January 4, 2022
Adam Hoeksema
According to IBIS World there are 615,000+ lawncare and landscaping companies in the US alone. The industry ranges from middle schoolers with a push lawnmower picking up accounts in their neighborhood, to large and sophisticated commercial companies with thousands of accounts and employees.
In this article I want to outline how to start a lawn care business that will actually generate a profit.
The common steps to start a lawn care business include:
- Determine whether you plan to target residential or commercial customers
- Calculate the cost to acquire the necessary equipment to startup
- Set your prices based on customer research
- Develop a plan to acquire customers
- Create financial projections for your lawn care business to determine your breakeven
- Ensure that your projections show that you can generate a profit
- Secure startup funding from investors, lenders or personal savings
- Launch your business
How much does it cost to start a lawn care business?
The first question is whether you are looking to start a low cost, residential lawn care business where your startup costs can be quite low, or do you want to start a commercial lawn care business? We have done some research on the startup costs for both.
Residential Lawn Care Business Startup Costs
The average cost to start a residential lawn care business is $6,900.
Based on 3 different sources (LawnLove, lawnmowing101, yourgreenpal) you can expect the following startup costs for your residential lawn care startup:
- Minimum startup cost for a residential lawn care business = $500
- Maximum startup cost for a residential lawn care startup = $15,000
- Average startup costs for a residential lawn business = $6,900
Commercial Lawn Care Business Startup Costs
The average cost to start a commercial lawn care business is $75,000.
Based on 3 different sources (taskeasy.com,nerdwallet.com,krain.com) you can expect the following startup costs for your commercial lawn care startup:
- Minimum startup cost for a commercial lawn care startup = $15,000
- Maximum startup cost for a commercial lawn mowing business = $250,000
- Average startup costs for a commercial lawn business = $75,000
The majority of startup costs for a lawn care business will fall into 4 categories:
- Lawnmowers
- Trucks & Trailers
- Small equipment (weed whackers, leaf blowers, fertilizer spreaders, etc)
- Working capital (advertising, fuel, salaries, rent, utilities, etc)
In this video I will show you how to enter your startup costs and lawn care business expenses into our lawn care financial projection template.
How to Start a Lawn Care Business with No Money?
A lawn care business can be started with little to no money down. This can be achieved through rental, leasing, bartering or borrowing. Supplies such as fuel, lawnmowers and edgers can be acquired in these ways. Additionally, there are many financing options available for small businesses, including small business microloans, grants and personal loans. If it were me, I would ask to borrow a lawnmower from a friend or family member and then pay them a commission on my sales after I get paid. So if you ask to borrow a lawnmower and some gas for the day, and you are able to move 5 lawns and pocket $400, you could reimburse your friend for the initial tank of gas and pay them a commission for the use of the lawnmower. If you do that for a few days, you will have enough seed money to rent a lawn mower or save up a down payment for a mower.
How much can a lawn care business make in sales?
The revenue potential for your lawn care business depends on a number of factors including your capacity / # of customers you can service with your team and equipment and factors like how many times per year will a customer need serviced? If you live in a community that has long winters, your lawn mowing season can be much shorter than a lawn care business in the south.
How to price my lawn care services?
Pricing your lawn care service is an incredibly important aspect of your business. There are two approaches to pricing your lawn care service.
- Market based pricing
- Target gross profit based pricing
Let's dive into both pricing options.
Market based lawn care services pricing
A simple approach to pricing your lawn care service is to simply find out what your competitors are charging and price your services accordingly. A simple Google search can give you some great intel:
Target gross profit based pricing
Another approach is to aim for a specific gross profit margin. For example, Turf Books estimates that the average gross profit margin for a lawn care business is 50 to 55%. So in order to quote a price to a customer that would earn a 50% profit margin, you need to know:
- How long will it take to provide the service including cutting and cleanup
- How much will you pay in labor cost to your employees
- How much fuel will you need to use
If we have a 1 acre plot and we estimate that it will take two employees 1 hour to complete the job and you pay the employees an all in cost of $15 per hour and you estimate $5 of fuel cost for the job, your total variable cost is $35. In order to earn a 50% margin you need to multiply your variable cost by 2 in order to come up with a price quote for the customer. In this example that would be $70.
How many times does a yard need to be mowed per year?
The average yard will need to be mowed once per week to every other week during mowing season.
Once you determine what you should charge a customer per mowing service, you need to estimate how many times the customer will need their lawn mowed per year. A simple Google search with a nearby large city should yield some results. There could be a significant difference between a lawn in Texas and a lawn in northern Michigan. For example, I searched for how many times a lawn should be mowed in Texas and found a range of once per week to once per every other week.
