How to Start a Lawn Care Business

Q: “I am in the process of trying to start my own business in lawn care How can I start out and do I need any forms to fill out. Thank You very much.”

A: Hi John,

I have gone over some of this in but I will highlight some items here-

You will need to form a business entity which takes some paperwork.

You will need to apply for insurance, workers comp, and open bank accounts. All of these items require plenty of paperwork.

So I am not sure exactly what answer you were looking for as this was a very general question but I hope this helps.

Justin

Q: Hi, How do you manage a 2-person team? Time per lawn cut? hours per day? Lawns per week per team? What is your profit percentage per lawn? hourly rate to pay each employee? Do you pay each crew member (2 person crew) 34% of gross sales? Total of 72% Gross Sales? If so, what profit margin are you shooting for? How much do you pay yourself?

A: I have 2 men per crew. The whole crew gets 34%. I let the crew foreman decide how much he pays his help. This year I may keep the crew pay at 34% but have the foreman determine an hourly rate for his help so he has the power to give them raises.

The way I plan the routes is I know that we end up making an average of about $45/man/hour, varying by location and what type of work we are doing. This is $90/hour for the crew. 34% of this is $30.60/hour for the crew. Typically the foreman takes about 19% and the help 15%. This equates to about $17 an hour for the foreman and $13.50/hour for his help.

Depending on the time of year, when grass is growing fast, it may take them more or less time. They get paid well, but they are also great employees and deserve it. This year I intend to better track our charge rates.

On top of the 34% I pay out, I pay a total of just under 15% for employee taxes and workers comp. So my total costs are about 50%. Take off the top of this about 10% for wear and tear and 10% for gas and miscellaneous, and you get a profit margin of about 30%.

We did $188,000 of work in 2011. I lived off of $35,000 and purchased $25,000 of equipment, and just about zeroed out. Because we are aggressively growing, I only take what I need out of the company and reinvest the rest.

I recently received an email from a website visitor, Joe:

“In my area the charge for a typical lawn is 140.00 a month. Thats just for cutting, edge ups and blowing excess of driveways/sidewalks. I’m lookng to come in and offer 100-120.00 a month for the 1st year. Does this sound reasonable? Also What is the normal/typical charge for spring/fall cleanups?”

Joe-

Regarding your pricing, it is hard to say without any further information. Many people will give you the whole lecture about knowing your own costs, which is indeed important. However, it may be difficult to figure out your own costs until you are further established.

In my opinion, in your situation, I think it is OK to base your prices off the competition. I would get several quotes (even on your own property) from several other reputable, successful businesses in the area.

Using their price, you can be sure that most likely these are reasonable quotes that you can make a profit off of.

I would say that you could probably safely operate for less than them ($100-120 seems reasonable) since you will have less overhead especially if you work on your own without hiring employees so you don’t have to pay workers comp etc. And if you go over budget on a job, you are only losing your time, not money that you paid your workers.

Obviously optimally you would like to work for premium lawn care prices but this may be difficult when first starting. You will learn it is all about your impressions, look the best you can afford. Buy nice T-shirts, have business cards, the more professional you look the more you will be able to charge.

Regarding spring and fall cleanups, again, this is a very broad question. It really depends on your area. Personally, we aim for $60-$100/man/hour. However, we are extremely efficient and have the best equipment available so we are able to work faster. We are also very experienced.

Many smaller companies are willing to work for as low as $35/hour because they are sole operators and like I said above it is only their time they are losing.

If you are not able to estimate how long a cleanup will take, you could always quote the customer hourly, or give a few blind estimates, you are only losing your time and after a few cleanups you will know how long they take you for future estimates.

Good luck!

We wrapped up our cleanups today, made it all the way to December 23rd! We ended up doing $23k in cleanups with a profit of around $11k. In 6 weeks not too bad. I have been working on separating out everything with my brother, cleaning up equipment and storing it away, collections, and prepping the truck for the plow season. Everything is all set now. I am also buying a house and leaving for Argentina in 2 weeks so I have had a lot going on. Before I leave I hope to have the call answering set up and have a plan for the plowing.

