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Professionals in the restoration and disaster recovery industry contribute important services in the aftermath of many types of disasters. Statistics from the Insurance Information Institute indicate that many factors contribute to an ongoing demand for services offered by this industry:
In a 2017 Restoration & Remediation magazine survey of 10,000 industry professionals, 50 percent of respondents identified water damage as their primary business. The likelihood for this service to present an ongoing revenue stream for so many industry professionals is tied to these statistics:
Professionals in the restoration and disaster recovery industry are looking forward to continued growth. According to an industry survey by Cleanfax magazine, approximately 74 percent of restoration companies reported an increase in revenue in 2016. Of those surveyed, 37 percent said they expected to grow more than 10 percent in 2017. The results of the survey were reported in the July 2017 issue of Cleanfax – more than a month before the United States suffered the damage from hurricanes Harvey, Irma and Maria.
In the aftermath of these three U.S. weather disasters, industry analysts predicted that billions of dollars would be funneled to the affected areas for restoration and recovery. The need for services was expected to provide restoration and disaster recovery businesses with opportunities that could impact their firms for the long-term since reconstruction extends well after a disaster strikes. In major disasters, the process requires years of work. According to a report by The Atlantic magazine, restoring and rebuilding structures was ongoing at the 10th anniversary of Hurricane Katrina in 2015.
Franchises in the restoration and disaster recovery industry are likely to find additional growth opportunities due to the following considerations:
Common Franchise Models for the Restoration and Disaster Recovery Industry
The services provided by restoration and disaster recovery industry franchises help customers minimize losses and salvage valuable assets. The restoration and recovery industry includes a wide range of businesses that provide these services to commercial and residential customers. While analysts define the industry as positioned for growth, uncontrollable factors related to the long-term frequency or absence of severe weather can have a significant impact on the bottom line of these businesses. As a result, many franchises offer multiple services to ensure numerous revenue streams that are not weather-dependent. Those that specialize in a specific application typically succeed by diversifying their client base and uses for their services.
Some of the most common business models for restoration and disaster recovery industry franchises include:
Owning a franchise in the restoration and disaster recovery industry is possible within a wide range of investment levels. Cash requirements of $50,000 are typical for businesses in this industry that involve the use of proprietary products and specialized equipment. Since many restoration and disaster recovery franchises can be operated from a home office, franchisees can save the cost of renting and maintaining commercial space. However, depending on the products and equipment used in your franchise, you may have to consider renting storage space to secure these items safely when not in use.
Franchises in the restoration and disaster recovery industry typically include the same standard costs that all franchisees pay, including ongoing fees for royalties and advertising. Fees for specialized training, proprietary software, mobile apps or other supplemental support vary by franchise. Since licenses and certifications may be required to perform the specific services offered by your franchise, you also may have ongoing costs related to education, testing and other fees associated with keeping professional credentials current.
There are financial advantages to owning a franchise in the restoration and disaster recovery industry. These include:
Even with lower financial requirements, you may require financing to secure a cleaning industry franchise. The good news is that you may find financing easier to accomplish with the backing of a franchise since your money is supported by a proven business plan. This association may mean that you present less risk to wary lenders. In some cases, franchisors may assist in financing your loan, helping to negotiate a loan, or even arranging equipment leasing to save the initial costs of equipment purchases at start up.
You can find a restoration and disaster recovery franchise that may work for you by searching Franchise Opportunities' Restoration and Disaster Recovery Franchises category.
According to a report by CNBC, investors interested in pursuing opportunities in the restoration and disaster recovery industry may have limited choices because there are a small number of publicly traded options. Instead, the report identified franchise ownership as one of the few paths to investing in an industry described as "highly profitable." According to comments from the Institute of Inspection, Cleaning and Restoration Certification (IICRC) included in the report, water damage caused by natural disasters, such as hurricanes, is a growing industry. Potential gross profit margins can range up to 60 to 70 percent, according to the IICRC comments.
Owning a franchise versus an independent business in the restoration and disaster recovery industry is an opportunity to enter this lucrative market with less investment risk because:
As part of a franchise family, you'll also have access to a corporate support team for the life of your franchise. These professionals have the experience and expertise to help you avoid mistakes and recognize opportunities within the franchise system. They can give you the benefit of their knowledge in areas including marketing, hiring and franchise management. You'll also receive the technical training you need to provide your services effectively. In addition, your network of fellow franchisees can offer support and firsthand advice to help you succeed.
While franchise ownership can give you a running start, all business in the restoration and disaster recovery industry can encounter some common challenges. Concerns regarding employee hiring and retention affect all types of businesses in this segment. In the 2017 survey by Restoration & Remediation magazine, 74 percent of participants reported that finding skilled workers was their biggest challenge. While a report by Cleaning and Maintenance Management magazine said that employee turnover rates of over 200 percent were not uncommon in the general cleaning industry, businesses in the restoration and recovery industry report more staying power. Nearly 50 percent of the industry professionals surveyed by Cleanfax magazine reported that their employees stayed with their companies for between four and 10 years.
As a franchise owner in the restoration and disaster recovery industry, you'll likely have to deal with the following considerations in the course of conducting business:
While you'll have the backing of your franchisor's reputation, your franchise eventually will establish its own credibility based on your individual performance. You'll help maintain a steady flow of new clients if you encourage satisfied customers to share their experiences. According to a Nielsen survey, 92 percent of consumers trust referrals from people they know and people are four times more likely to make a purchase when referred by a friend. You'll be best positioned if you're the first name people think of when looking for help in a time of crisis.
Characteristics for Success: Who Should Consider a Restoration and Disaster Recovery Industry Franchise?
Owning a franchise in the restoration and disaster recovery industry includes opportunities for franchises that offer comprehensive or specialized services. Successful franchise owners are prepared for the unique demands and challenges of this growing industry. You'll be more likely to reach your professional and personal goals with franchise ownership in the restoration and disaster recovery industry if you possess the following strengths and skills:
Industry Snapshot*:Minimum Cash Required: $ 15,000
*Based on currently active listings at FranchiseOpportunities.com
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