Looking for an opportunity to own your own destiny? If you’re not afraid to get your hands dirty (literally), landscaping is a budding opportunity to consider.
The landscaping industry has grown an average of 4.6% each year since 2014. In 2019, it’s a $99 billion industry with more room to grow. On top of that, it’s one of the few industries where huge corporations don’t produce the bulk of the profits.
More than 50% of annual gross revenue is earned by small landscaping businesses that earn $500,000 or less each year. There’s plenty of room for independent companies.
How to build a profitable landscaping business
Growing a landscaping business takes work, and not just with your hands. You’ll spend at least 20% to 25% of your time on back-office work to keep your business healthy.
The work starts before you’ve even found your first customer. Start with these tips for running a successful landscaping business.
1. Write your business plan
Fail to plan and you plan to fail.
Creating a rock-solid landscaping business plan is vital. Your business plan is the map that leads you to profits.
As you grow, your landscaping business will become more complex. Demands on your time will grow, and you’ll need to make more business decisions every day. With a business plan in place, it’s much easier. You’re guided by your overall strategy. The right choices are obvious.
Your business plan doesn’t have to be as complicated. At the core, a good plan states your goal and outlines how you’re going to achieve it. Start with a solid, written strategy and you’re far more likely to succeed.
2. Manage your bottom line
Running into cash flow problems early on is one of the biggest challenges for small landscaping businesses. Effective money management is a core business skill. From writing estimates to making payroll, you’ll need to pay close attention to profitability.
Estimates can be tricky. Quote too low and you risk doing work that costs you money. Quote too high and you might lose a good job.
Do a little research to find out what other landscapers charge for similar jobs. You might have to call them for a quote since pricing probably won’t be listed online.
Figure out how much it will cost you to finish the work, including how much you need to pay your staff. Add in your profit margin, making sure it’s enough to cover your time. If your number is significantly higher or lower than what the competition is charging, you may need to make some adjustments.
Remember that your business has other expenses, too. Your phone line, website, office space, time management software, and equipment purchases all factor in. Be sure your estimates are high enough to help cover those expenses.
Track time accurately everywhere
Hubstaff helps you track time and progress, no matter where your team is.
3. Make marketing work
Landscaping and lawn care are in increasingly high demand. The opportunity is there, but you still have to let people know you exist.
Marketing is how you attract potential customers. It’s also a great way to remind people how much they liked the work you did.
That means you’ve got an opportunity to not only win new customers, but to earn their loyalty and trust. In fact, 74% of overall landscaping business is from repeat customers.
Creating and maintaining an excellent marketing plan takes work. Depending on your time and budget, consider consulting a small marketing agency. Especially one that specializes in small business growth. They’ll help you figure out what makes your company different and what you stand for.
There are a lot of up-and-coming landscaping companies out there. Define what makes you a cut above the rest and highlight it everywhere you can — your website, your social media channels, and with your customers.
4. Cultivate referrals
You do good work for your customers. While your work may speak for itself, you’ll gain more business when your customers speak for you, too.
Recommendations and referrals are a cost-effective way to get attention. People naturally distrust advertising, but they trust the opinions and experiences of their friends and neighbors. An honest recommendation is powerful.
Here’s how to get more referrals for your landscaping business:
- Ask (nicely) for written testimonials that you can put on your website. If you’re sincere and ask face-to-face, most will be happy to help you out. Just be sure to follow up when you’re back at your computer so they remember.
- Generate more online reviews on sites like Angie’s List. You can use a program like Podium Reviews to ask satisfied customers to leave you a review.
- Reward referrals. If your customer sends more work your way, you can thank them with discounts, extra services, or other perks. You can even create a referral program to incentivize your customers to tell their friends.
5. Build a solid team
In landscaping, you’ll find that the old saying is true: good help is hard to find.
There are a lot of opportunities for people to work in skilled labor like landscaping, and there aren’t enough people to fill the open positions. According to a 2019 survey, 92% of green industry companies found it difficult to find good candidates. For ⅓ of those companies, it’s their biggest issue.
It’s not hopeless. There are plenty of things you can do to build a reliable, productive team.
