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Is Your Business Making A Profit Or Is It Just Moving Money

Discussion in 'Lawn Mowing' started by MMLawn, May 16, 2006.

  1. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    Saw an old friend last night at one of the local eaterys. He is an officer with the FD and last I saw him he was working part-time for a guy that ran a lawn care business. In talking he mentioned that the guy was no longer in business (keep in mind he was a full-time LCO) and that that the guy was working some crappy job now. I ask what happened because he had a couple of the largest HOA's in the area. The answer was straight and to the point, "he was just moving money around, not making any". I ask how. He said that the guy had bought new trucks and equipment in an efford to get those HOA's and to compete with the larger local companies and in doing so in the end all of the money the business brought in was simply going right back out to expenses and none was staying in his bank acct.

    So, that got me wondering how many guys on LS are in the same boat.......or even worse yet, how many are and they don't even realize it yet. ;)
  2. ProLawns

    ProLawns LawnSite Senior Member
    Posts: 476

    This is my fifteenth year in business and i've made a profit every year. I gradually bought my equipment over time and didn't buy everything new at first.
  3. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Posts: 1,511

    one major purchase per year based on demand and amount of revenue can be brought in from that piece. Plus I always save all year then pay off items once winter cash flow is established and second of all work more than you play.
  4. lawnwizards

    lawnwizards LawnSite Silver Member
    Posts: 2,434

    sometimes it seems that i work and work and work and never have anything to show for it. i try to take atleast a little bit out of every net check and deposit it into savings. i got about 1100 so far this year saved. Mike, how long did you do it before you knew it was the right decision? i mean, what year did it take before you knew you made it? thanks.

  5. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    I was 15 years into it before I starting making the amounts I am today Randy. I also would add that once I decided to focus at least 80% of my business on large commercial props that, that is when I made a HUGE turn revenue wise. Now 95% of my business (revenue wise) is commercial. Residential, NO THANKS! In that part of the business you are competeing with every loco that can fit a Murray mower in the truck of their car. In commercial at least (for the most part) I am competeing with other professional, knowledgeable, BUSINESS PEOPLE......and there is a difference between a true businessman/woman and just a guy cutting grass for $25 a pop.
  6. DynaMow

    DynaMow LawnSite Senior Member
    Posts: 570

    Mike, nice thread. I got to get this figured out right now or my career is not going to expand. I beleive this is the most important information any business owner can have. I bet most do not know all costs and would be suprised at want they spend.
  7. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    I agree 100% and that is why I started this thread after my talk with my buddy. I'd bet the farm there are many guys on here in the same boat and they need to realize it so they can make the needed adjustments to survive before they find themselves head over heels.

    To expand also on what you said, I'd also bet that less than 50% of LCO's know their REAL Cost of doing business per hour.
  8. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    As of this year everything I have will be paid for, and I only PLAN to buy small things like trimmers blowers and crap for the next two seasons. We've been pulling a profit but not a big one b/c we grow every year and with that growth I have to buy a thing or two to facilitate. So this year I plan to hit that sweet spot where I can really have the salary I want and have a nice 'True Profit" after that.

    In years past I got paid but the busness nver had a true profit, after my salary.
  9. lqmustang

    lqmustang LawnSite Senior Member
    Posts: 620

    This definitely emphasizes that anyone can mow a lawn, but not anyone can run a business. The year I started the expense ratio was pretty high, but now in my 5th year the bottom line looks pretty nice. I also intend to keep that bottom line growing. payup
  10. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    Moved money around the first three years. This year (4th) will clear $100-$150K before depreciation expense. Next year, even more. $40K salary and the remaining profits will be dividends as to avoid the ss tax on the bulk of it.

    There is good money in residential lawn mowing. You just have to realize this business is just like any other...capital required...and there is no substitute for experience.

    DFW Area Landscaper

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