Do you want to start a data recovery company? If YES, here is a complete guide to starting a data recovery business with NO money and no experience.

Okay, so we have provided you an in-depth sample data recovery business plan template. We also took it further by analyzing and drafting a sample data recovery service marketing plan backed up by actionable guerrilla marketing ideas for data recovery companies. In this article, we will be considering all the requirements for starting a data recovery company.

Why Start a Data Recovery Business?

Data recovery is one out of the three natural expansion paths for those that engage in computer services with the other two being IT services and mobile device repair. Data recovery is however more expensive to start-up when compared to the other two because when storage devices fail and can no longer becomes readable by the computer; it is only the use of specialized equipment that can help in recovering the data. Therefore, not only will you need to be knowledgeable about data recovery but also about the types of equipment necessary to restore data.

This current age runs on data, therefore an individual or company losing critical data can lead to severe consequences that might have a huge impact on workflow as well as the company bottom line. Most companies do not have in-house data recovery specialists and so often engage the services of third-party service providers. It is therefore important to understand that competency plays a huge role when it comes to offering services in this industry as many start-ups do not have the skills to effectively recover data.

Aside from equipping your business with personnel that have not only been fully trained but also certified, it is also important that they know a lot of techniques to handle a wide range of hard drives and systems.

Having specialized equipment and a clean room where work can be done is very important. Your clean room for instance should meet ISO 1000 particle standards and also feature laminar flow work benches so that there is less chance to contaminate the hardware of the client.

Whether starting your business on a small or large scale, it is important that you have a business plan in place in order to have a clear idea of what you are looking to achieve. If you feel overwhelmed in writing a business plan, you can engage the services of professionals to help you out.

Starting a Data Recovery Business – A Complete Guide

  • Industry Overview

The data recovery industry has no companies with a dominant market share. The revenue generated by the industry amounts to $15 million annually and from the period of 2011 to 2016, the industry has experienced a negative growth (-21.3) percent.

There are more than 290 data recovery businesses in existence in the united states employing more than 2,580 people.

The decline experienced by the industry is because there are more options in place to prevent data loss especially as businesses and other consumers are making use of other technologies such as data back-up, recovery software and also getting lots of do-it-yourself tutorials on the internet.

The main barrier that the data recovery service industry faces is in finding the right employees that have software and hardware skills related to data recovery. While some data can be recovered using automated software, data that has to be recovered from encrypted files however is usually more difficult to achieve and will therefore require the skills of a trained data recovery professional.

The barriers to entry into the industry are very low as there are no licensing, governmental or regulatory barriers that would stop an operator from entering into the industry. Even though the industry is said to be in a decline, many IT companies still require cloud service providers to not only provide them with the necessary essentials but also with a comprehensive toolset that can ensure data recovery.

According to a research report by MarketsAndMarkets, the data recovery service industry is estimated to grow substantially by 2020 and so companies specializing in data recovery can choose to scale their businesses appropriately.

Starting a Data Recovery Business – Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic compositions of those who require the services of a data recovery service can be categorized into individuals and businesses in all the industries, corporations and government agencies. If you are therefore looking to define the demographics for your data recovery business, then you should know that it is all encompassing.

List of Niche ideas Within the Data Recovery Business That You Can Specialize in

There aren’t a lot of niche ideas within this particular business that you can specialize in but before you choose any niche, ensure that you have conducted a thorough research regarding the niche in order to know who your target market is likely to be and if the niche will be able to generate serious revenue for you.

If you are starting your business on a small scale, then you might need to focus on just one niche in order to be known for that and then take on more niches as soon as you begin  to expand. Some of the niche ideas within this particular business that you can specialize on are;

  • Software related data recovery
  • Hardware related data recovery
  • Sale of data recovery tools
  • Data recovery consultancy services

The Level of Competition in the Data Recovery Industry

The level of competition in the data recovery business depends to a large extent on where the business is located because if the business is located within the hub of its target market, it has more of an advantage over those that are located far away.

What clients look out for when they engage the services of a data recovery business is that they have their expectations not only met but exceeded, which is why most clients prefer to engage those who have the experience or those who have glowing testimonials from others.

If you are therefore looking to run your data recovery business in the United States, you should note that you will be faced with lots of competition and therefore it is essential that you are adequately prepared.

  • List of Well – Known Brands in the Industry

In every industry, there are brands that stand out due to due to varying factors, and even though this industry has no dominant companies; there are still some that stand out due to the quality of service that they offer, their customer service relationship, their promotional strategy as well as how long they have been in the industry.

