- Starting a landscaping company can be lucrative since the industry is growing.
- There are special considerations business owners need to take when starting and running a lawn care business, such as insurance, licensing, and hiring the right employees.
- Learn how to start a landscaping business and how to get financing for your business in this article from Nav’s experts.
The State of the Landscaping Industry Today
The commercial landscaping industry is performing well and can provide a lucrative income to business owners. According to IBISWorld, the lawn care industry has a market size of $176.5 billion in 2023. Plus, the demand for well-manicured lawns is only increasing: The industry grew at an average of 5.3% per year from 2017 to 2022.
However, landscapers face issues with high fuel prices and shortages of labor. Many landscapers have to drive from location to location, as well as use fuel for much of their equipment, so paying a lot at the pump can eat into profits. And many landscaping companies report finding it a challenge to recruit reliable employees. Additionally, the landscaping industry is quite saturated, so there is a lot of competition. It’s important to stand out with fantastic customer service, reliability, and fair pricing.
Types of Landscaping Businesses
Running a landscaping company means you can specialize in a specific area or offer all of the above. Your offerings will depend on your location, expertise, staff, and availability. If you’re wondering what type of business fits into the lawn care industry, there are quite a few you can specialize in.
- Lawn maintenance: lawnmowers, blowers, trimmers, edgers
- Design: landscape designers, landscape architects
- Fertilization: adding fertilizers that stimulate plant and tree growth
- Debris removal: removing leaves, dirt, sticks, foliage, etc.
- Installation: Planting flowers, trees, shrubs, turf, etc.
- Weed control: Pulling weeds or adding herbicides
- Pest control: Adding outdoor pesticides to inhibit plant destruction
- Other: Tree removal, snow plowing, etc.
All of these services can work together. If you live in a colder climate, they can offer year-round options to bring in income. Landscaping businesses tend to boom in warm weather, so it’s a good idea to have services you can perform in the colder months to make up for lower revenue.
Revenue Streams for Landscaping Businesses
There are many ways to increase cash flow for a landscaping business, and lots of revenue streams you can include in your business. If you live in a colder climate, it’s best to figure out revenue streams during the winter months. You could take on a few greenhouse clients, plow snow, or chop and deliver firewood, for example. If you’re located in a warm climate, it will likely take less creative problem-solving to find year-round work.
The number of revenue streams you take on depends on what you can handle. If you can find the right staff, you can delegate work to your team. But whether you’re running a solo operation or have a large staff, the most important thing is to only take on work that you can deliver. Keeping current customers happy will allow your business to thrive.
The Importance of Proper Financing
Getting the right business financing for your landscaping business can make a world of difference in terms of how it enables your business’s success. Getting the right loan option, lender, and interest rate can allow you to pay for startup costs, add or upgrade equipment, or hire a larger team. However, you will have to pay interest when you take out financing, so you need to make sure you can afford the payments.
One factor that determines your interest rates is your credit scores. (Learn how to establish business credit in this guide from Nav.) Make sure you know all the fees and exact monthly payments you’ll need to make to ensure they fit in your budget.
Use Nav to find the best financing solution for your business — based on your business’s data. The more information you give us, the more accurate your options will be.
Business Formation: Choosing a Business Structure
When they start a new business, small business owners have to choose what type of business they want to run. The most common options are:
- Sole proprietorship
- S-Corporation or C-Corporation
A sole proprietorship has the least liability protections because they are not legally separate from their business, but it’s the easiest to begin. Your financing options will be quite limited with a sole proprietorship, however.
LLCs usually have more liability protections and more flexibility with their taxes, and an easier time qualifying for financing. Learn more about sole proprietorships vs. LLCs here.
If you’re looking to be completely separate from your business, you can look into starting a corporation. Learn the difference between an S-Corp and a C-corp here. It’s best to talk with an accounting professional before deciding which business type works best for you. Once you’re ready, the easiest and fastest way to form a business is to use a business formation service.
Financing Options for a Landscaping Business
There are many ways to pay for startup costs and increase working capital for your business. Here are several ways that other small business owners have paid for landscaping company expenses.
Personal savings: Pros and cons
If you have enough saved up or want to start a small business that doesn’t cost much up-front, you may decide to use money you have saved up.
Here are the positives and negatives of that approach:
- You won’t pay interest
- No application required
- Doesn’t help establish or build credit
- Eats into your cash reserves
Small business loans: Pros and cons
Small business loans and financing come in many different forms, such as:
- Term loans
- Business lines of credit
- SBA loans from the Small Business Administration
- Equipment financing
- Business cash advances
Here are the pros and cons of using small business loans to fund your landscaping company:
- Offer larger amounts of funding than many other options
- Can use them to expand your business
- Your payments may help build your credit file
- You’ll likely pay interest
- Interest rates vary widely depending on the type of loan
- May be difficult to qualify for
Business credit cards: Pros and cons
Business credit cards provide short-term financing for small business owners. (And they can be a tool that pairs well with other types of financing).
