Use these 5 steps to start your own lawn and landscaping business or apply them to another business that you’re building from the ground up!
By Lawn Care Millionaire, Sponsored by Echo
If you want to start a business out in the country, it’s going to take more than hard work. In addition to all the effort you can muster, your startup is going to take well thought out processes that set you up for success. Property management services, such as lawn and landscaping service, are well worth all the effort, but before you start you need a plan of action. Based on my experience in the lawn care and landscaping industry, there are five critical steps for your business to be successful.
If you’re thinking of running a lawn care business, you know all about the hard work that goes into delivering on mowing, weeding, edging, and other landscaping contracts. What you might not realize is that identifying, connecting with, and effectively communicating with new clients is just as critical to your long term success. While it is sure to be frustrating, confusing, and intimidating at times, take a deep breath, and buy a couple comprehensive marketing books for small business owners and get to work!
Before you go out and buy a mower, the first thing you need to do is research your target market. How do you do that?
Identify your ideal client.
If you want to mow meadows, maintain fence lines and drainage ditches, identify the smallest acreage that’d be worth your drive and the largest acreage that your business can handle during the first year. Based on that number, and your driving radius, identify the size of the large-scale rural landscaping market that’s available.
If you’re trying to specialize in small acreage “maintenance” lawn care, you’ll need to identify the number of small towns and unincorporated communities in your driving radius that you could service. Like your average acreage, identify the average worth of property that you’re hoping to reach. Also identify the lowest property value that could afford your services. Learn more about pricing from Service Autopilot’s Ultimate Guide for Lawn Care and Landscaping Starters.
Based on these acreage and property value ranges, get on the internet and search the number of homes in your radius that fit those criteria. If you can’t find that information in census data, you can go to brokers or marketing firms that want to sell you lists or do direct mail for you. (Warning: you might have to spend a little bit of money to buy these lists.)
Now you have a real picture of how many homes are in your market. Let’s say your target market has 1,000 homes that can afford $120 worth of service per month. Next, research current suppliers of rural lawn care and landscaping services to find out the going rate for services in your target region, and your potential competition’s reputation. This will give you an idea of the amount of demand for your services. Based on that information, make an honest estimate of how much of the market you will be able to sell your services to — let’s say 3%, which means that 30 initial clients will bring in $3,600 per month or $43,200 in revenue a year.
That doesn’t sound like nearly enough revenue to support the costs associated with a rural lawn service and landscaping business, so there are three things to do. First, plan to expand your market as you grow. For instance, you might want to focus on owning the market in two small towns. Once you’ve saturated that market, expand to another small town or unincorporated community. If expanding markets doesn’t give you a large enough market — a common issue in rural areas — focus on maximizing profit per client by upselling more services. How do you achieve that? In the past, if you only offered mowing, fertilization, and weed control services, move into pest control, tree cutting, garden tilling, and other services which are in high demand in your target region. If you can’t expand your market or the revenue per client, you need to choose a new market. That’s not the answer anybody wants to hear, but that is the reality in certain markets.
Once you’ve researched your target market and your marketing goals, you have two choices. One: if you have money to spend, and you want to go “all in” on your business, get some door hangers or flyers with a nice “Trial Rate Offer” to quickly find clients. Two: if you lack funds, or you want to start “safe,” go out and sell your services in person. Gather up a few regular clients, and figure out the basic processes of your business — before you spend any money on marketing.
Finally, be prepared for this trial period to be successful! You will want to launch your business website, social media presence, and geo-targeted pay-per-click advertising, such as Google Ad Words campaigns, but you can worry about all of that after you get started!
I want you to be able to spend more time with your family and go on the trips you always dreamed of taking. I want you to get that car you always wanted. And if you always dreamed of being the boss of your own company, I want to see that happen. I honestly want to see you become your own version of “successful.”
You can do that with a lawn care or landscaping business. However, you will NOT accomplish all your dreams if your business stays small forever. That means you’re going to have to pound the pavement, do the work, and sell your services. Luckily, with the right marketing and sales efforts in place, this becomes a simple matter of numbers.
