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Discussion in 'Lawn Mowing' started by Landscraper1, Apr 2, 2010.
an llc has the choice to do whats best for the company. It can be taxed has either a prop or corp
But he paid tax's on the $$ when he earned it the first time.
The corporation that earned the money that paid him the dividend also had their income taxed prior to passing out the dividend.
So now that money is getting taxed for the third time...
When is enough enough?
giving this a bump!
When and how you started the business? August 2010 as a snow removal company while I was in school studying project management. Decided to give it a go doing lawn care as well after graduating Feb 2011 and having a hard time finding work. I worked for 21 years in printing before getting laid off in Dec. 2008
What you gross in a year? Last year was first full year in business and I did 59K gross
How many employees? 1 (myself) I hire helpers from time to time
What trucks and equipment you use? 4 Chevy Silverado 1500 4x4 Trucks with Snoway plows, 14ft. dump trailer, 14ft. landscape trailer, Exmark LZ60, Scag Turf Tiger 61, Brown Bed Edger, Stih BR600 (2), Shindaiwa (Swisher) multi-tools (3), Ohio Commercial grade poly dump cart (2) and lots of hand tools.
How's your profit margin in these tough times? Too busy to tell but I had to work by myself today doing lawn care only and grossed $459 working 12 hours. I'd say my profit margin had to be around 35% last year and bit higher this year, but I own everything outright and keep investing a large % of my profits back into the business. This year my goal was 100K gross but a weak snow season (21k Jan-March) may have put that out of reach. It does seem like people are wanting more landscaping side work done this year. I've already done close to 200c.y. of mulch.
Interesting thread. Still trying to wrap my mind around the guy that claims 95% gross profit. But neglects all his expenses.
Sort of explains a lot of the "advice" that is given to newbies by those that have the world by the tail because they're one or two man outfits.
Not grossing $500k a year yet but growing VERY fast. My contribution to this thread is more about maintaining high margins. It is possible.
When and how you started the business?
Started up two years ago. Going into our third year. I started the business after a 20 year career in the media industry. Specifically as a business development and innovation executive. I got tired of making other people millions of dollars from my ideas. Landscaping has always been a passion of mine. Used my own money. Financed nothing. Own everything and have no debt. Created a sound business plan and worked the plan.
What you gross in a year?
Into six figures but under $500k. Not going to be more specific. I'm new to this site and want to keep that confidential. 90% from property maintenance and lawn service. 10% from landscape installations. On pace to make goals for this year at 50% increase. Landscape work remains inconsistent at best. Was great around tax refund time but has since fallen off again. Lawn Service is exploding for the third straight growing season. Important to note: we're located in South Florida where property maintenance and lawn service are a year round business on it's own.
How many employees?
Other than myself, one full time and 3 part time guys as needed. As we've grown my wife and my Mom pitch in with administrative work. (they work for free)
What trucks and equipment you use?
1999 Ford Ranger
2008 Dodge Ram 1500
2004 BMW 3 Series (used for sales calls)
2010 Pace 6x12 Trailer
2007 John Deere Z757 Mower (just purchased 2012)
2009 Troy Bilt Mustang zero turn (not a commercial mower and the transmissions are now about dead after 620 hours)
All Echo brand trimmers, blowers, edgers.
How's your profit margin in these tough times?
There is a significant difference between landscape margins and property maintenance margins. Landscape margins are all over the place and can be between 10% and 75% depending on the project. As such I'm only referring to property maintenance since that makes up most of our business.
We're holding at 50% in 2012. Nothing the first year as everything went back into covering start up costs and into marketing. How do we keep a 50% margin? There are many reasons but I will focus on the key areas.
1) A very smart, savvy marketing and business plan that keeps logistics VERY tight. We target specific zip codes, even specific sub zip neighborhood areas and saturate it with marketing and sales pressure. We follow very strict marketing metrics. We only offer property maintenance to these specific cost effective areas and do not go outside it for residential work. As we gain high market share in these areas we move into new areas close by and the process starts all over again.
2) This plan keeps fuel costs for the trucks VERY low. Less than 5,000 miles per year! All our fuel costs are mowing time. This means fuel is spent more on revenue producing mowing time than travel. If a potential new client is not within our defined area, we turn them away...unless they are in an area that fit our marketing plan metrics.
3) This plan keeps labor costs efficient and productive. More time spent on actual work than traveling to the next location. We have clusters of clients per day with as many as 30 within a 5 mile radius. We have specific stops with between 4 and 7 residential clients without moving the truck. We have as many as three commercial clients at a single stop.
4) An absolutely insane focus on customer service and quality work. This gives us a VERY high customer retention rate and a VERY high neighbor referral rate. The only customers we lose are the ones we fire for bad debt...and I've learned how to control these losses.
5) Smart cost management. Should go without saying but this does add % to our margin. We buy everything in bulk quantities. Some items (trimmer line, 2 cycle oil, weed killer, edger blades, etc) are now an annual purchase. Even our insurance premium is paid all at once...no payments with added fees. We also buy equipment outright. No financing.
I haven't read all the posts in this thread. Frankly some of them are just a waste of time. But browsing through I did notice a few that stood out so I wanted to join the conversation.
I am interested in growth models. I have a fantastic problem. My ability to market and gain new clients is far beyond the ability of my business to keep up with it AND keep margins high. I noticed a few people mentioned small operations versus multiple crews and larger operations. Specifically a "diminishing return" on labor. Even growing smart (and keeping costs controlled as mentioned above) there are margin obstacles to revenue growth and none bigger than labor. In order to grow through specific revenue thresholds margins have to suffer. I'm getting close to one of these thresholds and have figured out one possible way around it. I'm looking for more. Perhaps you are too? Hope my comments were beneficial to you.
Marketing Pro those were some great tips. Specifically the focus on small areas. I accidentaly found this out this year, I had to sell out of one part of town because I was to busy to keep the work up and I only had time to market certain areas. What resulted was having all of our work in 2 zip codes and it has been awesome. We are present in area more often so we can address concerns more quickly. We can are seen more often because we spend so much time there which helps with branding. Of course there is less drive time between yards.
I have 3 part time guys plus myself and we gross maybe $125,000 ish in a year, most of that in the spring and summer. I could easily see growing to $500,000 gross over the next 5 years and not expanding beyong these 2 zip codes.
I try to get $45-50/hr mowing.Sometimes I get it and sometimes slightly more and other times slightly less.What kind of profit margins are there on just cutting grass ?
Though to say. Every business has different expenses. In my business I figure 20 to 30% on the mowing.
Marketing Pro, interested to find out if you did increase by 50%.