Mid-Year Update on 2025 Restoration Trends and Market Update
In January, I wrote an article on my thoughts on the upcoming trends that will impact the restoration industry in 2025. One area that looked to be a challenge was the macro environment. You can find the entire article from C&R Magazine on 2025 Restoration Trends linked here. Our economic situation is very complicated right now and, in many ways, has been following the pattern that I expected when the article was written. The economy impacts our business, insurance companies, property management companies, interest rates, inflation, and more.
The National Federation of Independent Business (NFIB) has released its June update and trends. In this article, I will unpack this report and discuss how this affects small businesses, and more importantly, the restoration industry.
NFIB Report: What June 2025 Economic Trends Mean for Restoration Contractors
Small business optimism edged downward in June 2025, and the latest NFIB Small Business Economic Trends report reveals ongoing challenges and key signals for the restoration industry. With tight labor markets, rising compensation costs, and reduced capital spending, restoration business owners should take note of emerging trends and align their strategies accordingly.
Key Takeaways for Restoration Contractors
1. Labor Shortages Continue
36% of small business owners report unfilled job openings, particularly for skilled trades. In the restoration industry, this means intensified competition for qualified technicians, subcontractors, and project managers. In some states and regions, there is a bit of loosening, but the multi-year labor shortage persists. Now is the time to invest in recruitment tools, training programs, and strong employer branding. Create a culture that attracts and retains top talent for your business and create a career path that offers a plan for upward mobility.
Visit RIA Education Webinars and Resources for Employee Recruitment and Retention
2. Capital Spending is Down
Only 21% of small businesses plan to invest in capital over the next 6 months. This is a cautious signal for the economy and suggests that owners need to preserve capital and work to retain cash. Every dollar that is saved through better purchasing, project planning, capital budgeting, and similar strategies will drop to the bottom line and become cash in your business. Restoration companies may want to leverage RIA’s Affinity Partner discounts to make smarter, cost-effective equipment and tech purchases.
For example, in the past 6 months, those on the Lowe’s RIA GPO saved an average of $2,250 on purchases while helping support the restoration industry.
3. Sales Expectations are Slipping
A net negative 5% reported increased sales in the past 3 months, and confidence in future sales declined. As I talk with restorers from around North America, I am able to confirm that restorers are experiencing similar challenges with hitting revenue targets. Restoration contractors should prioritize business development efforts, maintain strong referral networks, and stay engaged in communities to stay top-of-mind when disaster hits.
TPA programs may be a resource to maintain or grow revenue. If you want to learn thoughts about the various programs from a restorer’s perspective, the AGA has published the TPA scorecard to help you learn more about the various programs. Access here.
4. Compensation Costs Are Climbing
With a 33% net increase in wages—the largest since January 2020—owners are paying more to keep talent. You need to develop a full compensation plan and create a career path to attract and retain great staff. Part of this career path and employee retention program involves training your team to maximize and optimize their performance. This allows you to offer market-leading remuneration programs and reduces employee turnover in an environment with labor shortages, rising wages, and increasing prices.
Use this moment to differentiate with better benefits, career growth paths, and education. Take advantage of savings through RIA education partners in the Affinity Program, like Violand, Large Loss Mastery, Reets Drying Academy, and Learn To Restore, which all offer premier savings for RIA members.
5. Inflation Pressures Remain
29% of owners raised prices, and 32% plan to do so in the months ahead. Pricing in restoration is a constant battle since many decisions are influenced by pricing software databases and monitored by adjusters, TPA programs, consultants, and more. Knowing how these programs work, creating and utilizing custom price lists, understanding and utilizing the AGA position papers, providing pricing feedback, optimizing your documentation, and utilizing scope verification programs such as Ask AiME from DocuSketch or Actionable Profile, will all help address rising prices and costs.
Restoration firms should continue monitoring material costs and update estimates regularly, while relying on RIA’s advocacy resources, such as position papers, to address pricing disputes and insurer challenges.
This makes it more important than ever for restorers to have a clear understanding of their true costs of doing business. We encourage members to utilize the RIA Cost of Doing Business Report as a strategic benchmarking tool to evaluate expenses, strengthen pricing strategies, and improve profitability: RIA Cost of Doing Business Report.
Restoration Sector Watchpoints
- Access to capital is tightening. 5% of businesses report more difficulty getting loans. If you're planning expansion or equipment investment, now is the time to compare financing options and focus on collection systems to speed the cash conversion process. In uncertain times, capital is more essential than ever. Traditional financing can be difficult to obtain at the time it is needed. It is good practice to work with your business banker to establish lines of credit prior to the need. Consider meeting with your lender or bank to discuss lines of credit or financing options if the need arises. Build your line and establish capital prior to any critical need.
- Only 8% rated their business as “excellent.” Confidence is slipping. Restoration leaders should stay agile and well-informed to protect margins and prepare for economic shifts. Leaders are needed when times are uncertain. You can use this opportunity to gain market share, build your business, find and develop great talent, and build an amazing business. 92% are not excellent – be a part of the 8!
Stay Ahead with RIA
As the restoration industry faces economic uncertainty, RIA membership equips you with the tools, data, and connections to adapt and thrive. From workforce development resources to legislative advocacy, we help contractors navigate complex challenges with clarity and confidence.