The Economics of Starting a Landscaping Business

Eric Goldschein

Eric Goldschein

Eric Goldschein is a freelance journalist who covers entrepreneurship, small business trends, emerging technologies, culture and sports. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, Trep Life, the Huffington Post and more.

You can contact him at ericgoldschein.com, or on Twitter at @ericgoldschein.
Eric Goldschein

Here’s something those of you without a lawn might not know: Maintaining your green spaces is a lot of work. Those who are in the landscaping business understand this all too well—maybe that’s why, according to the National Association of Landscape Professionals, the landscape services industry employs almost a million people and has an annual revenue of $78 billion.

How to Start a Landscaping Business

Considering the range and depth of landscaping—from residential to commercial, maintenance to removal, and designing to tree care—the economics of starting your own landscaping business are remarkably simple. It can be as easy as renting a lawnmower and knocking on doors.

Of course, you have bigger aspirations than reliving childhood memories of cutting the neighbor’s grass, but this is a viable way to get started in an industry where the barrier to entry is low.

“My previous company was a lawn care business that I grew from myself and a push mower to over 125 employees,” says Bryan Clayton, the founder of GreenPal, an online lawn care ordering service that is a bit like the Uber of landscaping.

“Most customers have to deal with shoddy and unprofessional competitors,” says Clayton. “Creating a successful landscaping business is almost easy if you simply answer the phone when your customer calls, return their voicemails promptly, and do the work that you agree to with your clientele.”

Sounds simple enough. But what else can a landscaping business owner do to move beyond the basics? Here are some tricks of the trade to get started.

Answer the age-old question when it comes to equipment: Rent or buy?

The first step to starting a landscaping business is to acquire your arsenal of landscaping equipment. You could be the first landscaping business to cut grass with your teeth, but that sounds like more trouble than it’s worth.

Starting out, you have the option to rent your equipment or to buy lower-grade equipment. But as the business grows, so will equipment costs—and you could easily spend the same amount on maintaining cheap equipment as the price of purchasing higher-grade machines.

“Most landscape contractors will need to spend 5 to 10 hours a week maintaining their equipment at first by sharpening blades or changing oil, spark plugs, air filters, fuel filters, and so on,” says Clayton.

So what are the basics of good landscaping equipment?

There are a handful of manual tools any good landscaper has at their disposal: shovels (such as square-mouth, spade, and trench), wheelbarrows, tillers (such as rear-tine tillers or cultivators), and more powerful items like chainsaws and drills. But this isn’t where the real expenses lie.

“Most people don’t know this, but the riding lawnmowers that you see commercial landscape operators running cost over $12,000 themselves,” says Clayton.

Landscape contractors need to make even bigger investments:

“Landscape contractors also need a decent truck, which costs at least $10,000 used, and a trailer, which costs $5,000-plus,” Clayton says. “Also, for landscape construction you will need in most cases a front-end loader, which will cost $10,000-$50,000 by itself.”

All told, Clayton estimates that landscape construction and maintenance businesses need to bring between $40,000-$50,000 worth of equipment to a customer’s property. That’s why you might want to start off with rentals—which puts set-up costs at a more reasonable ballpark of $3,000, according to Clayton—but don’t depend on them forever.  

Get all the insurance that’s required, and maybe some extra

Red tape is our least favorite kind of tape. But it exists for a reason, and there are a few things that landscapers need to get in order before they really get down to business.

There are a few necessary forms of insurance you need to obtain to conduct business at all. The most important is general liability insurance, which covers everything from the cost of repairs, to legal fees, to damages that need to be paid out if you or an employee accidentally runs the lawn mower over a sprinkler.

You might also need workers comp insurance, depending on what state you’re operating in, though as Clayton puts it, “Many states require both insurances to operate a legitimate business regardless of whether you have employees or not.” Workers comp covers you in the event an employee is injured on the job, from medical expenses to court costs.

