Restoration has proven to be an essential industry that provides a service with a high purpose. We restore lives and livelihoods of those impacted by disasters. As the world shut down in 2020, restoration continued strong. I have seen an across-the-board increase in professionalism both from independent companies and through the franchise operators. Finally, I am encouraged by the progress from the Advocacy and Government Affairs (AGA) group from the RIA. The AGA is helping with pricing, scoping, representation, and areas where contractors need to have a collective and unified voice.  

One of the biggest challenges in the industry comes from the fragmentation of the players. The industry is populated by small to mid-size companies. This puts the average restoration company in a position of weakness in dealing with multinational insurance and management companies. Another challenge is that there are many different software solutions in the industry, each solving a new and important issue. The challenge is that they frequently don’t work together, which requires many different data entry points for the same information. This adds to the additional required administrative functions, which are often not reimbursed or directly paid for by vendor programs and TPAs.

Restoration is uniquely situated to serve the changing environment, cultural and demographic trends. Restoration is a recession-resistant industry and companies with a strong business approach can take advantage of these opportunities to create a strong local and regional presence. Opportunities can also be created in niches of the industry such as mold, contents and other supporting restoration services. Companies that embrace technology can drive efficiencies. The recent trend of consolidation offers owners that are looking for an effective exit strategy many options.

There will be continued labor challenges, especially for frontline staff and in the construction trades. Many of the skilled construction staff are nearing retirement age or may be looking to move out of the field and into management positions. Compensation for people that will fill entry restoration technician positions and build a restoration career are finding many other options for employment as well. Another major threat to restoration business owners is a lack of focus and discipline on profitability. Many companies are operating on thin margins and are generally cash poor. Continued downward pressure on profit margins can be detrimental to these companies. I also think there are many companies that are accustomed to continued weather events. Companies need to keep in mind that there was a 10-year period without any hurricanes hitting the U.S. starting about 2007 and the wildfires are a relatively new phenomenon. Companies that are using weather events to overcome poor business practices may have challenges in years or even spans of years without the events. Using the unpredictability of weather as a business strategy is risky.