From legal considerations to making a profit, here’s what you need to know to get your landscaping business off the ground.
Who hasn’t dreamed of working outdoors? For entrepreneurs who take this dream seriously and have a knack for landscaping, working in the “green” industry is a natural solution. It doesn’t take much money to start a small lawn-care business—just a pickup truck, a power mower and, ideally, some experience. The work can take on many forms, from basic lawn maintenance to complex design projects.
Many landscapers first gain experience working for another company or start landscaping as a side job. “I find that fellow landscapers strike out on their own so they have control over the work they produce,” says Wendy Lomme, owner of Seattle-based Akina Designs LLC. Lomme started her landscaping business because she didn’t feel enough of a connection to clients while working at a commercial landscaping company.
Some would-be landscapers complete coursework so they can market their new gardening or tree trimming business. Most end up offering a variety of services, whether as the groundskeeper of commercial property or the owner of a suburban lawn-mowing business.
State of the Industry
The U.S. landscaping industry nets $ 61 billion annually, according to the Professional Landcare Network (PLANET), a national group that represents landscape contractors, tree-care and lawn-care specialists. Many of these businesses are small; more than half make less than $ 500,000 in annual revenue, while almost half post net profit margins of less than 10 percent (companies predict higher margins and gross sales for 2013).
Mowing and maintenance, the fastest growing area of the industry, is a good place to start. “It’s a very low cost point of entry,” says Bruce Wilson, who facilitates peer groups through PLANET. Because of the recession and its impact on construction, many design-build landscaping companies either went out of business or transitioned into maintenance areas.
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Skills and Training
Landscaping companies with a design element are often started by people with a degree in landscape architecture. To start a mowing and maintenance company, you may not need a degree, but you should be adept at skills like mowing, trimming and pruning. For some, this requires investing in horticulture courses to learn gardening, irrigation and other key techniques.
But prepare to wear some of your hats indoors. Some landscapers are surprised to find that businesses management skills are just as crucial to succeeding. Landscapers must meet with clients, bid for jobs and market their services. Some companies divide the work between two people—one who oversees work sites, while the other handles bookkeeping and other office duties.
Types of Landscaping Businesses
Your first step is to choose which type of landscaping business to start. Lawn care can be a successful one-man business, says Tom Delaney, Director of Government Affairs for PLANET, if you provide routine services like weed control, insect control and core aeration—a process of removing cores of soil to introduce more nutrients into the ground.
Your choice will likely depend on a number of factors. According to PLANET, most businesses offer residential services. But there’s an upside to working in a commercial setting, Wilson says: “Property managers are business professionals and tend to treat you more like a business.” With construction still in a slump, you may find success by offering these types of services:
- Lawn mowing and landscape maintenance
- Sod installation and hydroseeding
- Weeding, fertilizer and/or pest control application
- Interiorscaping—landscaping inside office buildings
- Design work on subcontracting basis
Getting the proper licensing is key, and the rules vary quite a bit. In most states, landscaping licensure is not a requirement, says Delaney. Only a few states do, like Oregon, which has landscape contractor licensing laws.
In Colorado, if you sell plants to customers, you must obtain a Colorado state nursery license. Hawthorne, N.J.-based attorney Peter Lamont, who represents small landscaping businesses throughout the country, says New York and New Jersey require landscapers to have a home improvement contractor’s license.
Who else needs a license?
- People who spray pesticides. When landscapers don’t apply the correct amount, toxic chemicals from fertilizers and pesticides can end up in nearby water resources.
- In the Southwest, irrigation is a huge part of the business. Irrigation requires a license in some states.
- Cities, counties and municipalities may have additional requirements for dumping or other activities pertaining to your new business.
Setting Up Your Business
Once you’ve established your type of business, one of your first decisions will be how to legally organize the firm. The primary consideration, particularly for small businesses, is taxation, so speak to an accountant to determine which structure will be most beneficial to you.
As the owner, you would undertake the risks of the business to the extent of your assets. Most smaller landscape businesses operate as a Limited Liability Company (LLC) or S corporation, since both protect the shareholders from being pursued legally for work performed by the company.
Financing: It may not cost much to jump-start your business, but Wilson says that, ideally, landscapers should have about $ 50,000 to survive while building the business and waiting for those initial payments.
Venture money is chasing businesses that focus on property maintenance, Wilson adds. “You could build a $ 5-to-$ 10 million company and sell it for $ 10 to $ 15 million down the road,” he says.
Equipment: Equipment and supplies vary according to services. Typical purchases include a sit-down mower, weed wacker and trimmer, says Barbara Goldberg, who advises small landscaping businesses in St. Augustine, Fla. Businesses that do gardening may need shovels, picks, rakes and hoes. “That cost increases if you want a hedge trimmer or something to lop limbs off trees,” Goldberg says.
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Small landscapers tend to base the job on their initial estimate, and too many pay workers in cash. “They don’t adequately define the scope of the work or have other protections,” says Lamont. As companies grow and develop some worth, they open themselves up to liability.
The best way to protect your new business is through a solid contract. In the last year Lamont says he’s been contacted by at least 20 landscapers being sued by clients. Typically they were working without contracts. “That’s what leads them to problems,” Lamont says. “No matter what you do, there’s going to be someone who doesn’t like your work or doesn’t want to pay you.”
After doing an estimate, incorporate that scope of work into a contract, says Lamont, who recommends having subcontractors sign separate contracts. Include project details and an agreed-upon payment structure. With clients, include any exclusions—for instance, stipulating that you’re not responsible for anything found in the ground if you’ll do any digging.
Don’t get lost in the weeds. “Most people that fail in this business fail for a lack of financial or interpersonal skills,” says Wilson. “They don’t fail because they don’t know how to do landscaping.”
Budding landscapers can avoid common pitfalls by brushing up on fundamental accounting skills and managing their clients’ expectations. Don’t commit to any project without the proper skills and experience. Before bidding on any project, visit the property to look for obstructions and get a realistic picture of what the job will cost on your end.
Making a Profit
Once you get started, these four areas will help your business flourish:
- Off-season work: Many companies in the north make extra cash doing snow removal and holiday decorating in the off-season.
- Trade groups: Join local trade associations for ongoing education and other benefits. PLANET provides members with tools for financial planning, estimating and proposal presentation.
- Interpersonal skills: “Being in the service industry, customer relationships and [good] communication are paramount,” says Lomme.
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