operations
Your first hire will likely be a Restoration Technician. This person handles the on-site work, from water extraction and demolition to setting up equipment. Look for someone with an IICRC Water Restoration Technician (WRT) certification, as this is the industry standard.
Expect to pay a certified technician between $40,000 and $55,000 annually. A mistake some owners make is hiring cheap, uncertified labor. This can lead to improper drying, secondary mold growth, and costly rework that will damage your reputation from the start.
Streamline your daily workflow
Once you have a job, you need to manage it. Restoration management software like Jobber or Encircle helps you schedule technicians, document job progress with photos, and communicate with clients. This prevents scheduling mix-ups and creates a professional record for insurance claims.
Now that you have your first team member, plan your growth. A good industry benchmark is to aim for $150,000 to $200,000 in annual revenue per field employee. This metric helps you decide when it is financially sound to hire your next technician.
Here are 4 immediate steps to take:
- Draft a job description for a Restoration Technician that requires WRT certification.
- Research local technician salaries to create a competitive pay offer.
- Sign up for a free trial of a management software like Jobber to test its features.
- Set a revenue target of $150,000 before you plan to hire a second employee.
Step 8: Market your business and get customers
Your best leads will come from referrals. Build relationships with plumbers, insurance agents, and property managers. Drop off coffee or lunch. Your goal is to become the first company they call. This direct approach often yields a higher conversion rate than cold online ads.
Next, set up your digital foundation. Create a Google Business Profile and fill out every single section with your services, hours, and service area. Upload high-quality photos of your clean van, professional equipment, and uniformed team. This is your new digital storefront.
Establish your online authority
Many new owners fail to manage their online reputation. After each job, ask your satisfied customer for a Google review. A steady stream of positive reviews helps you rank higher in local search results. It also builds immediate trust with people in a stressful situation.
Once you have consistent revenue, you can explore Google Ads. Keywords like "water damage restoration" are competitive and can cost $50 to $100 per click. A small, targeted campaign with a budget of $1,000 a month is a good place to start testing the waters.
Here are 4 immediate steps to take:
- List five local plumbers and five insurance agents to contact for referrals.
- Create and completely fill out your Google Business Profile.
- Draft a simple email or text message to request customer reviews.
- Research the current Google Ads cost-per-click for "water damage" in your city.
Step 9: Set your pricing strategy
Most of your work will be priced using software, not guesswork. For insurance claims, the industry runs on a program called Xactimate. It provides standardized, location-based pricing for every task, from tearing out drywall to running a dehumidifier.
Insurance adjusters use Xactimate, so submitting your estimates in their format gets you paid faster. A common mistake is to invent your own prices for insurance work. This creates friction with adjusters and will delay your payments significantly.
Calculate your profit and overhead
For Xactimate jobs, you will add line items for overhead and profit. The standard is "10 and 10," which means you add 10% for overhead and another 10% for profit on top of the job's subtotal. This is a widely accepted practice.
For smaller cash jobs, you have more pricing freedom. A time and materials model works well here. You might mark up materials by 30% to 50%. For labor, a good rule of thumb is to bill at three times your technician's hourly pay rate.
For instance, if you pay a technician $25 per hour, you would bill their time at $75 per hour. This covers their wage, your overhead costs like insurance and vehicle maintenance, and leaves room for profit.
Here are 3 immediate steps to take:
- Research the monthly subscription cost for Xactimate.
- Calculate your billable hourly rate for cash jobs using the 3x markup rule.
- Call two competitors to get a price for a small, non-insurance service.
Step 10: Maintain quality and scale your operations
Establish your quality standards
Your reputation depends on consistent quality. Use the IICRC S500 Standard for water damage as your guide. Create a job file checklist to ensure every step, from moisture readings to equipment logs, is documented correctly.
Many owners fail to track their performance. You should implement a simple customer satisfaction survey after each job. Also, track your callback rate. A rate below 5% shows your team is doing things right the first time.
Plan your growth path
Once you have a steady workflow, you can plan for expansion. Use the benchmark of $150,000 to $200,000 in annual revenue per technician to decide when to hire. Hitting this target means you have enough work to support another team member.
Consider expanding your services next. After mastering water restoration, you might add mold remediation. This requires an IICRC Applied Microbial Remediation Technician (AMRT) certification for your lead tech. Software like DASH can help manage more complex, multi-service jobs as you grow.
Here are 4 immediate steps to take:
- Create a quality control checklist based on the IICRC S500 standard.
- Set up a simple post-job customer feedback survey.
- Calculate your current revenue-per-technician to track against the $150,000 benchmark.
- Research the cost and schedule for an IICRC AMRT certification course.
Starting a restoration company is about more than just repairs, it's about rebuilding trust during a crisis. Remember that your speed and professionalism are your best assets. You have the roadmap, now it's time to get to work and build a business that helps people recover.
As you get started, make sure your payment process is just as efficient. JIM turns your smartphone into a card reader, so you can accept payments on-site for a flat 1.99% fee without extra hardware. Download JIM and get paid from day one.
