If you enjoy working outdoors, have an eye for detail, and aren’t afraid of some physical labor, it might be time to consider starting a landscaping business. As a landscaper, your daily work may vary from mowing lawns to designing a garden to creating a retaining wall. When you own a landscaping business, you may be a one-person operation or can choose to expand and hire employees.
There is a lot of preparation that goes into starting a landscaping business before you can even plant your first flower, and this guide will provide you with an overview of the landscaping business and the steps you need to take to start your own successful venture.
Business Overview
Landscaping businesses alter the appearance of lawns, gardens, and other outdoor elements. Landscapers may provide residential or commercial services and some work with government or non-profit operations. Landscaping customers often become repeat clients, which can help a landscaper quickly build up a roster of clients.
While starting a landscaping business may seem like the ideal way to spend your days outside, a lot of this business consists of in-office tasks like managing payroll, marketing, and scheduling. Plan to spend a good deal of your time on administrative tasks to keep the business running smoothly. Also, landscaping will have you outdoors in some great weather, but be ready to work when the weather is less than enjoyable. This business can be seasonal, so business owners need to be prepared with a side business or other seasonal business, such as snow removal, that will pick up when the landscaping work dies off in the winter months.
Succeeding as a new landscaping business can be hard as it doesn’t cost a lot for new competitors to start. Providing excellent service, managing employees well, and professional marketing are key, and as your business grows, it is harder for these new operations to take business away.
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Industry Summary
According to the data from IBISWorld, the Landscaping Services Industry in the US is a thriving sector that has been experiencing a steady growth of 4.7% annually over the last five years, and in 2022 generated $150.4 billion in revenue. The market is expected to increase significantly, offering ample opportunities for businesses in this sector.
One of the key trends driving the industry is the growing demand for eco-friendly and sustainable landscaping practices. Consumers are increasingly seeking services that focus on environmental conservation, water efficiency, and native plant species. This trend is driven by a rising awareness of the importance of preserving natural resources and reducing carbon footprints.
The landscaping industry is fragmented, with over 90% of companies employing fewer than 20 people. Most providers focus on residential lawn care and maintenance. Larger firms offer commercial services and complex landscape design/build projects.
Steps To Start A Landscaping Business
Step 1: Market Research
To start a landscaping business, it’s important to do your research and understand the local market. Here are a few steps you can take:
Local regulations and permits: Begin by researching the regulations, licensing requirements, and permits necessary for starting a landscaping business in your area. This will help you understand any potential legal barriers to entry.
Conduct market research: Look into the demand for landscaping services in your area. Consider factors such as population size, demographic profiles, and the number of residential and commercial properties. You may also want to look at income levels, as higher incomes generally mean more spending on landscaping. Reviewing demographic data from the Census Bureau can give you data for your area.
Through your market research, gather insights into the needs and preferences of potential customers in your area. This could include understanding the types of landscaping services they commonly seek, their desired outcomes, and any pain points they experience. This information will help you tailor your services to meet their specific needs.
Analyze competitors: Identify other landscaping businesses operating in your area and analyze their services and pricing. Also, check customer reviews on directories and platforms like Yelp, looking for consistent complaints about quality, responsiveness, pricing, etc. This could indicate opportunities for a new entrant to offer something unique or better.
Step 2: Write a Business Plan
Once you’ve researched the market and gained a clearer understanding of the potential for your landscaping business, it’s important to write a business plan. It’s thrilling to imagine your future crew at work, the hum of mowers in the air, and the smell of fresh earth. Many people will skip this step, but shouldn’t.
The business plan is important because it has you thoroughly evaluate your idea, its feasibility, and potential challenges. It helps to ensure that you have a solid foundation and a clear understanding of the steps needed to turn your idea into a successful business.
One of the key sections of a business plan is where you project income and expenses. By estimating your potential revenue and outlining your expected costs, you can assess your business’s financial feasibility, which gives insights into whether your idea can generate enough income to cover your expenses and ultimately be profitable. It’s far better to discover any potential issues and make adjustments in the planning stage rather than after starting your business.
Related: How to write a business plan
Step 3: Secure Funding
From purchasing equipment and supplies to marketing your services and covering operational costs, there are many expenses you’ll need to consider, and finding the funds to cover these costs can be one of the most challenging aspects of starting your business. Here’s an overview of some of the common funding sources for landscaping businesses.
Self-funding is the first place you’ll look. It involves using your own money, whether it’s savings, selling assets, or tapping into retirement accounts. If your personal savings don’t fully cover your startup costs, you’ll need to explore outside funding sources.
The most common outside funding source is approaching lenders, such as banks, for a business loan. Lenders typically require borrowers to invest at least 15% of their personal funds towards the total project cost, along with having a good credit score and sufficient collateral. In some cases, if the bank considers the loan too risky, they may use an SBA (Small Business Administration) loan guarantee to reduce their risk.