The startup question that I get all the time is how to raise money. I feel like most people who ask me that question — and this is a broad generalization — sit on the sidelines waiting for the money to show up when they should be taking some form of action. The reality about raising money to start a lawn care business or an irrigation business or a tree business is that it’s going to be really difficult to get that money. Unless you have equity in your home and you can refinance it or you have some other assets such as a paid-off car that you can finance and get cash or you have a good line of credit, you’re really left with asking a relative or a friend or a family member for money, or maybe there’s somebody you know that will invest in your business sort of as an “angel investor.”
Outside of that, you’re generally not going to get a bank loan, on something as high risk as a new business. Because these operations are lower-barrier-of-entry businesses, a lot of people get into these businesses and a lot fail. You’ll stand a much better chance of being successful if you learn from others’ mistakes and if you’re willing to offer services that others aren’t.
If you’re going to get an investor, I wouldn’t just get one for money. I would get an investor with the experience to show you how to do it. Otherwise, you’re giving up a lot of equity and getting no advice. You’re just getting money. What happens when you raise money is you basically take money and you apply it to bad thinking, because in the beginning, you don’t know what to do, you don’t know the ideal business model, you don’t know who the ideal client is, you don’t know the best ways to market. Learn more about marketing your landscaping or lawn care business.
Instead of focusing all your attention on finding the big initial investment, consider it a blessing in disguise. Without a large investment, you’re forced to be aggressive and scrappy; you’re forced to figure stuff out and find creative solutions (because there isn’t any money).
My advice? If you do invest time and effort in raising money, do it 4 or 5 years in once you’ve figured everything out, because then you can pour good money on top of good strategy instead of good money on top of bad thinking and bad strategy, which is what generally happens when you raise money without a mentor early on. Instead, go out and start doing this thing on the side now.
Just like sales and marketing, it’s your responsibility as a business owner, no matter how much you hate it, to understand finance. If you don’t already know, you need to learn how to create and read a profit and loss statement (P&L). You need to know how to read an income statement and learn cash accounting versus accrual accounting. Figure out what it means to manage debt, what it means to have a line of credit, and how to manage money correctly. Accounting is more than looking online at your bank statement and writing checks based on that. You need to get to the point where you understand finance so you can price your services and understand the profitability of your employees, your crews, and the services you provide.
A big part of getting a grip on your finances involves controlling expenses and in this business equipment is a large expense (but a necessary investment). I generally recommend that you wait until the very last minute to buy new equipment. That allows you to keep the money in the bank until the last minute. There’s a number of reasons behind that. If I need a big piece of equipment, I could buy that a week before I need it or a couple of days before I need it. So many companies and so many owners get excited by a new piece of equipment so they buy it months in advance. Generally, this is not a good idea for a whole number of different reasons.
December is when I make an exception to buying new. This is the time of year when buying lawn care equipment and pre-spending money on chemicals and supplies makes sense. You can take a full deduction in some cases of this equipment, maybe even a truck if the gross weight of that truck is high enough and you can write it off in full on your taxes in this calendar year. This brings down your tax bill for the year, leaving more money in your pocket to spend and reinvest into your business next year.
While I generally shy away from recommending debt, even if you buy your equipment in December, and you finance it, you can fully depreciate it in this calendar year even though it’s financed, saving you money. Basically, instead of giving the money to the IRS, you can take that same money and reinvest it your business.
On the flipside of controlling expenses, thoroughly track your time so that you can guarantee that you are averaging a minimum of $40 per hour on jobs. Now, pricing is really difficult and it’s hard to estimate how much time will be saved as you develop a more efficient process on the job. When I got started in the business I didn’t have the faintest idea how to price commercial or residential. I was clueless. I remember the challenge and the difficulty. I remember struggling to figure it out.
Mowing is generally the biggest commodity in lawn care, and so it’s easiest to find out what others are charging. It could be a big mistake, but that’s where you start. Ideally you’re not signing contracts with the clients. You’re just signing them up for lawn mowing. If you get it wrong, you can raise their price or you can let them go as a client. In the beginning days, any money feels great and wonderful because you’re making a lot of money, but you also have the lowest costs that you will have.
