What You Need to Know About Finances When Starting a Restoration Company
Starting a restoration company is exciting—you’re jumping into a field that provides essential services, helps people in times of crisis, and can be incredibly profitable. But before the trucks are wrapped and the dehumidifiers are humming, it’s critical to lay a solid financial foundation. Here’s what you need to know about finances when launching your restoration business:
1. Start With a Budget (And Don’t Skip the Forecast)
Many business owners think a budget is something you build after you’re already bringing in revenue. But in restoration, your startup costs can be significant—equipment, vehicles, software, marketing, certifications, and insurance all add up quickly. A detailed budget helps you:
Plan how much capital you need to get started.
Avoid running out of cash during slow months.
Know when you can afford to hire your first tech—or your third.
Also, a basic 12-month forecast helps you anticipate revenue fluctuations and expenses, which are common in restoration due to seasonal surges and delays in insurance payouts.
2. Know Your Labor Burden
It’s easy to assume your technician costs $28 an hour because that’s their wage—but that’s just the beginning. Add payroll taxes, workers’ comp, paid time off, health benefits, and time spent not on billable jobs, and your actual hourly labor cost can be closer to $38–$42/hour. Underestimating this number can make jobs that look profitable quietly eat away at your cash.
Use a labor burden calculator to get a more accurate picture before setting pricing or quoting jobs.
3. Job Costing Is a Must
Restoration jobs can vary wildly in scope, and not tracking job-level profitability is one of the biggest mistakes new business owners make. Job costing means assigning all income and all relevant expenses (labor, materials, subs, equipment usage, etc.) to a specific project.
Done right, job costing will tell you:
Which types of jobs are most profitable.
Whether certain technicians or teams perform better.
Where to tighten up estimates or improve efficiency.
4. Don’t Rely Solely on the Bank Balance
It’s tempting to check your bank account to see if you’re “doing okay,” but restoration accounting requires more nuance. Insurance claims can create long payment delays, and the lag between doing the work and getting paid can mislead you. A healthy bank balance might just mean you haven’t paid vendors yet—not that you’re turning a profit.
Instead, review actual financial reports (Profit & Loss, Balance Sheet, Cash Flow) every month. If they confuse you, don’t worry—you’re not alone. A good outsourced CFO or bookkeeper can help explain them.
5. Cash Flow Is King
Restoration companies are often profitable on paper but cash-poor in reality. Why? You’re paying labor, materials, and overhead now, but you may not get paid for 30, 60, or even 90 days.
To protect your cash flow:
Set up clear payment terms with insurance companies and clients.
Consider factoring or financing for large jobs.
Build a cash reserve or line of credit before you need it.
6. Get Help Early
If you're serious about growing your restoration company, don't try to be your own bookkeeper, CFO, and estimator. You're juggling enough already. Hiring a financial pro—someone who knows restoration—can save you time, money, and stress.
At Kiwi Cash Flow, we specialize in helping restoration contractors understand their numbers and build companies that are both profitable and sustainable. From job costing setup to monthly KPI reports and forecasting, we’ve got your back.
Starting a restoration company? Don’t go it alone. Schedule a call with us today and build your business on a strong financial foundation.