- Use subcontractors. When you need labor for a job and you don’t have enough coverage, other landscapers can help.
- Pay competitively. Research what other companies pay for the same work and make sure you’re paying enough, especially for your most skilled people.
- Offer on-the-job training. Since highly skilled labor is hard to come by, cultivate skilled workers for yourself. Make it clear that you’ll pay more when they can reliably do the job, and give feedback often.
- Treat people fairly. Use a tool like Hubstaff to track time and pay accordingly. Hubstaff creates transparency so you and your people are on the same page, even if you’re not on the same worksite.
- Communicate often. Your team is more likely to care about the company’s success if you keep them up to date. Talk to them about important goals, your shared challenges, and how much their work matters.
- Take an interest. Learn about the things that are important to your people. What are their hobbies? How is their family? What do they care most about? Treat your staff like people who matter, because that’s what they are.
As you build your team, think about this:
Most lawn care jobs are very similar. They use the same equipment and pay the same amount for the same work. What can you offer the team that makes you better? That’s how you’ll keep your top people with you.
6. Invest in good tools
You can’t do a high-quality job without the right tools. Buying tools can be a big investment, so it’s important to find your financial balance. It’s okay to rent big-ticket items that you don’t need often. You can gradually fill your supply shed with good equipment rather than buying everything at once.
Inexpensive equipment might look like a good deal, but there can be big hidden expenses.
Broken down equipment is expensive. You need to repair it, replace it, or use a rental until it’s fixed.
Jobs take longer when your tools don’t work right. You pay for that time.
The actual cost of discount equipment is often more than you’d spend on something better.
Think long-term and big picture. Calculate total costs, including upkeep, efficiency, and eventual replacement. It might make sense to save money by renting something or buying used equipment. On the other hand, it may be wise to invest in an expensive tool that’s cheaper to operate and gets the job done faster.
Keep track of what you spend on tools. Figuring out what you spend on repairs, rentals, and new purchases will help you set your rates high enough to make a profit.
Landscaping business mistakes to avoid
Let’s talk about what not to do. We’ve just covered 6 great lawn care business tips. Think of this section as a bonus.
1. Don’t ignore safety rules
“Safety first” isn’t just a catchphrase. You use equipment that cuts, crushes, and makes really loud noises. According to OSHA, you and your employees deal with safety risks like:
- Cuts and amputations
- Heat and cold stress
- Muscle strains and injuries
- Hearing loss
- Eye damage
Taking safety seriously is priority #1. Actively work to make sure that safety is a core of your company culture. It should be everyone’s responsibility to adhere to a mandatory workplace safety program.
Your job is to not only create that program, but to also make sure it’s simple to follow, clearly communicated, and has buy-in from everyone. Set the example by using your safety equipment, and strictly enforce the rules. It’s not worth the risk to ignore workplace safety.
2. Don’t forget to increase your prices
Year-over-year costs to maintain a landscaping business are going up. That means if you’re using the same pricing structure as you were a year ago (or, yikes, even longer) then your profit margin is shrinking.
Over-time, costs creep up. It gets harder to make payroll, pay your taxes, and survive economic upsets. You might find yourself working harder than ever, but struggling to pay your bills for the first time.
Don’t be afraid to raise your prices when things get more expensive. Everyone else is, and most of your customers understand why. You’re in business to make a profit, so do it.
3. Don’t spend too much on equipment
Especially as you’re starting out, it’s hard to make your money back from huge purchases. You don’t want to be cash-strapped early on. It’s more important to keep funds available for emergencies than to roll up in a brand new truck.
Take a realistic approach. Before you make a big purchase, ask yourself these questions:
- How often will you use it?
- Do you have the money to buy this, or will you need to take out a loan?
- How soon will it pay for itself?
- Can you do the job without it?
If it doesn’t seem practical, don’t spend the money. You can rent instead, buy something second hand, or use a different tool while you save money. Plan ahead for big purchases.
One last tip for your lawn care business
Keep learning. Running a business is a big job. Read articles, attend trade shows, and stay open to new ideas. You never know what you might find out.