There are a lot of misconceptions about whether or not lawncare and landscape businesses are profitable. In this blog post, we’re going to break down the numbers and give you an idea of what it takes to make a sustainable income in this industry.
So, whether you’re just starting out or you’ve been in business for a while, read on for some insights that could help you take your company to the next level.
How Much Profit Should a Lawn Care and Landscape Business Make?
Landscaping services and lawn care service businesses are quite common, but how much profit should these businesses make? It really depends on the size of the business and what landscaping and lawn care services they provide.
Generally, if a lawn care and landscape business provides basic services, they can expect to make 10 percent to 15 percent net profit after all expenses. However, if the business provides more comprehensive landscaping services or high-end lawn care services, they may be able to make 20 percent to 30 percent net profit.
So, it really varies depending on the type of business and the services they provide. But as a general rule of thumb, most businesses in this industry should aim to make 10 percent to 30 percent net profit.
Total Job Revenue
One of the most important considerations when running a lawn care and landscape company is net profit. In order to be profitable, you need to make sure that your net profit is greater than your total expenses. This means that you need to carefully track your income and expenses, and make sure that you are charging enough for your services to cover your costs.
In addition to net profit, another important consideration is total job revenue. This is the total amount of money that you bring in from each job. To be successful, you need to make sure that your total job revenue is greater than your expenses. This means that you need to carefully estimate your costs for each job and charge accordingly.
By carefully tracking your income and expenses, and making sure that your net profit and total job revenue are both positive, you can ensure that your lawn care and landscape company is profitable. Let’s go over some of the subsets of total job revenue below:
- Cost of Material – When you’re running a lawn care and landscape business, it’s important to consider the costs of materials when determining your total job revenue.
If you’re not careful, the costs of materials can quickly eat into your profits. That’s why it’s important to get an accurate estimate of the cost of materials before you start work on a job.
Once you know the cost of materials, you can price your services accordingly and ensure that you’re making a profit.
In addition, it’s important to consider the quality of the materials you’re using. Using cheap, low-quality materials will likely result in inferior workmanship. This could damage your reputation and cost you future business.
So, when considering the costs of materials, be sure to balance quality with quantity to ensure that you’re running a profitable business.
- Execution of Labor – When you’re running a lawn care and landscape company, execution of labor is a key factor in determining your total job revenue. If you’re not efficient in how you execute your labor, you’re going to end up spending more money on labor costs than you need to.
In order to be profitable, you need to make sure that your execution of labor is as efficient as possible. There are a few things you can do to ensure this:
- Make sure you have a clear plan for each job before you start. Having a clear plan will help you avoid wasting time and resources on jobs that don’t need it.
- Take the time to train your employees properly. This will help them be more efficient and productive on the job.
- Be organized and efficient in how you schedule your jobs. This will help you avoid overlap and wasted time.
- Overhead – If you’re in the business of lawncare and landscape, overhead is always a consideration when it comes to total job revenue and profit margins. But what exactly is overhead, and why is it so important? Overhead is all of the costs associated with running your business not directly related to the services you provide.
This can include everything from office expenses and marketing costs to vehicle maintenance and insurance. Overhead can vary depending on the size and scope of your business. So, it’s always important to keep a close eye on these costs in order to ensure that you’re making a profit.
Tracking overhead and keeping in line with your total job revenue ensures your lawn care or landscape business is profitable.
- Errors/ Insufficiencies/Unforeseen Delays – In the lawncare and landscape business, inefficiencies and unforeseen delays are inevitable when it comes to finishing a job. But what does that mean for your total job revenue? If you’re not factoring in those potential inefficiencies, you’re likely not going to be as profitable as you could be.
It’s necessary to consider things like how long it might take you to finish a job. Also consider how many trips you might have to make back and forth to the nursery for supplies. You can set a more realistic price for the job– one that includes your time and materials.
In other words, don’t low-ball yourself just because you think the customer wants a bargain.
