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How Much Do Restoration Companies Make: The Comprehensive Guide to Revenue, Profits, and Owner Salaries

8 min
Contents

CONCLUSION

The restoration industry as a whole is expected to produce $7.1 billion in revenue by the end of 2024. Sources cite climate change and the rise in natural disasters as major contributors to growth. Still, people need these services more than ever, and there is a big financial opportunity for entrepreneurs looking to enter the space.

So, how much money can individuals and businesses make in the growing restoration industry? Well, it depends—there is no hard and fast rule.

The figures here serve as general guidelines gathered from publicly available information and online industry sources. Real earnings can vary widely depending on experience, location, company size, and market demand. While these estimates can give you a sense of potential income, your actual numbers might look slightly different based on your unique circumstances.

According to C&R Magazine’s recent report, 42.4% of restoration businesses forecasted earnings ranging from $1-5 million for the year 2023.

According to the US Chamber of Commerce, small business owners in the United States make between $83,000 to $126,000. For restoration business owners, salaries depend on factors like location, market competition, size of business, number of jobs per year, operational efficiency, profit, how much they decide to pay themselves, and more.

If you’re looking to start a restoration company, you’ll find profit margins, typical owner salaries, and the time it takes to reach profitability below.

Summary

The average profit margin for restoration companies is different based on the type of job you’re doing, how you are pricing the job, and how smooth the job goes.

The typical timeframe it takes for a new business to become profitable is anywhere from two to three years, but this depends on many factors and will vary from business to business.

As a business owner, the income you can expect to earn ranges widely. You should expect a modest salary in the initial years but can work towards $350,000 and beyond as your company becomes large, profitable, and established.

Key factors that influence profitability and the owner’s potential earnings are things like location, market demand, and operational efficiency.

A pie chart showing the breakdown of how much revenue restoration businesses predict their companies will make in 2023

Source: C&R State of the Industry Report 2023

Average profit margin for restoration companies

Like any business, profit margins will always vary. For restoration companies, in particular, profit margin and risk change based on job type and job size. Check out the video below for a great introduction on profit margins and the profitability of the restoration industry as a whole.

Breakdown of profit margins

Expert Shane O’Dazier breaks down general profit margins that restoration companies should aim for. He notes the following ranges for four different types of restoration jobs:

  • Reconstruction: up to 10% gross margin
  • Fire damage repair: 20-25% gross margin
  • Mold remediation: 20-50% gross margin
  • Water damage restoration: 50-80% gross margin with larger margins on smaller jobs

He also outlines the risk level of each, the riskiest type of job for profits being reconstruction, then fire, mold, and water as the least risky.

Overview of revenue and expenses

Reconstruction 

Reconstruction, or rebuild, costs vary more than other types of projects due to factors like square footage, location, and materials, says Angi. The easiest way to estimate how much this type of job will cost, though, is by square foot. Consumers can expect to pay anywhere from $100 to $500 per square foot on a new home rebuild.

Fire damage repair

The national average cost for a fire damage restoration job is $12,900, according to Forbes. But given the wide range of damage fire can cause, the cost can range as well – Forbes quotes as little as $1,200 to as much as $72,300.

Fire damage restoration includes different procedures to repair different types of damage. As a fire can cause smoke damage, soot, and water damage (among other things), repairs like soot removal, duct cleaning, thermal fogging, ozone treatment, removing damaged items, and deodorizing furniture may be necessary aside from a full rebuild.

Fires are broken down into five types of classes, with restoration costs starting around $8,600 for Class A and climbing to $24,800 for Class D.

  • Class A: Wood fires
  • Class B: Flammable liquid fires
  • Class C: Electrical fires
  • Class K: Oil and grease fires
  • Class D: Metal fires

Typical expenses include: labor, materials that range from new drywall to new roofs, equipment like ozone generators, transportation, and overhead.

Mold remediation

According to Architectural Digest, on average, mold remediation costs $2,230 or from $10 to $25 a square foot. On the high end, for a 300 square foot affected area, they quote a cost range of $3,000 to $7,500 for consumers. On the low end, for 25 square feet, they quote a range of $250 to $625.

There are many different types of mold, each of which can require different remediation techniques. On the low end, for Chaetomium, you’ll charge anywhere from $600 to $5,000. On the high end, for Stachybotrys chartarum (black mold), you’re looking at a range from $800–$7,000.

Typical expenses include: PPE (like N95 masks), bleach, equipment for removing water and drying out a space, bleach, gloves, and more.

Water damage restoration

The national average cost for water damage restoration is $3,812, according to HomeAdvisor, with a range of $1,350 to $6,274.

Water damage is broken out into three categories:

  • Category 1 (least expensive): Clean water (Water heaters, faucets)
  • Category 2 (mid range): Gray water (Appliances, toilets)
  • Category 3 (most expensive): Black water (Sewage, contaminated water)

Typical expenses include: labor, materials like new flooring, appliances and parts, and drywall, equipment like fans for the dry-out, transportation, and overhead costs.