Here are the positives and negatives of using business credit cards to fund your business:
- Easier to qualify for than many loans
- Potential to earn rewards
- May help build business credit
- High (and variable) interest rates
- Lower credit limits than many other financing choices
- Possible annual fees and late payment fees
Investors: Pros and cons
It’s not common to bring an investor on in a landscaping company, but you may be able to find family, friends, or acquaintances that want to invest in your business. Here are the pros and cons of using an investor:
- Won’t have to go through a bank or lender
- Probably no application
- Can leverage your current relationships or form new connections
- If you know the investor personally, it can create difficulties in your relationship
- May pay interest or give up part of your earnings
- Won’t help build business credit
Grants: Pros and cons
Grants are money to use toward your business that you don’t have to pay back, and there are grants for small business owners. Here are the pros and cons of using grants:
- You won’t pay interest
- There’s no need to pay them back
- May be available to new or existing businesses
- Very competitive and can be difficult to get
- Potentially long application process
- May not provide enough for all your funding needs
Budgeting for a Landscaping Business
Creating a business budget is an important step to writing your business plan. However, it can be a challenge to even know where to begin when budgeting. We recommend using budgeting software and apps to get the ball rolling.
You’ll want to start with how much money you plan to bring in — your sales. If you’re a new business, complete a sales projection to determine how much you expect to make. If you have already been operating, use the sales from the previous year to figure out an estimate for the next year.
Then, you’ll find your fixed expenses, variable costs, and one-time expenses to calculate how much it will cost you to run your business. Next, estimate your profits (and using budgeting software can be a big help with this). Nav’s experts break down seven steps to creating a business budget for more detail.
Marketing Your Landscaping Business
Because there are so many landscaping companies out there, marketing is an important part of your business’s strategy for success. Anything from social media to flyers to word-of-mouth marketing can factor into your plan to reach potential customers.
It helps to first define what makes you different from the competition — whether you’re the most reliable, the most affordable, or the most flexible in terms of your services offered. Make sure your marketing efforts showcase this trait.
Then you can advertise through any of the following ways:
- Social media: Don’t try to do it all — choose one and post regularly.
- Email marketing: Create an email list for your customers and send them updates and useful landscaping tips.
- Search engine optimization (SEO): This is a strategy to make your website appear higher on the list of search engines.
- Billboards or yard signs: This type of marketing can be effective for local businesses.
- Word-of-mouth: Offer a discount or incentive for current customers to tell their friends about you.
Don’t try to get into every kind of marketing at once. It can be tempting to get the word out in as many ways as possible, but it’s best to pick two or three to start. You can always add more marketing channels later as you gain experience.
Learn the ins and outs of creating a small business marketing plan here. You can also consider funding your small business marketing if you can’t afford the costs upfront.
Insurance for Landscaping Businesses
Landscape professionals and their staff face risks of injury, as well as risks of damaging property. So it’s important to have the right business insurance in place. Most states require small businesses to carry general liability insurance, commercial property coverage, and workers’ compensation insurance if you’re an employer.
Landscaping businesses may have special insurance they should consider, like:
- Commercial auto coverage: Since you’ll likely have to use vehicles to transport your equipment, make sure your auto coverage protects commercial vehicles.
- Pesticide or herbicide coverage: Protects in cases of accidental chemical release.
- Contractor equipment coverage: Helps cover costs of contractor equipment if it goes missing or gets damaged.
- Snowplow operations insurance: Protects your business in case of personal injury or property damage while operating your snowplow.
- Umbrella coverage: Provides additional protection if you go over your liability policy limits.
The amount you’ll pay for business insurance depends on how big your business is, how many types of coverage you need, how many people you employ, and how many vehicles you operate.
Building Your Team
Hiring staff members is often an essential part of small business growth because you can delegate tasks to your team and take on more work. It can be a special challenge for landscaping business owners to hire employees because the work can be strenuous and often outdoors, and not all employees excel in that environment.
When you’re looking for employees, it’s a good idea to start with posting on online job boards. In 2015, 79% of job seekers used the internet to look for work, even if the job wasn’t computer-based. This number has likely increased as our world has become even more digital. You should also post on your social media account.
At the same time, it’s a good idea to ask around in your community for referrals. If you already hired a great worker, ask them if they have reliable friends who are looking for work. You can also ask local vendors that may know people in the industry.
Handling Accounting and Payroll
Managing your business’s accounting and payroll are two of the most important foundations you can put in place for your business. Tracking your accounting details on a spreadsheet is possible, but can get complicated quickly. Accounting software can be an essential tool for small business owners to track their business expenses and income, as well as create financial reports instantly that show them how their business is performing. Using accounting software also makes tax season much simpler.
If you hire employees, you’ll have to run payroll. You can do this manually, or you can use payroll software to make the process simpler. Payroll software stores all of your employees’ data, calculates withholdings, lets you run payroll in just a few minutes, and more. Most payroll providers also file payroll taxes automatically so your business stays compliant.
Final Thoughts on Starting and Financing a Landscaping Business
Lawn care services are in high demand and the industry is growing. If you enjoy working outdoors and have a little know-how about maintaining and upgrading yards and landscapes, starting your own landscaping business can be a lucrative venture. Make sure you know exactly how much it will cost to start and run, how you’ll fund those expenses, and what you’ll need to do ahead of time to get the foundation you need for business success.
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