Be honest about what it will take to get the job done right, and you’ll find that you’re much more profitable in the long run.
- All Equaling Net Profit – Overhead costs, labor and unforeseen delays can all eat into a lawn care or landscaping company’s bottom line. Here’s a look at how these factors can affect net profit:
Material costs can vary widely depending on the type of lawn care or landscaping services being performed. For example, a company that specializes in sod installation will have different overhead costs than one that focuses on mowing and fertilizing lawns.
Labor costs will also vary depending on the type of company and the services they provide. Overhead costs such as insurance and rent can also eat into profits.
Unforeseen delays, such as bad weather or equipment failure, can also cause problems for lawn care and landscaping companies. Inefficiencies, such as workers not working at full capacity or vehicles breaking down, can lead to lost profits too.
To make a profit, lawn care and landscaping companies need to carefully manage all of these factors. By understanding how each of these variables affects their bottom line, companies can make informed decisions about pricing, overhead, and labor.
They can then ensure that they are making a profit even after accounting for all of these potential cost factors.
For more help in ensuring your lawn care and landscaping business is profitable, contact Landscape Marketing Hero today.
Lawn Care and Landscape Owner’s Profit Checklist
Maintain a Good Profit Margin
In the lawn care and landscape industry, profit margins can be especially tight, with many companies only earning a net profit of 1 percent to 2 percent.
However, it is possible to maintain a profit margin 3 to 5 times higher than the average company. To do so, start by carefully evaluating your costs. According to Lawn Care Millionaire, typical net profit margins can range from 5 percent to 20 percent.
Make sure you are only spending money on essentials, and look for ways to cut costs where possible. Once you have a handle on your costs, set your prices accordingly.
Keep in mind that you need to charge enough to cover your costs and earn a profit, but not so much that customers are unwilling to pay. By following these steps, you can ensure that your lawn care and landscape business is both profitable and sustainable.
It is common for contractors to ignore critical cost factors when calculating net profit. This means that your net profits won’t be calculated accurately. Because of this, you overestimate profits when job costing, when actually you should charge more to cover their costs. Having a good net margin can mean the difference between making 5 percent and 20 percent.
Learn Advanced Tax Reduction Strategies
If you’re like most business owners, you’re always looking for ways to reduce your taxes. And in the lawncare and landscape industry, there are some advanced tax reduction strategies that can save you big money.
First, it’s important to understand how your business is taxed. If you’re a sole proprietor, your business income is taxed as personal income. That means your marginal tax rate applies to your net profit.
If you have an LLC or corporation, your business income is taxed at the corporate tax rate. This value is significantly lower than the personal tax rate. So that’s one way to reduce your taxes– by restructuring your business as an LLC or corporation.
Another way to reduce your taxes is by taking advantage of depreciation deductions. Most of your assets– like vehicles, trailers, mowers and other equipment– are subject to “depreciation.” That means they lose value over time due to wear and tear. You can deduct that depreciation on your taxes, which can significantly reduce your tax bill.
There are other advanced tax strategies that can save you money, too. But these are two of the most powerful ways to reduce your taxes if you’re in the lawncare and landscape industry. So if you want to keep more of what you earn, be sure to learn about these advanced tax strategies.
Cross-Sell or Up-Sell Existing Clients
As a lawn care and landscape professional, you know that providing high-quality service is essential to keeping your existing clients happy. But did you know up-selling and cross-selling to your clients is a great way to boost your business’s bottom line?
Up-selling is the practice of selling higher-priced items or services to clients who are already buying from you. If you offer lawn care services, you could up-sell your clients by offering to fertilize their lawns or provide other lawn care services.
Cross-selling, on the other hand, is the practice of selling complementary products or services to your existing clients. You could cross-sell your clients by offering to pressure wash their homes or provide other exterior cleaning services.
Both up-selling and cross-selling can be highly profitable for your business. In fact, according to one study, the average up-sell generates a net profit of 18 percent, while the average cross-sale generates a net profit of 11 percent.
