Commercial Disaster Restoration Industry-SWOT
The strengths of the commercial disaster restoration industry include recurring increases in earnings, expansion of services offered, a wide range of events covered which allows for successful business growth, no need for office space, and high risk of wildfires in the US. On the other hand, weaknesses include large cash investments when opening a business within the industry, only 25% of work being commercial, and insurance payment delays.
- Approximately 900,000 U.S. residential properties in 13 western states are thought to be at high or very high risk of wildfire damage, which has an estimated property value of $237 billion.
- Seventy four percent of restoration companies have reported increased earnings the last couple of years.
- Companies in the industry are successfully expanding their services from just curative to preventative, which include moisture control systems. This expansion relies on customer education.
- The industry covers a wide range of different events allowing companies to expand their area of service.
- The four most common business models are bio-hazard and trauma cleanup, contents restoration, mold remediation and abatement, and water, flood and fire damage.
- Businesses in the industry are mainly franchises that involve the use of "proprietary products and specialized equipment." The advantage of this is that most restoration and disaster recovery franchises can be operated without the need of renting office space, which allows franchisees to save the cost of renting commercial space.
- In order to open up a business within the space, an estimated investment of $50,000 is typically needed.
- Restoration training and equipment can be expensive and require constant investments due to the rapidly changing way restoration is effectively done. This involves purchases of air movers, dehumidifiers, air scrubbers, and other tools.
- Only around 25% of work completed in the restoration industry is commercial, whereas, 65% is residential. This infers companies focusing solely on commercial properties are at a disadvantage.
- Twenty-five percent of restoration business owners report suffering up to two months of insurance payment delays, while an additional 12% report waiting more than eight weeks.
- It is estimated that around a half million structural fires occur each year. Of this, 30% are commercial and 70% are residential properties fires.
- North America is vulnerable to major weather and catastrophic loss events. Recent climatic events include Hurricanes Harvey and Irma in 2017, wildfires in California in 2018, tornado outbreaks, and
- flooding events. It is projected that due to climate change these events will occur more often.
- In the first six months of 2018 alone, the U.S. saw $6 billion in damage from weather disasters.
- The "steady emergence of medical data", mostly due to information accessibility, is leading companies to understand indoor air quality as related to health and are more likely to purchase preventative systems or schedule regular maintenance.
- Thirty four percent of all business growth in the industry depends exclusively on weather events.
- The top threats to businesses, according to business owners, are recruiting, retaining quality staff, maintaining margins and profitability, differentiating their company, maintaining a steady cash flow, and increasing costs of doing business within the industry.
- Clients are demanding the industry adapt to using less toxic chemicals in the restoration process.