Lawn care business revenue potential
Once you have done this work and research you should be able to estimate your potential revenue by taking your # of customers X # of mowing service calls per year X $ amount per mow.
A one person lawn mowing business might be able to earn approximately $75,000 during an 8 month mowing season based on the following assumptions.
- 8 lawns mowed per day
- 6 days per week
- $50 average price
- 4 weeks per month
- 8 month mowing season
- = $76,800 in annual revenue.
According to Lawnmowing101 a person could cut up to 12 yards per day. If we took the same equation, but assumed 12 yards instead of 8 the projected revenue would be $115,000.
A $75,000 annual business might be a great start, but probably isn’t a long term sustainable business which is why most lawn care businesses are going to grow beyond just one person and a lawnmower.
So, let’s look at some industry averages in terms of revenue.
Lawn Care & landscaping Business Annual Revenue
The average revenue for a lawn care business is $297,000 per year.
Based on 3 different sources (lawncrack.com, greenindustrypros, Landscape professionals.org) you can expect the following annual revenue for your residential lawn care startup:
- Minimum revenue for a lawn and landscaping business = $50,000
- Maximum revenue for a lawn and landscaping startup = $1.1M
- Average revenue for a lawn and landscaping business = $297,000
Let me show you how to project revenue for your lawn care startup.
How to Get your First 100 Lawn Care Customers
Getting the first 100 customers for your lawn care business will probably be the hardest customers to acquire. In order to get 100 lawn care customers you need to get the word out about your services. Consider taking out ads in local newspapers or on local radio or television stations. Make sure to list the services you offer, your rates, and any special deals or discounts you may have available. Take advantage of social media, utilizing sites such as Facebook, Twitter, and Instagram to advertise your business. Create a website, complete with a frequently updated blog, that specifically highlights the services you offer. Another option is to approach business owners and locally-owned establishments to ask if they would be interested in having their lawns serviced.
You can also offer incentive programs to current customers as a way to get more lawn care customers. Consider providing discounts to customers that refer you to friends and family, or discounts when they book multiple services. Word of mouth can be one of the most powerful tools in your process of getting 100 lawn care customers. Have customer brochures available and make sure to follow up with those you’ve provided services for. Additionally, customer loyalty rewards are a great way to show appreciation and develop strong relationships with existing and potential customers. By implementing these strategies, you should be well on your way to increasing your customer base and reaching your goal of your first 100 customers.
What are common expenses for a lawn care business?
Your operating expenses for your lawn care business will be split into variable expenses and fixed expenses. Variable expenses are expenses that increase or decrease with the amount of lawns you are mowing; whereas, fixed expenses are going to be the same whether you mow 1 lawn or 50 lawns. Here are some of the most common expenses.
Variable expenses for a lawn care business
- Fuel expense for your equipment
- Fuel expense for your trucks
- Credit card processing fees
- Vehicle and equipment maintenance
- Fertilizer or other materials used on lawns
- Hourly Labor
Fixed expenses for a lawn care business
- Accounting services
- Insurance
- Advertising
- Supplies
- Salaried employees
- Equipment rental
- Building rent
How much profit can a lawn care business generate?
The average lawn care business can generate $41,580 in profit annually.
We calculated this by taking the average annual revenue of a lawn care business of $297,000 x the average profit margin for a lawn care business of 14% to come up with $41,580.
Clearly the amount of profit that you can generate in a lawn care business can vary dramatically depending on your size, equipment, customer base, etc. Some industry ranges can be found below.
Lawn Care & Landscape Business Profit Margin
The average profit margin for a lawn care business is 14%.
Based on 3 different sources ( Lawn Care Millionaire, lawnandlandscape.com, lawnsite.com) you can expect the following startup costs for your residential lawn care startup:
- Minimum profit margin for a lawn and landscaping business = 3-5%
- Maximum profit margin for a lawn and landscaping startup = 25%
- Average profit margin for a lawn and landscaping business = 14%
Now that we have filled out our template with startup costs, projected revenue, and operating expenses I will show you in this video how to calculate your projected profit for your startup lawn care business.
Hopefully you now have all of the information you need to be able to create a financial forecast for your own lawn care business. Make sure to use our lawn care financial model to create your projections and let me know if you have any questions as you progress. Best of luck!
Banner Image: Photo by Magic K from Pexels
Corner image: Photo by Lisa from Pexels