Consider Real Estate Investments
By owning the property where you conduct your business, you can avoid paying rent or lease payments. Plus, you’ll have the potential to earn income from other businesses that may be interested in using your property.
For example, you could allow a wedding photographer to use your grounds for photo shoots or rent space to a local farmer’s market. Investing in real estate can help you to achieve a higher net profit for your business. With careful planning and execution, it can be a lucrative decision for any lawn care or landscape entrepreneur.
Plan Your Exit
When it comes to retirement planning, lawncare and landscape businesses are a unique case. Unlike other businesses, the value of your business is often directly tied to your personal labor. It’s important to take the time to think through all of your options when it comes to retirement planning.
One option is to simply sell your business. It may be a good choice if you plan to retire soon and don’t want to continue working in the company. When selling your business, keep in mind the price will likely be lower than if you continued to operate it.
Another option is to transition the business to family members or employees. You can do this to ensure that the business continues after you retire, and you can also get a higher sale price. The key is to make sure that whoever takes over has the skills and knowledge to run the business successfully.
Finally, you could simply continue operating the business yourself. While this might not be an ideal retirement plan, it can help maximize your business’ value. To transition out of the business when you retire, you’ll need a solid succession plan in place.
By taking the time to consider all of your options, you can ensure that your retirement plans are aligned with your long-term goals for both yourself and your business.
Any Secrets in Running a Profitable Lawn Care and Landscape Business?
Being in the lawncare and landscape business, you are constantly having to manage risk. You risk losing money on a job, having to deal with dissatisfied customers or even damaging your equipment. While there is no surefire way to avoid all risk, there are some secrets that can help you manage risk and run a more profitable business.
One secret is to always get everything in writing. This includes contracts with customers, agreements with suppliers and even estimates for jobs. Having everything in writing will help protect you if something goes wrong.
Another secret is to carry insurance. This will protect you financially if something goes wrong on a job or if you damage someone’s property.
A third secret is to have a risk management plan in place. This plan should identify potential risks, assess the likelihood of them occurring and put measures in place to mitigate those risks.
Get Serious With the Right Marketing Strategy
Marketing your lawn care and landscape business doesn’t have to be complicated or expensive. In fact, there are a few simple marketing strategies you can implement today that will help you attract more customers and grow your business.
First, make sure you have a clear marketing strategy.
What are your goals? Who is your target customer? What are your unique selling points? Once you have answers to these questions, you can start to develop a marketing plan that will help you reach your target customers.
Next, take advantage of free marketing tools, such as social media and online directories. These platforms provide an easy way to connect with potential customers and promote your business.
Finally, don’t forget the power of word-of-mouth marketing. Ask satisfied customers to leave reviews on popular directories, and make sure to thank them for their referrals. By following these simple tips, you can get serious about marketing your lawn care and landscape business and start seeing real results.
Invest in Your Team
Investing in your team is essential to running a profitable lawn care and landscape business. Your employees are the ones who will be doing the work day in and day out, so it’s important that they are well-trained and motivated. Here are a few ways to invest in your team:
- Offer training and development opportunities. This can include formal classroom training, on-the-job training or even sending employees to industry conferences.
- Provide fair compensation and benefits. Your team members should feel like they are being compensated fairly for the work they do. Offering benefits such as health insurance and paid time off will help to attract and retain good employees as well.
- Show appreciation for a job well done. A little recognition can go a long way in keeping your team members motivated. Let your team know you appreciate their hard work by giving them an end-of-year bonus or a simple thank-you note.
Conclusion paragraph: So, is the lawn care and landscaping industry profitable?
The answer to that question is a resounding “yes!”
In fact, many businesses in this industry are doing quite well. But don’t just take our word for it– do your own research to find out what others are charging for similar services in your area.
Once you know how much profit you need to make, use the tips we shared above to help maintain a good profit margin while also expanding your business.
Are you ready to take your landscaping business to the next level? If so, give us a call today and let us show you how Landscape Marketing Hero can help.