Top 5 Key Metrics for Understanding the Health of a Restoration Business

We work with clients all over North America. Part of our R[OS]™️ program is to help them develop a scorecard. This scorecard allows them to quickly check the health of their business.

We go through the Most Important Metrics with them and we discuss them in detail to ensure that the metrics are relevant and that they are contributing to the organizations health and goals.

Many Restoprueners™️ are focused on helping the clients, and often get overwhelmed with the business. They don’t know where to start. That’s where the Restoration Advisers R[OS]™️ program comes in. Clients who have gone through the program have been able to systematically get their business organized and have a “dashboard” that allows them to make educated decisions and have clarity on next steps using data and strategically curated information.

Let’s break down the 5 MOST Important Metrics in your Restoration Business.

New Leads:

This metric gives you a glimpse of the future. Also known as a leading metric.

Consistent leads need to be coming in the door. If not, your business will be riding a constant roller coaster. The old saying “Feast or Famine” comes to mind here. With a steady flow of inbound leads and other down line processes and procedures, you’ll be able to have consistent cash flow.

Gross Revenue: 

Money is after all the lynchpin of business. As with all financial data, this is a lagging metric.

Gross revenue, or total revenue, is the total amount of money your business generates from its sales or services before subtracting any expenses. Tracking gross revenue is crucial for Restoration Businesses because it serves as a key indicator of financial health, helps in decision-making, and understanding trends. For those positioning to be able to sell their business, gross revenue helps to attract investors. Gross Revenue also aids in evaluating employee performance and ensuring compliance with tax and financial reporting requirements. By understanding and monitoring gross revenue, business owners can make informed decisions about how to optimize their operations and achieve long-term success.

Net Profit: 

Ever heard the term “Cash is king”. Net profit is what’s left over after everything is paid for in a given period of time.

Net profit, also known as net income or net earnings. It’s the primary metric of a company's profitability. It’s the amount of revenue that remains after all operating expenses, interest, taxes. Essentially, net profit is what the company retains after it has paid all its expenses. It is a crucial metric for evaluating a company's financial health and performance, as it provides a clear picture of the company's ability to generate income beyond its costs and expenses.

Accounts Receivables: 

Accounts receivables is the money owed to a business by its customers for goods or services provided but not yet paid for. In the restoration industry A/R is a Cronic issue due to the overwhelming empathy of Restoprueners™️. Carriers and TPAs take advantage of under educated Restoprueners™️ and cause A/R to go through the roof of those who don’t their client onboarding properly. Managing accounts receivable is essential for maintaining healthy cash flow and overall financial stability. This involves having a very strong client onboarding process (including setting clear payment terms), and holding the client accountable for the contract that they signed.

The accounts receivable turnover ratio is often used to measure how effectively a business is managing its accounts receivable. This ratio is calculated by dividing net credit sales by average accounts receivable. A higher ratio generally indicates that a business is more effective at collecting on its accounts receivable. However, the exact target ratio can vary depending on the industry and the specific business. For a restoration business, a healthy accounts receivable turnover ratio might be around 10 to 15, but this can vary depending on the specific circumstances.

Employee to Revenue Ratio: 

Understanding the overall efficiency of your business is difficult to comprehend without the right metrics. Revenue per Employee is a very simple calculation and is a quick way to gauge overall efficiency.

Revenue per employee measures the total revenue of a company divided by its current number of employees. It's a way to gauge how much revenue each employee generates on average. This metric is crucial for restoration businesses as it provides insights into operational efficiency, financial health, and potential areas for growth. It helps assess how efficiently a small business is utilizing its workforce, indicating a healthy business model when the ratio is high.

A healthy target is $4500/employee/week. At Restoration Advisers, we have clients who operate as high as $6500/employee/week and some as low as $2000/employee/week.

Our hope for restoration business owners and leaders is that they have the tools they need to have the business that affords them the time to have incredible impact on their families and communities.

Having a clear and concise scorecard is one of the critical steps into making educated decisions for your organization so that you can have a business that is working for you, and you are not consumed by and working for it.

Reach out to Restoration Advisers if you’d like to hear more about our R[OS]™️ program or if you’d like to get the education and resources to start you on the path of accomplishing your goals and dreams with your restoration business!