Some of the well-known data recovery businesses in the United States of America;

  • SERT Data Recovery
  • ACE Data Recovery
  • ESS Data Recovery, Inc.
  • Ontrack, LLC
  • Ohio Data Recovery

Economic Analysis

Several incidents of data loss is what led to the growth of data recovery companies; however the technological progress for data storage has had a lot of effect on this industry. With the present trend, it can be assumed that developments in digital technology will continually lead to a decline in the demand for data recovery services.

As a result of this, the data recovery industry has been split with there being Do-It-Yourself data recovery software with high success rates matching the performance of data recovery specialists with there being an increase in the number of those using computers and having to have one or more crises when it comes to their data.

With increasing usage of storage capacity, there will always be an increased chance of losing one’s data and so data recovery usually require investment in knowledge, trends, and the latest technology in order to keep up with the growing storage devices that are being churned out by manufacturers.

The data recovery industry is gaining huge grounds in other allied fields such as data forensics and to stand out in this industry will require huge market visibility.

Starting Your Data Recovery Business from Scratch vs Buying a Franchise

When looking to start any business, you must decide whether you intend to start the business from scratch or buy a franchise because while either option is good, it will be to the benefit of your business if you choose the option that will best align with your goals and objectives. The thing with buying a franchise is that you get guided and therefore do not have to face the several challenges that plague start-ups.

Before buying any franchise, a thorough research needs to be done in order to ensure that the franchise you intend to purchase thoroughly aligns with your intended goals and objectives. The IT industry doesn’t run on the franchise system and so you will need to start this business from scratch.

When starting your business from scratch, it is vital that you have knowledge about the business and have also conducted a proper research in order to know what to expect when it comes to running the business. If you have had no experience whatsoever in running a business, then you might need to start on a small scale so that you can use that as a learning curve for your new business and then you can expand the business once you feel that you have sufficient experience.

Possible Threats and Challenges You Will Face When Starting a Data Recovery Business

Whatever business you are looking to start, you should understand that you won’t have a smooth sail no matter how meticulous your plans are because internal and external circumstances that you cannot readily control can crop up at any time; therefore, it is necessary that you are prepared for whatever threats and challenges are likely to occur. While some might be easy enough to handle, it isn’t all that you will be able to and so when these occur, the best you can do is remain focused and optimistic.

Some of the threats and challenges that you are therefore likely to face when looking to start your data recovery business include; changing industry trends, competition from already existing competitors, alternative means of data storage in which there might not be a need for data recovery, industry and government regulations.

Starting a Data Recovery Business – Legal Matters

  • Best legal entity to use for this type of business

When looking to start a business, it is important that you know which legal entity would be most appropriate for your business as whatever legal entity you pick will have an impact on your business. If you intend to run a small scale localized data recovery business, then going for a legal entity that will come with too much paperwork and a stiff structure will not be to your advantage.

Some off the factors that you would need to consider when looking to choose a legal entity for your business include; the flexibility of the legal entity especially if in future you are looking to change it to another one, the ease at which you can set up and control the legal entity, the extent of liability – whether limited or unlimited, and what taxation structure you should mostly expect. If you are overwhelmed with the legal entity to pick for your business, then you might need to engage the services of an experienced attorney to help you out.

Some of the legal entities available to entrepreneurs looking to run their business in the United States include; sole proprietorship, general partnership, Limited Liability Company (LLC) and corporation.

Most entrepreneurs usually choose either the sole proprietorship or the LLC because of how flexible they are and the ease at which the owner can set up and run the business. Also, taxation when using these kinds of legal entities is pretty simple as compared to others especially the corporation.

However, where the sole proprietorship differs from the LLC is that the LLC is incorporated and offers the owner more protection than the sole proprietorship, whereas under the sole proprietorship; the business and the owner are regarded as one.

The corporation is a form of entity that is used by large scale companies and offers a lot of advantages to entrepreneurs as they can seek to source for capital from external investors while still having most of the advantages that the LLC offers.

Catchy Business Name Ideas Suitable for a Data Recovery Business

When starting any business, one of the most important steps that must be taken is in naming the business. A business name is very important because this is how your business gets identified from others and so it must be unique and easily pronounceable.

Also, ensure that the business name isn’t being used by someone else as this would mean you going back to the drawing board. Some of the business name ideas suitable for your data recovery business include;

  • DataReco Inc.
  • PR141 Data Solutions
  • Century Data Services
  • Westpoint Corp.

Insurance Policies

Whenever you are looking to start any endeavor, you need to ensure that you protect your investment, employees and your bottom line so that should any disaster befall your business, it will not destabilize you. While having insurance for your business is necessary, you should ensure that you only purchase the necessary insurance policies for your business.