Another source of funding to consider is friends and family. They might be willing to invest in your business, but it’s important to put any agreements or terms in writing. This helps to avoid misunderstandings and preserve relationships.
If your funding needs are relatively low or you don’t have access to credit through traditional lenders, microloans could be an option. Some local economic development organizations provide microloans specifically for small businesses. These loans may also come with business training or support, giving you additional resources to help your business grow.
Related: Finding the money to start a business
Step 4: Register the Business
Starting a landscaping business involves several legal steps to ensure your business is properly registered and compliant with local, state, and federal laws. Requirements vary depending on where the business is located, but here’s an overview of what you need to do to get your business off the ground legally:
Choose a business structure: The first step in registering your business is choosing the right business structure. The structure you choose will affect your liability, taxes, and administrative requirements. The four main types of business structures are:
- Sole proprietorship: This is the simplest business structure and rarely requires you to register with your state. It’s often a good choice for small, low-risk businesses or individual entrepreneurs. The advantage of a sole proprietorship is its ease of startup and lower cost. However, as a sole proprietor, you’re personally liable for your business’s debts and obligations.
- General partnership: A general partnership is an option if you’re starting your business with one or more partners. In a general partnership, all partners share in the business’s profits and are personally liable for the business.
- Corporation: A corporation is a separate legal entity owned by shareholders, which means the business itself, not the shareholders, is legally liable for the corporation’s obligations and debts (unless they sign a personal guarantee for a loan). Starting a corporation involves more administrative tasks and higher costs than other business structures, but it offers liability protection.
- Limited Liability Company (LLC): An LLC combines the liability protection of a corporation with the tax benefits and simplicity of a sole proprietorship or partnership. This is a popular option for many small businesses, including landscaping businesses.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
Related: How to choose a name for your landscaping business
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain business licenses and permits: Licenses may include a contractor’s license, pest control license, or other specific permits, depending on your services.
Also, depending on your location, there will likely be a variety of general registrations needed before opening. This could include a local business license, seller’s permit, and Employer Identification Number (EIN).
Related: State guides for general business licensing
Step 5: Set Up Operations
The next step takes all of the planning and research done so far and begins taking action to make your business a reality.
To start, one of the first considerations is establishing your base of operations. Initially, this could be as simple as using your home as a home base, particularly for administrative tasks, parking for trucks, and storing equipment. As you grow, leasing a yard or a garage in close proximity to your primary service area can greatly reduce travel time and costs. If you need more space, renting a small warehouse might be the way to go.
Next, invest in quality commercial equipment. Quality commercial mowers, trimmers, leaf blowers, trailers, and trucks are the tools of the trade. While new equipment may offer the latest features and reliability, don’t overlook the potential savings of purchasing used equipment, as long as it’s in good condition. Regardless of whether new or used, proper and regular maintenance of your equipment avoids downtime, so your operation runs smoothly.
Once you have your facilities and equipment, it’s time to plan your schedule. Using a spreadsheet or implementing field service software like Jobber can help you manage your schedule effectively. Organize your daily or weekly tasks based on location, focusing on grouping jobs together by geography. This approach minimizes drive times and maximizes the time spent on actual work.
Step 6: Hire Staff
As a landscaping business, you have the flexibility to start as a solo business or choose to hire employees to help with client work.
First, you’ll need to determine if you need contractors or staff. There are some differences between these two types of workers. Generally, contractors work on a project-by-project basis and are responsible for paying their own taxes, while staff are employees who work for you on a regular basis and are responsible for withholding taxes from their paychecks.
Before hiring employees, there are some legal requirements that you need to take care of to avoid any legal issues in the future. One critical step is obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your business entity and is necessary for tax purposes. Additionally, you’ll need to comply with federal and state laws related to hiring employees, such as verifying the employee’s eligibility to work in the United States and following labor laws related to minimum wage and overtime pay.
Related: State guides for hiring your first employee
Step 7: Prepare to Launch!
After going through the major steps above, there are still several key steps to look at before you’re ready to start serving clients. While the specific needs of each business will differ, here are some common areas that new landscaping business owners should address.
Business insurance: Acquiring proper landscaping insurance is crucial for any business, but it’s particularly important in the landscaping industry, where the risk of property damage or injuries is higher. General liability insurance can protect your business in such cases. Depending on your operations and local regulations, you may also need to consider workers’ compensation insurance for your employees and vehicle insurance for your business vehicles.
Bookkeeping: Setting up an accounting system is essential for managing your business’s financial health. This includes software such as Wave Accounting (FREE) or Quickbooks to handle daily transactions, prepare taxes, and generate financial statements. Keeping your financial records organized from the start will make it easier to monitor your business’s performance and comply with tax obligations.
Contracts: Having clear, legally sound contracts is important to protect your business and set expectations with clients. Examples of relevant contracts for a landscaping business include service contracts (outlining the services you’ll provide) or independent contractor agreements (if you’re hiring contractors). RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.
