In today’s competitive restoration industry, understanding the keys to growth, consistency, and strategic partnerships can make all the difference. Drawing from nearly two decades of hands-on experience, Nate from Restoration Made Simple shares invaluable insights on how restoration businesses can thrive. Whether you’re a startup or aiming to scale, this guide covers everything from relationship-building and sales strategies to hiring and navigating third-party administrators (TPAs).
Starting Out in Restoration: The Power of Consistency
Nate’s journey into restoration began almost 20 years ago, transitioning from IT and education into a startup restoration company. Like many in the industry, the early days were challenging. However, Nate emphasizes that the turning point was relentless consistency. “That first year is awful,” he admits, “but I never gave up.” Building relationships with insurance agents, property managers, and plumbers takes time—often six months to a year. Persistence is key.
One innovative strategy Nate’s company employed was creating a “flood house” within their warehouse to conduct continuing education classes for insurance agents. This hands-on approach not only educated agents but positioned the company as a professional and trusted partner, leading to increased referrals and business growth.
Nate: “Word travels really quickly when you’ve got people in your shop, and they see you as the professional.”
When to Bring on Sales Reps and Scale Your Team
Many restoration company owners struggle with the decision of when to hire sales representatives or additional staff. Nate advises a financially grounded approach rather than acting on gut feelings. Typically, a company should reach around $500,000 in revenue before seriously considering hiring a salesperson, with some cases requiring closer to $800,000 to $1 million to ensure profitability.
Hiring too early can strain finances since sales reps often take six months to a year before generating a positive return on investment. Additionally, owners must consider operational logistics, such as whether they are still heavily involved in fieldwork or have crews handling jobs independently.
Optimizing Crew Efficiency: One-Man vs. Two-Man Crews
Operational efficiency is critical in restoration. Nate points out that two-man crews often spend a significant portion of their day just driving between jobs—sometimes up to three and a half hours daily. This “windshield time” represents lost productivity and increased costs.
Interestingly, Nate found one-man crews tend to work harder and more efficiently because they are motivated to complete jobs quickly and return home, whereas two-man crews may have more downtime. While some jobs require two-person teams (e.g., confined spaces), careful planning and logistics can reduce inefficiencies and improve margins.
Understanding and Leveraging TPAs in Restoration
Third-party administrators (TPAs) often evoke strong opinions in the restoration industry. While many smaller companies dislike them, Nate encourages business owners to carefully consider TPAs as a valuable revenue stream. He notes that major players like ATI, Blue Sky, Belfor, and Servpro all work with TPAs profitably.
TPAs help control costs for insurance companies but also offer restoration companies a consistent flow of jobs and faster payments. Nate highlights that being on TPA programs can reduce the time and effort spent on collections and increase cash flow reliability.
Nate: “If your breakeven number is, say, $50,000 a month, then every TPA job on top of that is gravy—even if the margin is a bit lower.”
He cautions that diversifying revenue streams is essential to avoid overreliance on any one source. Combining TPAs with insurance agents, plumbers, online marketing, and government contracts creates a more resilient business.
Referral Sources: Navigating the Complexities
Referrals from insurance agents, plumbers, and other partners remain a cornerstone of restoration business. However, Nate points out the challenges, particularly with plumbing referrals where referral fees have escalated dramatically in some markets—sometimes up to $1,500 or even $2,000 per lead.
He advises building strong, mutually beneficial relationships with referral partners. While some plumbers may expect high fees, owning the relationship and maintaining exclusivity can be more valuable than competing on price alone.
Hiring Smart: Avoiding Common Pitfalls
Hiring new technicians or office staff should be a strategic decision based on metrics, not just workload. Nate recommends analyzing the cost burden of each new hire and ensuring the company can generate enough revenue to cover and profit from the addition.
Typically, a restoration truck should generate between $40,000 to $60,000 in monthly revenue to justify its costs. Hiring prematurely can lead to financial strain if business slows down after onboarding new staff.
Balancing Growth and Profitability
Nate shares a cautionary tale from his own experience running a multi-location restoration company. Despite increasing sales volume, he struggled with shrinking profit margins and longer work hours. The lesson? Growth doesn’t always mean more money unless managed carefully.
Understanding operational costs, reducing inefficiencies like excessive windshield time, and maintaining strong financial controls are vital to sustainable growth.
Final Thoughts: Persistence, Diversification, and Smart Scaling
Nate’s key advice for restoration business owners boils down to persistence and diversification. Building relationships takes time, and consistency over months or years is necessary to see results. At the same time, diversifying revenue streams—from TPAs to online marketing to referral partnerships—helps stabilize income in an unpredictable industry.
When it comes to hiring and scaling, decisions must be rooted in financial data and operational efficiency rather than quick fixes. Thoughtful planning around crew deployment and sales growth can protect margins and prevent common pitfalls.
For those looking to grow or optimize their restoration business, Nate and the team at Restoration Made Simple offer expert consulting tailored to startups and medium-sized companies. Their month-to-month approach ensures flexibility and value without long-term contracts.
Learn more by visiting restorationmadesimple.com and take the first step toward building a more profitable, sustainable restoration company.