Estimating operational costs

Discussion in 'Starting a Lawn Care Business' started by swbluto, Aug 10, 2011.

  1. So, I've started a lawn mowing business using another person's equipment and business has grown briskly and I want to continue operating next year. So, I do a detailed cost analysis (including labor, gas, equipment costs, equipment replacement costs, etc.) to figure out if its viable and I find the cost per lawn was much lower than I originally anticipated, and I wondered why isn't the going price for lawns that low? I assumed a volume of 100 weekly lawns per crew.

    So, I would like someone to check my assumptions.

    Does a truck cost nearly $300 a month to operate, including insurance, maintenance and gas? The service radius is 3 miles, so the average daily drive is about 10 miles or so. I realize there's a lot of stopping and starting with this business, so I'm wondering if I'll be replacing the clutch and/or transmission more often than every 5-10 years...

    Does 6 months of commercial insurance cost around $300? I mean the kind of insurance used to pay for broken windows due to thrown rocks.

    Are there any other significant costs I might be severely underestimating? Is "worker's comp" expensive (Like, does an $8/hour employee actually cost $14/hour with worker's comp included or something?)?
  2. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    Well that's the reason so many jump in every year because they get this math wrong and think its all profit.

    What does a truck cost new or used 5 years old or 25 years old kind of hard to give you that number when you left all that out.

    I put a 100 dollars a week in to each of my trucks for fuel.

    Another 100 a week per crew for equipment fuel.

    Then there is insurance I have good insurance 500k 1000k runs us about 1100 a year per truck. Its good to be 41 with a clean record.

    Then comes break downs and tires this is of course assuming you have used I also have a new beast with 1100 a month payments. But lets go with repairs figure 2000-3000 a year in repairs and tires per truck. Been doing this as an owner last 9 years those are the numbers.

    Business insurance this is not so simple your mower gets stolen do you want it covered how bout everything else you own. If so you can forget about 300 dollars every 6 months and step up to around 1500 a year. That's replacement cost on my most important items and 1000k 2000k for liability. And your love this they wont pay for broken windows they wont budge on their 1000 dollar deductible.

    As for comp the longer your around with out an accident the cheaper it is we pay 4% then add in 6.9% state unemployment another 1% or so fed unemployment 7.5 % SSI and medicare. So ballpark 20% on top of there hourly wage then add in a payroll service that will cost you 1000-2000 a year.

    Your billing and invoices contracts and stamps and envelopes and bank fees and P.O. box fess we pay about 3000 or about 15 per customer.

    Don't forget phones cell and perhaps a business line can easily hit 1500-2500 a year.

    We haven't even touched equipment replacements and repairs 10-15k a year or about 5000 per year per crew.

    Is your rent free I own the land but the mortgage and taxes still cost 16 k a year.

    Then there is trailer tires and repairs at first there wont be any but don't let it fool you if you ignore it it will hit you all at once 400 a year per trailer is about right.

    Advertizing expect to spend 50-100 dollars per account you land.

    Accounting fees you will have much more complicated tax returns that's another 1000 a year.

    Property taxes hehehe lets just say your gona love that.

    Registration fees sounds easy wait till you have 8 different plates and see if you still enjoy those payments.

    Then there's license costs and software upgrade costs but you get the idea you might be missing some things.
  3. GravyTrain

    GravyTrain LawnSite Senior Member
    Messages: 375

    Maybe I'm off on this, but 100 per week per crew seems a little aggressive as well. I'm solo, so that probably has a lot to do with it.
  4. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    At 4 dollars a gallon that's only 25 gallons and that's because its summer in spring I was using 25 gallons a week just in my 60 inch lazer
  5. MowHouston

    MowHouston LawnSite Bronze Member
    Messages: 1,012

    I spend $15 - $20 for new accounts with advertising.
  6. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    WOW.... when i read this i thought it was a typo.... We run a little over 100.00 PER day ......

    Getting back to topic. I noitced the OP said Estimate. WOW. there is NO eastmated cost. it should be RIGHT TO THE PENNY.

    I think we need a POST on balance sheets !!!

    I see many post here and it makes me think some of the operations are being run by the seat of there pants.

    they go cut and pay out what they have too and what's left over is there's.

    GENTEMEN: YOu need to get a handle on this.
  7. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    Your numbers sound right if your mowing 5-6 days a week we tend to mow Wednesday through Friday with Saturday-Sunday as our over flow days for breakdowns and weather issues. So that 100 per crew average is for a 3 day cutting schedule. Income wise it differs between my 2 crews ( both are 2 man set ups) I bring in 2400 plus in those 3 days my partner brings in 2900 plus in those 3 days yet I use more fuel (longer drives bigger lawns) I probably should have broken my numbers down per day on this item.

    As for posting balance sheets I think you and me bohiaa would probably be the only 2 on this site that would be fine with that. Your one of the few left here who always gives sound serious advice.
  8. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    WOW thanks Kelly. I do Enjoy comming here and helping out the NEWbys. But I have been told many times I dont know what I'm talking about.

    Thanks again
  9. joshman108

    joshman108 LawnSite Member
    Messages: 86

    i spend $0 on advertising? Ok maybe like $2. Craigslist and homemade signs and word of mouth. Works wonders.

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