Other forms of insurance that aren’t required but may come in handy include inland marine insurance (for coverage of goods damaged in transit), commercial auto insurance (you can’t use your personal vehicle for most of what you lug around, and your personal policy won’t cover your commercial vehicles), and commercial umbrella insurance (which expands your coverage in case you’re hit with a major settlement).

Additionally, if you’re looking to apply pesticides as part of your services, most states have a pesticide charter that needs to be acquired. Clayton calls this “a very involved process” and doesn’t recommend it until you’re well-established in your field.

Before you scale, make sure you’re insured against employment law liability

This tip is so important it gets its own section. Another form of insurance is employment law liability insurance, which covers your business in case you make mistakes around calculating overtime and wage and hour violations. Considering the uncertainty around the future of overtime wages, and the fact that many small business owners tend to go it alone at first without the aid of a lawyer or accountant, this insurance could be a life-saver—or more accurately, a business-saver.

Clayton describes his “personal nightmare” that resulted from not having this insurance as follows:

“In 2009 my company was audited by the Department of Labor and they determined that our crew leader managers could not be paid a salary—they needed to be paid as hourly wage employees,” he says. “This in turn kicked in additional overtime charges that were due to 80 employees, and it resulted in a $450,000 fine that my company had to pay.”

Not having that insurance almost killed Clayton’s company. Having that insurance in place—particularly before you scale—is crucial.   

For marketing, hit the usual spots

When it comes to marketing, you already know where to start: Facebook and other social media, as well as SEO tactics that will increase your search visibility on Google and other search engines. Word-of-mouth is always the best, especially in hyper-local markets, but that comes with doing good work over time.

Clayton says that mastering all of the typical marketing channels, and putting a starting budget of $500-$2,000 in place to acquire your first 10-100 customers, is the best way to start. A digital marketing expert may be necessary to bring your game to the next level once you expand.

Move beyond manual processes for keeping track of your business

In 2017, we’re probably past the day of using a pen and paper to keep track of all expenses, schedules, and accounts. Even Quickbooks and other spreadsheet applications, though capable of handling large quantities of information, is a bit outdated. There are automated programs for managing inventory, assets, and time clocks that work very well.

For example, Clayton recommends Xero for new landscape contractors. Xero is a system for billing invoices and accounts receivable, as well as payroll (good for smaller companies, from 5-10 employees) and fixed asset management. Rather than calculating the depreciation of your fixed assets yourself, let software handle it.

The Trick to Getting Ahead in the Field Is Simple: Show Up

As mentioned above, a major part of landscaping is fairly simple: Answer the phone, get back to your clients, get your work done when you say you will. This mindset should never fade, especially as you’re trying to get ahead of other competitors in your field.

“Woody Allen said half of success is just showing up. This mantra definitely applies to the landscaping industry,” says Clayton. “If you do the work you say you will do on the day that you promise for the price that you agreed on, most issues will take care of themselves.”

***

Most lawn care operators make between $30 and $50 per hour, which isn’t bad for unskilled labor work. But if you’re interested in going further—if you feel like you have the work ethic, dedication, people skills, and willingness to learn (be it about new technologies like management software or new techniques like SEO marketing)—little is stopping you from starting your own landscaping business.

Clayton went on to sell his business in 2013, in the largest acquisition in the lawn care industry in a decade, before starting GreenPal. And remember: He got started on his own, with just a push mower to his name. Success isn’t guaranteed to everybody who gets into landscaping, but it’s a field that shows no sign of disappearing anytime soon. And there’s no time like the present to capitalize on people’s love of a well-manicured lawn.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Eric Goldschein

Eric Goldschein

Eric Goldschein is a freelance journalist who covers entrepreneurship, small business trends, emerging technologies, culture and sports. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, Trep Life, the Huffington Post and more.

You can contact him at ericgoldschein.com, or on Twitter at @ericgoldschein.
Eric Goldschein

0 Comments

Our Picks

Ready to Grow Your Business?