You will hear of companies making it work with $25 to $30 per hour if they have tons of volume and large properties, but to grow a business, I recommend at least $40 per hour.
It’s hard to come to terms with the amount of time that you will spend on your computer once your business becomes successful, but it is possible for that time to be productive and efficient. I work with a lot of people that have built companies to hundreds of clients, and they are absolute disasters because they didn’t invest in software. Without the organization and planning that a solid software platform offers, these companies are far less profitable than they would have been had they had software from day one. Think you can wait? Switching software systems when you’re a million dollar company is an extremely tedious task.
I really recommend getting a software system that can run everything from your marketing and websites to your job costing and scheduling to your equipment tracking all the way down. You need one system that can do it all and tie into your financial system. It is critical. I used Service Autopilot to grow my business into the tens of millions per year. It’s perfect for the lawn care and landscaping industry, even if you’re just starting out. It can handle your accounting, your scheduling, your marketing, and pretty much everything else you’ll be doing in your business.
If your business is successful 10 years from launch, you’ll want to have built a place where you love coming to work every day. Whether or not you look forward to work bright and early every morning will overwhelmingly depend on the relationships that you build with your clients and the culture that you establish from the start.
Your company culture is your beliefs, your behaviors and how you communicate with your clients and your employees — and so much more. It’s vital for you to set the culture for your company, because that culture will determine what kind of employees and clients you attract, and ultimately what kind of company you end up with. Learn more about building a company culture that your team (and clients) will love.
Think of culture as how your clients and employees would describe your company. In a trusting culture, your team trusts you to take care of them as employees and clients, and to build a great company. Most importantly, they trust that you’ll listen to their input and make changes based on it. In a learning culture, you’re constantly learning and growing and training and teaching—and your team will be doing the same. As you’re building your business plan think about whether you want to build a hard-core, predominately commissioned sales environment or more of a consultative sales environment. These are decisions that you will make for your employees before you ever hire a salesperson or a mowing team, and you’ll set this culture from the start over the course of all the conversations that you have with potential clients, repair shops, gas station attendants, and all the people in your service area.
If culture is somewhat abstract, your plans for crew size are very concrete and it pays to think about them early. This industry is in the business of selling time. The number one line item on our profit and loss statements is labor, and labor is either efficient or inefficient based on a number of factors including crew training, job site, equipment, but most of all crew size. Crew size directly affects the profitability of your business because it determines the productivity and efficiency.
There are two primary ways to evaluate your crew size. First, determine your hourly man hour rate that by service type, by crew, and by property. Next, determine how much non-billable, non-productive time you’re incurring. The more people you put onto an inefficient crew, generating a high level of non-billable time, the more money you cost yourself. For example, imagine that you have a two-person crew that works eight hours a day, and they incur three hours of non-billable time a day. If you give them a third person without increasing efficiency and they are still incurring three non-billable hours a day, you’ll have added another three non-billable hours to your payroll, which costs you in profit.
For my business, three person crews are best because of management, the way we pay, and other factors, but if I were starting over, I would run two person mowing crews for smaller properties and four person crews on commercial properties or large acreages that took up to 32 labor hours. If you are dealing with very large properties that contract more than 32 hours at a time, look into specialty crews for the primary assignments. You will lose some efficiency from having different crews come to a job site — especially if there is a lot of driving involved — but we believe from testing and trying things that huge efficiencies can be gained if there is enough time needed on the property.
To summarize, if the crew size is the heart of running a profitable operation, then the company culture is the soul. There are so many variables that you’ll need to keep in mind as you build your company, and they’re worth thinking about from the start, because you’ll want to have a plan for growth that maximizes productivity and minimizes stress as much as possible.
It’s important to think about these five big steps, and I think you’ll find that it will lead to true success, but the biggest step is to get out there and start working. Chances are that you have a mower and an old truck. Load it with whatever you can scrounge up, make your first $1000 and your first $3,000, and save those earnings to invest in a commercial stand-on mower and bigger trailer and a newer truck. Then, get that next $5000 in recurring revenue and, before you know it, you’re ready for growth!