Doesn’t every restoration company owner want to grow his or her business? Generate more revenue, achieve higher profits, open up new markets, implement new services, and generate more work? But there are only so many ways to do this. Many of these ways get little attention from most restoration company owners, yet they represent their very best opportunities to grow.
There are several tsunamis of change affecting the restoration industry today. One of them is the move to “full-service.” Customers want to make one call, to one contractor who can do it all. They don’t want to be their own general contractor overseeing the work of three or four contractors to complete their damage repair.
The same is true of Third Party Administrator (TPA) Networks and individual insurance carriers. One full-service contractor who is trustworthy, has excellent skills in customer service and satisfaction, and can be depended upon to do quality work in a timely manner is priceless. TPA’s put a lot of time and money into fostering relationships with quality, full-service contractors who are their go-to cadre for damage repair.
If you are not full-service, you really need to consider it. Most of the good things happening in the industry today are happening to full-service contractors who do more than just water damage work – but things like reconstruction and roofing. It is not as hard as you might think to get involved in this revenue generator and profit maker.
I began my company as a mitigation-only contractor back when I owned a franchise. I was told by my franchisor that focusing on mitigation only was the right thing to do. Construction was just too hard and the margins too thin. Was that the wrong advice!
As my mitigation company continued to grow, I began running the numbers and found I was losing out big time on the largest profit generator available to me! Consider this scenario, will you?
The average mitigation job is about $2,500 while the average build back is approximately $10,000 in size. So what about profit for each one? Are construction margins really too thin? In my company, we set 75% as the benchmark profit we strived to achieve on each and every mitigation job, and 50% on build back work. Now, I know what you’re thinking – 50%, who are you ripping off? No one! With everything above board, paying workers a good wage and purchasing quality products through wholesale sourcing, 50% was our mark, and we achieved it!
So here are the numbers:
- The average mitigation job is $2,500 @ 75% profit = $1,875 net profit.
- The average construction job is $10,000 @ 50% profit = $5,000 net profit.
What a difference! If you are a $500,000 mitigation-only company doing some 200 jobs a year, you could increase your gross revenue by as much as $2 million and your profit by as much as $1 million by becoming full-service. If you secured only half (100) of the total construction opportunities available as a percentage of the total number of mitigation jobs you receive annually, you would more than double your business. Isn’t that worth the effort?
As I stated earlier, adding construction services is not as hard as you might think, and there is plenty of help available to coach you along the way.
My company maintained an average annual growth rate of 46% over nearly a decade of work from startup to hyper-growth. Adding construction services was the best opportunity I came across, and the smartest decision I made was to reach out to seize it!
You can do the same, and it has the potential to change your life.