Below are some of the insurance policies that you should consider purchasing when looking to start your data recovery business in the United States of America;

  • General Liability Insurance
  • Property Insurance
  • Casualty Insurance
  • Workers’ Compensation Insurance
  • Payment Protection Insurance
  • Errors and Omission Insurance
  • Fidelity Bond Insurance
  • Business Owner Policy (BOP) Insurance
  • Cyber Liability Insurance
  • Umbrella Insurance Policy
  • Employment Practices Liability Insurance

Intellectual Property Protection/Trademark

For this kind of business, you will not need to worry about having to acquire intellectual property protection since the data you will be recovering is not yours to protect.

However, should you feel it is important enough, you can decide to protect your company name and logo and certain materials that you feel should be protected. This is however not considered a priority by entrepreneurs in this field.

Is Professional Certification Needed to Run a Data Recovery Business?

In this business, your clients would feel more confident if they know you have several certifications. You have to note that if you intend to bid to large scale corporations, then where you got your certifications from will determine how much of an advantage you will have over others that are bidding for the same job as well.

This is why it is very important that you make a thorough research of the certifications you want to acquire so that you do not end up wasting money in certifications that will not give you leverage over your competitors. Some of the accredited professional certifications that you should therefore look to acquire for your data recovery business include;

  • Certified Expert Penetration Tester (CEPT)
  • Certified Application Security Specialist (CASS)
  • Certified Data Recovery Professional (CDRP)
  • Certified Computer Forensics Examiner (CCFE)
  • Certified Penetration Tester (CPT)
  • Certified Reverse Engineering Analyst (CREA)

One thing about the IT industry is that it is regulated and so having professional certifications is necessary if you intend to achieve your intended goals and objectives.

List of Legal Documents You Need to Run a Data Recovery Business

Regardless of what business you are looking to run, having the necessary documents in place will save you a whole lot of headache. If you are thinking of starting your data recovery business and running it for a long time without having the required documents, then it might mean that you aren’t serious about the business.

Ensure that you conduct a thorough research about the documents you would require in running the business or you engage the services of an attorney to help you. Below are some of the legal documents that you will need to run your data recovery business;

  • Certificate of Incorporation
  • Operating Agreement
  • Business Plan
  • Business License and Permit
  • Business Certification
  • Insurance Policy
  • Non-Disclosure Agreement
  • Contract Documents
  • Employer Identification Number (EIN)
  • Federal Tax Identification Number (TIN)

Financing Your Data Recovery Business

While data the recovery business is not capital intensive, you will still need a substantial amount of money to buy the tools and equipment you need and to promote your business. If you do not have all the capital you need, then you can source for funds from external investors.

Some of the options that you can explore when it comes to financing your data recovery business include;

  • Using your personal savings or revenue from the sale of your stock or property
  • Source for soft loans from family members and friends
  • Raise start-up capital from private investors

Choosing a Suitable Location for your Data Recovery Business

When looking to start a business, the issue of where you are going to locate the business is an important one because of how much impact it can have on the growth and sustainability of your business. The data recovery business can be run from anywhere convenient enough for either you or your clients.

If you are looking to start this business on a low scale, then you might need to operate your business from home. All you would need is to create a space in your home where you would store essential documents and your special data recovery equipment.

If you find out that most of your competitors have a leased facility where they render their services from, then it might be necessary to also lease a facility to run your business from so that your competitors do not have the advantage over you.

When leasing a facility, ensure that it is within the hub of your target market and that the location can be easily accessed by not only your clients but also by your employees, should you choose to hire any. While leasing a facility within your target market might prove to be more expensive, it will be cheaper in the long run as you would constantly be visible to your target market.

If you are new to the dynamics of choosing a location, ensure that you engage the services of a real estate agent to help you out in choosing a suitable location according to your budget.

Starting a Data Recovery Business – Technical and Manpower Details

In starting a data recovery business, aside from the professional knowledge that you will need to recover data, you will also need to acquire professional data recovery tools that will allow you to retrieve more data effectively especially from cases as common as having to recover data from drives with bad sectors as well as partially failed drives. If you intend to run a large scale recovery business, then you would need to go a step further by acquiring leading-edge data recovery tools so that you can effectively retrieve data from very complex cases.

It is important not to neglect building a professional business operation that will handle formal business processes, documents, templates and messaging in order to be able to manage interactions with your clients as well as automate all the routine tasks in your business.

Even though a data recovery business might not be as capital intensive as some other businesses, you still need to get certain specialized equipment and you will need a substantial amount of money to buy these equipment and then run the business till it starts to generate revenue.

