What do you net? (POLL)

Discussion in 'Starting a Lawn Care Business' started by rgodwin, Oct 10, 2016.

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What do you net? (Your individual profit)

  1. 30k or less

    39 vote(s)
    36.1%
  2. 30k-60k

    25 vote(s)
    23.1%
  3. 60k-100k

    19 vote(s)
    17.6%
  4. 100k +

    19 vote(s)
    17.6%
  5. I made enough to run for president.

    6 vote(s)
    5.6%
  1. PLLandscape

    PLLandscape LawnSite Bronze Member
    Posts: 1,094

    My point is there have been multi million dollar landscape companies that started out with near $100k loans to get their businesses started. But around this site you would be flamed to death because you took out a loan for something. I agree if you jump in head first you better have some backup cash. I was asking for expanding the answer due to this.
     
    KAZ likes this.
  2. drivenlandscapes

    drivenlandscapes LawnSite Member
    Posts: 14

    I think the term "net" is a useless benchmark. The reason I say this is because your net profit is a number that you and your accountant need to massage at the end of the year. You want to make your net profit high enough to obtain loans you may need for the coming year, or low enough to reduce tax liability....

    My recommendation is to focus on two figures...

    1.) EBITDA - Earnings before interest tax depreciation and amortization.. this should give you a more accurate picture of profit prior to "massaging" the numbers

    2.) Gross margin. - If you accounting is set up properly, and you have build a balanced business - the gross margin for residential landscape maintenance companies should be similar business to business. you should be shooting for a 45 to 65% margin.

    Hope that helps!
     
  3. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 928

    cash flow example - service based business, doing 2MM in revenue, paying a combined state and federal tax rate of 40%, billing for services at the end of the month with net 45 terms - you aren't getting paid on the first months services until the middle of the 3rd month.

    At 10% net profit, you aren't cash flow positive 30+ months
     
    Patriot Services and PLLandscape like this.
  4. klsgc

    klsgc LawnSite Senior Member
    Posts: 259

    This is a ridiculous statement... Unless I am understanding it wrong. My business nets over 20% AFTER I take a normal salary. In my opinion that is healthy profit. Much higher than the industry average. If I average out my expenses over 12 months I have around 70k per month in expenses. I could never carry this using cash reserves with no receivables. I would guess there isn't a business owner on lawnsite that could do this.

    QUOTE/ I was told FIRST DAY in my college Small business management class was thus:
    If you cannot run your new business with ZERO receivables for 6 MONTHS, Don't even start it.[/QUOTE]
     
  5. drivenlandscapes

    drivenlandscapes LawnSite Member
    Posts: 14

    Go full time into lawn care if you know what you are doing, easy to build and scale a business if you have a good plan.

    1. ) 1.2 million
    2.) Gross margin is between 55 and 60% ( Net is a useless number since it is a number that you massage with your accountant to fit your needs )
    3.) we have about 1,200 accounts ( residential mostly )
    4.) We have been in business for five years.
     
  6. ZombieCutter

    ZombieCutter LawnSite Senior Member
    Posts: 741

    [/QUOTE]

    There are many "business" owners here not 30 days from bankruptcy.
    Did you have a 70K expense just starting out?
    Did you just fall into 400 customers and multiple crews?

    Think about my statement for a while.
     
  7. Rockbridge Lawn Care LLC

    Rockbridge Lawn Care LLC LawnSite Member
    Posts: 12

    I started in August 2016 and had net income of $1,18.00/month which got me off the hook with the wife about the $850 I spent on a 36" walk behind to get this endeavor off the ground... she looked like I was stupid and wanted me to spend $350 on a new push mower....... I just spent $1,750 for a 52" hydro which was 3/4 of 2016's profits. I've only been a licensed & insured business for 1/2 a year and in the industry for a year. So I put $350 cash in my pocket when all said and done for 2016...which makes my net salary about $0.30/hour :(:(:):)<<just realized my equipment is all paid for tho
     
    rgodwin likes this.
  8. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 13,404

    And what is the rationale of buying a bigger mower for accounts you don't have? The 36 would have carried you for quite a bit longer. The 1750 would have been better spent on gaining accounts. Are you planning on claiming this endeavor on your taxes? You might be able to lower your tax bill a bit. Just my .02
     
  9. Rockbridge Lawn Care LLC

    Rockbridge Lawn Care LLC LawnSite Member
    Posts: 12

    Patriot I had been mowing a number of neighbor's for a couple of years as a cash on the side type of deal / help them out and/or a lot of free time as I work my 7-3 shift and my afternoons are... well unproductive... and the old trusty craftsman died late spring.....So as a home owner I was going to be out $350 either way....so I jumped in with getting a 36" to replace the craftsman push mower and had an "awww-haaa" moment.... Later that week I stopped by this bigger jungle lot property with the mower in the back and said i'll cut it today....boom... the owner said come every week until it snows....I had this one 1.3 acre account before the 52" purchase.... I was mowing it with the belt drive 36" in 101*F temps late August- like a true rookie.....I just contracted a 2 acre empty lot for 2017 and picked up another 1.5-2 acre plot at the end of the 2016 season. I can get by with the 36", but why pass up a 400 hour hydro machine that is hopefully going to give me like 30% better production and I can finally ride a velky. I figured there would be some tax incentive too, but not counting on that

    I was very fortunate not to have to market. I slapped some magnet decals of my logo on the truck door, filed my license and GL insurance and off I went. 20174- will be about refinement
     

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