Insurance payments vs. direct client payments

Restoration companies operate within a unique revenue model – they are often paid by insurance companies rather than directly by clients.

The pros and cons of this model

Pros: Consistent cash flow from insurance companies, reduced financial burden on clients, and larger project opportunities.

Cons: Potential payment delays, more complicated billing processes, and reliance on insurance claim approvals. DocuSketch can help here – with precise documentation built for restoration companies that speeds up scoping, estimating, and cycle times.

“DocuSketch can get restoration companies paid more quickly – with precise documentation built for restoration companies that speeds up scoping, estimating, and cycle times”

Average time to become profitable as a new business

The time and path to profitability hinges on many factors, like initial investment, location, marketing, owner effectiveness, leads, and efficiency. Below, we’ll outline approximate startup costs and initial investments, typical timeframe to profitability, and cash flow considerations.

Startup costs and initial investment

There are many costs when starting a new business, including things like equipment purchases, vehicle leasing or purchasing, marketing, licensing, and insurance.

Below, you’ll find a general idea of how much it costs to start a restoration franchise, which will give you an idea of how much it can cost to start a business on your own from scratch as well.

  • PuroClean’s initial franchise investment cost: Approximately $225,000 – $245,000
  • Paul Davis’s initial franchise investment cost: Approximately $285,800 – $737,400
  • ServiceMaster Restore’s initial franchise investment cost: Approximately $252,675 – $358,810

Typical timeframe for profitability

The typical timeframe it takes for a new business to become profitable is anywhere from two to three years, but this depends on many factors and will vary from business to business.

To put that into better perspective, restoration company Paul Davis lists average reported gross sales for each of their franchises at:

  • Businesses two years and older: $5,836,208
  • Businesses two years and younger: $2,493,138

Factors that may influence this timeframe include: market demand, competition, industry experience, marketing efforts, and the owner’s overall effort, efficiency, and success in running and growing the business.

Cash flow considerations

As you strive to manage and maintain cash flow in the early days, there are a couple of best practices that can help:

Helpful tools and resources

Owner salary expectations

Your net take home pay will vary based on many different factors, including how many jobs you get per week, the cost of those jobs, location, seasonality, competition, efficiency, marketing, and, ultimately, how much you decide to pay yourself.

Given that, we’ve done the research for you to figure out how much you can estimate you’ll make as a restoration company business owner in the initial and later years you’re in business.

Earnings for new business owner

The way you’ll earn money from their business is a function of how much revenue and profit you generate. Generally, how much you earn each year will be very subjective, as you will be the one determining how much to pay yourself.

⚠️ Also keep in mind: New business owners often need to reinvest a significant portion of profits into the business to cover expenses, taxes, loans, marketing, and expansion. Below are a couple of resources you can use to determine how much salary you should expect in the first years of business.

U.S. Bureau of Labor Statistics

The average hourly wage the U.S. Bureau of Labor Statistics lists for the occupational groups of Installation, Maintenance, and Repair plus Construction and Extraction is $32.03/hour. If you work 40 hours per week, 2,080 hours per year, your average take home pay would be $62,400.

CO by U.S. Chamber of Commerce

CO, the online publication by the U.S. Chamber of Commerce created a helpful resource for how to calculate how much you should pay yourself. They list the average range of pay for small business owners between $83,000 and $126,000 per year.

Free Business Salary Calculator

Gusto (Human resource software) created a free business salary calculator where you can estimate your earnings as a restoration business owner. You’ll enter stats like your monthly gross income, cost of goods sold, and expenses to get your net take home pay.

Earnings for established and successful business owners

Expert Shane O’Dazier mentions that it’s realistic for established owners to take home pay beyond $350,000. That’s in line with what Paul Davis lists for franchises 2+ years of age which reports average gross sales per franchise 2 years or greater is $5,836,208.

This growth ultimately depends on factors such as business size, number and types of projects completed, mitigation of risk, customer base expansion, cost of materials and labor, risk, and local market rates.

Factors influencing owner earnings

There are many different factors that can and will affect the profitability of a restoration business. Things like: seasonality, market demand, insurance coverage, cost of labor and materials, local competition, type of business, business model, business reputation, economic conditions, real estate trends, and more, can all contribute.

IBIS World lists target market, services offered, extent of damage, climate change, environmental calamities, and consumer spending, among other things, as factors that influence the growth of the restoration industry.

Awareness around indoor air quality, aging homes and infrastructure, and an increase in national disasters are others, says the Restoration Association of Florida.

It’s worth noting that you’ll also need to learn the nuances of working with insurance companies.

DocuSketch can help you maximize efficiency and reduce costly errors. Plus, the more jobs that can be successfully completed in a certain period of time, the more profit you stand to make as a company.

The real answer: it all depends

There are so many factors that influence the success, profitability, and revenue of restoration businesses. It will widely depend on your strength as a business owner, market conditions, size of company, if it’s a franchise or independently owned, and so much more.

⚠️ Disclaimer: The numbers in this article are rough estimates based on research and are for informational purposes only.

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