Some of the equipment that you would need to acquire in order to be able to run your data recovery business include; software such as file system recovery tools, flash memory tools, firmware repair hardware, data recovery imaging equipment and CRM.

Building a solid business structure is very vital if you are looking to achieve all your core goals and objectives. It is important that you hire those that are not only professionals and competent but are also committed to ensuring that you achieve your goals and objectives.

The employees you would need to start off your business are; a Chief Executive Officer (CEO – owner), Admin and Human Resource Manager, Business Development and Marketing Executive, Data Recovery Specialists, Customer Service Executive, and Accountant.

From the above analysis, you would need at least 6 key people to run your data recovery business successfully.

The Service Delivery Process of a Data Recovery Business

There are three major steps taken when it comes to recovering one’s data and they are; evaluating the drive, recovering the data and returning the data. In evaluating the drive, the hard drive is tested for functionality making use of certain equipment in order to determine if the problem is with the drive or file structure.

Once the problem has been identified, repairs will then be undertaken and the hard drive cloned so that the recovery process can be carried out on the cloned drive without jeopardizing the integrity of the original data. Once the damage has been taken care of, the recovered data is then returned either in a new drive, via an external drive, on writeable DVDs or even via the original hard drive.

Starting a Data Recovery Business – The Marketing Plan

  • Marketing ideas and strategies

No one wants to lose important data and so whether on a small or large scale, people will do anything to have their data recovered, which therefore means that the data recovery business is hot cake. Because there will always be a lot of clients looking to recover their data, clients will want to see you offer them something extra to attract them to you. Before you can draw up a marketing plan for your data recovery business, you must not only have the required experience but most also have a unique selling point (USP) so that you can attract the clients that you need.

Marketing involves anticipating the wants and needs of your target market in order to meet and satisfy them. It is only when you know these needs that you can think of penetrating the market in order to not only fairly compete against your competitors but also have a fair share of the market as well.

In order to have effective marketing strategies, it is essential that you have conducted a thorough research that will allow you know your niche and also identify your target market. In knowing your target market, you will understand what they expect from you and what you should expect from them as well. Another advantage of conducting market research is that you will be able to know who your competitors are, their strengths and weaknesses.

Due to the competition that you will likely be facing from those already in the business, it would be wise to hire the services of a marketing consultant to help you in drafting the right strategies that would enable you to effectively promote and advertise your business.

Therefore, some of the marketing strategies that you can use in promoting and advertising your data recovery business include;

  • Formally introducing your data recovery business to corporate organizations in various industries, small and medium enterprises, and the government by sending an introductory letters as well as a brochure listing your services, contact information and rates
  • Advertising your data recovery business in newspapers (local and national), ICT and related magazines and on radio and television stations
  • Empowering your marketing executives to physically meet with potential clients and engage in direct marketing
  • Ensuring that your business is listed in reputable online directories
  • Attending ICT seminars, tradeshows, events, expos and business fairs in order to network and promote your data recovery business.
  • Making use of social media platforms such as Facebook, Twitter, Linkedin and Google Plus to advertise and promote your data recovery services

Strategies to boost your brand awareness and Create Your Corporate Identity

In order to generate revenue for your business, you must get enough people in your target market to be aware of the business and so whether you like it or not, it is important that there are strategies in place that will not only boost awareness for your brand but will also create a corporate identity for your business.

Your promotion strategies will depend on what your goals and objectives are, if you want to be known just locally, and then your strategies will be different from one that wants to be known worldwide.

There are a lot of benefits to be derived from boosting awareness for one’s brand and also creating a corporate identity for your business and this is why already successful companies always set aside a substantial amount of money every year so that those in their target market as well as other stakeholders might continue to remain aware of their brand.

Before you can however craft strategies that will be unique and effective, you must first understudy your target market and know where they are likely to visit so that you can use those likely avenues to boost awareness for your brand. If your target market does not read newspapers for instance, you will be wasting money promoting your brand in a newspaper.

If you are not sure on how to go about understudying your target market in order to have an idea of where to promote your business; you could engage the services of publicity consultant. Below are some of the platforms you can leverage on to boost awareness for your brand as well as advertise your data recovery business;

  • Ensure that your data recovery business is duly listed in reputable online directories
  • Get a professional website and then ensure that it is highly optimized so that it can rank tops in search engines
  • Encourage your satisfied and loyal customers to help spread the word about your business to others
  • Make use of social media platforms such as Facebook, Google Plus, Twitter and LinkedIn to promote your data recovery business
  • Attend industry tradeshows, ICT events and conferences in order to be able to network with others and promote your business as well
  • Join ICT forums in order to relate with a wider audience of both professionals and potential clients so as to increase awareness for your business
Solomon. O'Chucks