seeking wise counsel

Discussion in 'Starting a Lawn Care Business' started by RScapes, Nov 28, 2012.

  1. tonygreek

    tonygreek LawnSite Gold Member
    Messages: 3,914

    When you have a service area decided on, shoot me a message and I'll gladly pass on any leads. I often have people ask for recommendations in the New Albany/Gahanna and Upper Arlington/Dublin/Hilliard areas.
  2. shovelracer

    shovelracer LawnSite Silver Member
    Messages: 2,008

    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.
  3. Darryl G

    Darryl G Inactive
    Messages: 9,500

    When I started out I was kind of retired myself, even though I was only 39. I lost my job as a project manager in the environmental consulting and engineering field and had already built up a fairly healthy financial cushion. My mother was dying of Lou Gehrigs Disease, my dad had been gone for 3 years so she was in my care, I had two young sons (ages 3 and 6) who hardly knew who I was, my wife and I had gotten somewhat distant because I was pretty much consumed with work all of my waking hours...I brought work home every night...reports to review/edit and non-billable work to keep my billability rate up high to get my company profit share rating high. I got a pretty good severance package from my company and was collecting unemployment until I started the business.

    I invested 10K as start-up cash and bought a new walk behind mower, trimmer and blower and had a trailer made by a local trailer shop. I already had a truck and landscape tractor for my own use. I cashed out an annuity I had taking monthly payments for 10 years. That allowed me to take it easy at first and put most of what I made back into the business for the first couple of years. My wife hadn't worked since our second kid was born so we got to spend a lot of time together and with our kids. We spent a lot of time recreating on our back acreage and in the river and going to the local attractions. Bascially I semi-retired while I was able to enjoy it with my kids. My wife took a total of 12 years off and is back to work now part time and I'm full time on the business with some seasonal help from the kids. It was really nice to be a young family with me only having to work part time on the business. We didn't get to travel out of state much or do vacations, but we had a lot of fun.

    My biggest problem was that my 1985 truck went down on me twice the first season, once for a week to have the top of the motor replaced. I had a tow hitch put on our van to use as a backup. It was a 2002 VW and actually has a 3/4 ton chasis, extra load tires and handled the trailer well as long as I balanced it properly...didn't end up using it but it was available if needed. I mentioned it earlier, but you need to have a spare for just about everything or at least something you can substitute on a short-term basis. Some dealers will have loaner mowers they will let you use. You can get a short-term rental truck from Home Depot or some other source...just don't mention you want to use it as a landscaping're moving furniture ;) You don't want to be in a situation like I was trying to service your lawns out of a Taurus station wagon with a push mower for a week.
  4. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Messages: 560

    As stated above it is very cheap to become a legitimate business compared to starting the rest of the business. I had around $140 in business documentation fees and my insurance covered:
    $1 million general liability
    $5000 marine policy(cover equipment)
    one or two other things as well
    One year of insurance cost me $560 for lawn and landscaping(not hardscaping).

    If you only wanted lawn coverage it would have only cost $150 for me. Get quotes from a few local agents. I know Progressive won't accept first year companies and their are others that won't either.

  5. RScapes

    RScapes LawnSite Member
    Messages: 21

    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!
  6. Darryl G

    Darryl G Inactive
    Messages: 9,500

    One other thing. I do way better than 50%. In 2011 my net was 76% of my gross income. That's before federal and state income tax.
  7. shovelracer

    shovelracer LawnSite Silver Member
    Messages: 2,008

    Gross sales revenue or gross personal draw? Those numbers are unrealistic for anyone with payroll or doing installations. On the other hand it is entirely possible to achieve similar results being lean and solo with a fair dose of luck. A hard working full time operator could sell 100K in labor each season. Most can not get this number because of inefficiencies, but it is possible. Now if you are super lean and tight and make the right moves you could see a gross draw in the upper 70's solo, netting around 55K.

    This is part of the issue talking numbers. A company pulling 10 mil in commercial mowing is doing way more labor hours than a company selling 10 mil in hardscapes with a large material expense. One guy could sell 200K solo but if it is all installation work than it may mean that you personally made more mowing 100K.

    Rscapes - Do not think I am trying to deter you, but I am trying to help you see things in a realistic view. You mentioned you will already have the equipment. Have you accounted that your tractor may last 20 years at your property, but you will achieve the wear of those 20 years in one season commercially? Or that you may have a roll of trimmer string 5 years at your house but will burn 3 a season commercially. It generally is not the large items that take out new businesses, it is the constant influx of nickle and dime expenses that wears the new guys down. This in combination with mis management of funds. General rule is that it takes 3 years to build a foundation and become profitable. From there a properly run organization sort of enters cruise control and becomes it's own monster.
  8. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Messages: 560

    I do agree with what shovelracer was saying.

    Although I feel that your Toro mower should suit you well, if you do happen to get more than 20 accounts you may want to consider the idea of getting a used 60"/72" mower. Just make sure you can make enough money back to still be in your profit area.

    Make sure you have spare belts for your mower, good traction on your tires, and all the normal maintenance.

    The grass cutting season spans for apprx. 32 weeks of lawn mowing, plan on as little as 25 cuts per lawn due to droughts, unless they are really bad droughts in your area. Some areas may cut for a longer span but that is mostly towards the Southern parts of the country.

    You shouldn't go through more than 2 rolls of weed wacker string in a season, assuming you don't go over 30 lawns or have to edge a lot of driveways and sidewalks. Buy 50:1 mix in bulk in the beginning of the season, Echo oil comes in 8 packs of 2.5gal or 1gal mix, im sure it varies more but that's what my supplier carries.

  9. Darryl G

    Darryl G Inactive
    Messages: 9,500

    Sorry meant to say my net income was 76% of gross sales...basically income minus expenses. It was mostly maintenace with 68% maintenance labor and 21% snow plowing. About 6% landscaping labor. Hauling/disposal, materials and misc. made up the rest. I do have a trimmer/blower guy in the summer as needed (my sons).
  10. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    Thanks for sharing

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