Originally Posted by shovelracer
There are always things to consider.
For a lot of guys equipment recovery is one. A lot of small or under the radar guys will say, well I paid cash and all my equipment is paid for so I can charge less. The way I see it they have tied up valuable operating cash and not charging for recovery is foolish because in 5 years the replacement will have to come from somewhere.
Another is all the other items you fail to think about at first. With no business you can be driving around getting 35 MPG in a Civic. Now you need a truck, even if it is a 4 cylinder compact. All of a sudden you are down to 10-15 MPG, are replacing brakes, tires, balljoints, etc every 2 years. Your vehicle expense winds up being several thousand a year when likely you just planned on fuel and oil. This is just an example.
I'm talking about running a legit business. Now a lot of guys will think they will just fly under the radar, and honestly being small it is entirely possible. With a small operation though going legal is very minimal, and the costs would be very low. The thing is you need to stay the size you intend to because there is a pretty large jump to the level of contractor from retired lawn service. A few guys have talked about hiring help as needed. Right there alone you have opened up yourself and your business to major liability issues. Workers comp is a big issues in most states. It does not take much to crush a finger, damage a foot, or much worse. Realistically you could probably run a legal very small operation for somewhere around 3-5% more than the same operation under the table. Not worth losing your house over such a small amount.
With any business you will have a road ahead of you. Likely even with intended revenue figures your first season at least you will make very little profit. You will have a lot of startup and recovery costs that first season so your tax return will likely show a loss, but that is not necessarily a bad thing.
A wise man told me once. If you want to be profitable in the lawn business you need to be either very small and lean or very large and lean. The key here is to avoid mid sized operations. These guys running around with 3 crews may be making some money, but the hours they require and the headaches they have are far worse than a solo guy grossing 50K or a leading outfit grossing 10 million.
Shovelracer: You are correct. I was not considering equipment recovery and replacement down the road. Most of this equipment I will still need, lawn care business or no lawn care business as I have some acreage to take care of here at home. I also didn't look too close at the increased frequency of breakdowns and part replacements on the truck. I appreciate you candid insight on the costs involved. Often times that part of the equation gets overlooked and glossed over--thinking only of the positives (working outside, independently without a bunch of employees to worry about). I think it's important to look at all issues, positive and not so positive in order to make a calculated decision. Having said all of that, I have made the decision and intend to to move forward knowing that this will not be easy. I do have a great deal of comfort knowing my God is with me. I do have some peace of mind knowing I have a cash reserve to supplement the pension to get through next year. If it doesn't work, I work for someone else part time.
The plan is to stay legal and small. I will follow the old man's advice of small and lean. I have retired from a situation where I supervised a large number of people and don't want to go back. Too many headaches. The only one I will supervise is myself.
Thanks again shovelracer and keep the good advice coming!