I have been preparing for my trip to South America this winter (Justin Travels) and unfortunately for work also all my employees are also planning on leaving the country. Besides figuring out labor, I also am trying to figure out what to do about phone calls. In the past when I left the country my brother was here and I just forwarded my calls to him. But this year even he will be gone.

Using a service called Ring Central I am setting up call answering. I think I am going to put my roommate in charge of the phone, accounting, etc basically running the business. And I will either use a past employee of mine or a sub to actually do the work. I will have a call answering system that enables callers to pick extensions. I was planning on setting this up this year anyway, I looked into it last year but decided to wait to implement it. Next year I will have extensions for myself and for the crew foreman, as well as the guy I have in charge of developing the fertilizing programs. They will all have their own voicemail inboxes (of which I can monitor all of them) and hours set. The business will have set hours and if callers call outside of these times it will be sent directly to voicemail. This will enable me to also have my own dedicated cell phone number that I will only give out to friends/family so I have so more work/personal life separation. I am pretty excited to see how this pans out.

Today I worked on the end of season meeting I intend to have with my employees. I made an outline of the good and the bad, and plans for next year. I want all of their input on prices to raise and improvements we can make next year. I generated a graph of our performance this year versus last year with a growth of 48% in sales. I want to motivate them to take on bigger roles next year so we can grow as a team. I still have to think of a good location to have the meeting.

I also started calling/emailing to nag customers for $ owed again. I hate calling around the holidays, it is awkward to call to collect money and then wish them happy holidays. Also, I am leaving the country for the month of January so it is even more important I get these monies collected.

When comparing how long cleanups took from last year compared to this year, we are destroying it. We are getting jobs done on average about 33% faster. I think most of this is thanks to the leaf plow. Our guys are also very competent and more practiced. We run an extremely efficient operation.

I have done some thinking about charge rates, and we try to maintain about $60/man/hour. But now with the extra productivity should we be charging less? I think that our services should be charged more hourly now that we are using more equipment. There is extra wear and tear, plus the experienced operators necessary to operate it, so I think it justifies the slightly higher charge rate now near 75/hr.

We have been still very busy with cleanups. I have been working with the guys, it really feels good to be out working. Lately I have been working about half days, in the mornings doing daily business management things such as sending out bills for work done the day before, returning calls/emails, then going out and working. Figure I will make some extra loot too!

Today I went through my accounts receivable, called most of them, as well as both emailed and mailed statements out. For the most part, people just forgot to pay. I just really havent been on top of it. I am starting to realize now it would have been much less stressful to just call them initially instead of stressing about it because 75% of the people I talked to were like oh sorry I will put that in the mail right away! I just really hate talking to people on the phone especially and assume that on the next month’s bill where it shows the total balance they will notice that and pay the full amount. Therefore I still receive payment and never have to call them. This works some of the time but some people just aren’t getting them because they go to spam etc.

We have been working like crazy, its go time! I have been working in the field a little with my brother to make some extra money, why not? It’s felt nice to be out of the office working lately, I feel productive. The leaf plow is extremely efficient, I couldn’t believe how much faster and efficient it makes us. We have been banging out about 5 properties a day, and grossing about $1500 per day with 4 people. We have switched the guys over to hourly payroll because we did it that way last year. Everything has been going very smoothly.

It has been getting pretty busy. Lot of calls coming in; Did 4 estimates today and so far booked 3/4. Supposed to rain tomorrow so no work, then Thanksgiving. Unfortunately, I still have to work because I have to do payroll etc. The business is really growing, I have a good feeling about next year and have tons of ideas I am excited to implement. I am starting to doubt if I want to go on a long trip again this winter (last winter I went to south america for 7 weeks). I think I only want to go away for a few weeks because I have so many plans for business development this winter.

The firewood business I have been working on the side is proving difficult; I found a good supplier of firewood for $220/cord delivered and I resell for $265. I offer stacking as well, which we do, so it brings in more work. However, the sub I am using is not very professional or reliable so it is proving difficult to coordinate. For the time being I have paused this endeavor, until I find a more reliable supplier.