Business bank account: Opening a separate bank account for your business is important for keeping your personal and business finances separate. This makes it easier to manage your business’s money and can simplify tax preparation.
Marketing strategy: To attract clients to your new landscaping business, you’ll need a strong marketing strategy. This could involve creating a website and social media profiles, placing print ads, or even running local radio spots. Networking with local businesses, property managers, and contractors can also be an effective way to generate leads, as is getting a free Google Business Profile and listings in Angi and other directories.
Industry associations: Joining industry associations can provide opportunities for networking, professional development, and staying up-to-date on industry trends and regulations. For landscaping businesses, associations such as the National Association of Landscape Professionals or the American Society of Landscape Architects can be beneficial.
Common Questions When Starting A Landscaping Business
How much does it cost to start a landscaping business?
Starting a landscaping business can cost very little for a one-person operation, but it can also cost significantly more for a larger-scale operation. A one-person operation with a small mower, trailer, and some basic tools will cost around $2,500, but a larger business with commercial-grade equipment can cost $40,000 or more to start.
Business registration: Costs can vary by state, but expect to pay between $50 to several hundred dollars for business registration fees and licenses specific to landscaping work.
Insurance: Carrying the necessary commercial general liability, workers’ compensation, property, auto, and equipment insurance will likely cost between $1,000 and $3,000 annually.
Equipment: The initial costs for landscaping equipment like mowers, trimmers, blowers, etc., can range from $1,000 to $30,000 or more. Buying quality used equipment can reduce startup costs.
Marketing: Initial marketing, like print materials, website development, and advertising, may cost around $500 to $2,000 to establish your brand.
Location: If your landscaping business requires a physical location, you’ll need to consider the cost of rent or purchase, along with any initial deposits. The cost will vary greatly depending on the size and location of the property.
Last, having three to six months of operating expenses on hand is highly recommended as a buffer. This can help cover unexpected costs or fluctuations in income, especially in the early stages of your business.
How profitable is a landscaping business?
The profitability of a landscaping business will vary according to the number of reliable staff, competition, length of grass growing season, and even marketing techniques.
To calculate the revenue, the landscaping business owner needs to consider the total sales generated from various services provided, including lawn maintenance, hardscaping, landscape design, and installation. The revenue might also include additional income from landscape material sales or maintenance contracts.
To use an example of a brand new small landscaping company focused only on residential projects, let’s look at a scenario where they complete one project per week over a 35-week operating season, using data where an average residential landscaping project brings in revenue of $3,415.
At one project per week for 35 weeks, the total annual revenue would be $119,525 (35 projects x $3,415 each).
Based on industry averages, the cost of goods sold for a residential landscaping business runs around 45% of revenue. With revenue of $119,525, the annual cost of goods sold would be $53,786 (45% of revenue).
Operating expenses like insurance, rent, admin costs, and minimal staff typically range from 10-25% of revenue. Using 20% to be conservative, the operating expenses would be $23,905 (20% of $119,525).
So for a new one person residential landscaping operation completing one $3,415 project weekly for 35 weeks annually, the potential profit could be approximately $41,834.
What skills are needed to run a landscaping business?
While starting a landscaping business doesn’t require a business degree, certain skills, experiences, and education can contribute to your success.
Experience using machinery and equipment: Landscapers need to be able to drive a truck and large trailer and operate a variety of machines such as zero-turn mowers and string trimmers. Experience using these types of machines can make for an easier learning curve when starting a business.
Mechanical knowledge: Landscaping businesses rely heavily on machines, and these machines require maintenance and can break down. A business owner who has the ability to do their own machine maintenance and even smaller repairs can save money and time over bringing in a professional.
Physical strength: Landscaping is a physically demanding job. An owner who is physically fit and strong can make an easier transition into full-time landscaping work than someone who is not physically fit.
An eye for design: Whether planning out an eye-catching gazebo layout or determining which colors of flowers would make the best addition to a garden, landscapers need to have an eye for design and an understanding of what looks good.
Knowledge of horticulture: Landscapers need to understand how to cultivate and manage various plants, shrubs, and grasses. With this knowledge, they can better advise their customers and make recommendations that will get customers the results they’re looking for.
Attention to detail: Landscaping is all about details, and landscapers need to always be looking at the details of their work.
Creativity: Landscapers may be tasked with designing gardens or coming up with solutions to problems, making creativity an important skill in this profession.
Staff management skills: If a business owner plans to hire staff, previous experience with interviewing, hiring, training, and managing employees will be valuable.
Customer service skills: Previous customer service experience can help a landscape business owner provide professional communication and address customer concerns.
What is the NAICS code for a landscaping business?
The NAICS code for a landscaping service is 561730.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
Resources:
American Society of Landscape Architects
Association of Professional Landscape Designers
Ecological Landscape Alliance
National Association of Landscape Professionals
