Starting a tree trimming business can be rewarding for those passionate about the outdoors and landscaping. However, starting a successful tree service requires more than just technical skills in tree care.
With proper planning and preparation, you can grow a successful tree trimming operation, and this guide is here to help by providing an overview of the tree trimming business, steps to get started, and answers to common questions for new entrepreneurs.
A tree trimming business provides services like pruning, cutting, and removing trees and branches on residential and commercial properties. Key services include tree removal, trimming, pruning, stump grinding, and sometimes planting new trees. Customers include homeowners, property management companies, parks, golf courses, and local governments. Most tree trimming businesses operate within a local service area due to the hands-on nature of the work.
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Tree care, also known as “arboriculture,” is a highly fragmented industry with many small local operators. According to the International Society of Arboriculture, the top 4 companies generate just 4% of industry revenue.
Industry revenue is projected to reach $37.1 billion in 2023, having grown at an annualized rate of 8.5% annually over the last five years, according to IBISWorld. This growth is due to multiple factors. An increase in residential and commercial construction means increased demand for tree trimming and removal. During that time period, per capita disposable income also increased, meaning homeowners had more money to hire a professional to maintain the trees around their home instead of attempting the tree removal and maintenance themselves.
The industry has low barriers to entry but requires technical skills and specialty equipment like bucket trucks, chippers, chainsaws, and stump grinders.
Steps To Start A Tree Trimming Business
If starting a tree trimming business sounds appealing, follow these steps to launch your new venture:
Step 1: Research the Market
So, you’re thinking about starting a tree trimming business, and the big question on your mind is: “Is there room for one more?” Before you invest your hard-earned money into chainsaws, tree climbing gear, and a service vehicle, it’s important to find out whether there’s enough demand to sustain another business like yours.
The first point of order is to get a grip on the size of the market you’re targeting. Census data can be a rich source of information for this. Look at the population, number of homes, and median income in the areas you’re considering. You might want to zero in on wealthier neighborhoods; people there are more likely to pay for professional tree care. Understanding the market size gives you a clear picture of your potential customer base and helps you answer the question: “Is the pie big enough for one more slice?”
Once you’ve established the market size, the next step is to understand who else is in the same business. Use online directories, social media platforms, or even take a drive around targeted neighborhoods to spot your competitors. Pay attention to the number of companies already operating, the range of services they offer, and what customers are saying about them in reviews. This information will help you understand how saturated the market is and what unique services or features could make your business stand out.
Last, take a look at the future of your area. Is the local population growing? Are there upcoming housing projects or business expansions? Maybe there are plans for more green spaces or urban forestry initiatives. If the signs point to growth, then the demand for tree services is likely to rise, offering more opportunities for your business.
The question of whether there’s enough demand for another tree trimming business isn’t answered with a simple yes or no. You have to dig deep into market data, assess the competition, and gauge the area’s growth prospects. If the market size is significant, competition is manageable, and the area shows signs of growth, you have a strong case for proceeding with your business.
Step 2: Write a Business Plan
After researching the market and confirming there’s demand for your tree trimming business, the next step is writing a business plan. This document serves multiple purposes. First, it acts as a reality check. By laying out all aspects of your business in a structured format, you can assess whether your ideas are genuinely viable or if you’ve overlooked important factors. Secondly, the business plan allows you to project your income and expenses. These projections help you determine whether your tree trimming business is financially feasible, which is essential when making the decision whether to start and when securing funding.
A few sections in the business plan to focus on, especially if seeking funding, include:
In this section, it’s not enough to just present data; you need to explain why your tree trimming business will succeed in the given market conditions. You’ve done your market research; now’s the time to demonstrate that there is a gap in the market that your business is uniquely positioned to fill. Lenders will want assurance that there’s a demand for your service and that you have a plan to capture this demand.
A strong management team is often a good indicator of business success. This section should include details about the owners and key staff, highlighting their relevant experience and skills. Lenders and investors place a lot of weight on the management team because a good team can make or break a startup. Don’t underestimate the importance of showcasing the strength and expertise of the people behind the business.
Bankers will pay very close attention to this section, so make sure your numbers are both reasonable and well-explained. Include projections for income, expenses, and cash flow. Given the seasonal nature of the tree trimming industry, your financial planning should reflect these fluctuations, helping you manage lean periods effectively. Be prepared to explain how you arrived at these numbers, as lenders will likely question your assumptions.
Related: How to write a business plan
Step 3: Source Funding
Finding the capital to launch your business can be both a high and a low point in your entrepreneurial journey. So, let’s look at the ways you can fund your business.
Personal savings: Using your own savings can be a good start, and depending on the equipment you already have, your startup costs may be very low. The benefit here is that you’re not taking on any debt, which means no payments eating into your profits.
Home equity loan: If you own a home, you might consider taking out a home equity loan or line of credit. Interest rates tend to be more favorable compared to other loan options.
Credit cards: Business credit cards offer a quick solution to your immediate financial needs. They’re convenient, but they come at a price. Interest rates are high, and credit limits are often low. If you decide to use a credit card, tread carefully to avoid spiraling into debt.
Bank loan: Banks are a traditional source of small business funding. You’ll need to present a solid business plan, invest at least 15% of your personal funds into the project, and have a decent credit history. The good thing is that interest rates are generally reasonable, however bank loans can be hard to qualify for.
If the bank considers the project as too risky to fund in-house, they can get a Small Business Administration (SBA) loan guarantee. The interest is slightly higher than a traditional bank loan and the application process can be long.
Family & friends: You could consider asking close family members or friends to invest in your business. If you choose this route, make sure to set clear arrangements upfront to prevent any potential misunderstandings or strained relationships.
Microloans: If you find that your funding needs are small or you can’t get credit through traditional means, microloans are another option. These are small loans offered by local economic development organizations that are designed for startups and small businesses. Some microloan programs even offer business training alongside the funding, which can be a valuable bonus.
Step 4: Register the Business
Starting a tree trimming business involves more than just knowing how to handle a chainsaw; you’ll need to make your business legal and official. Navigating this maze can be tricky, especially since each state has its own rules and regulations. Here are some of the tasks to consider:
Choose a business structure: The first big decision you’ll need to make is what type of business structure best fits your needs. Your options typically include a sole proprietorship, a general partnership, a corporation, and a Limited Liability Company (LLC).
- Sole proprietorship: This is the simplest structure and often the least expensive to set up. You’re the sole owner, and the business income and debts are yours alone. However, this also means you have no liability protection.
- General partnership: If you’re going into business with someone else, this might be your best bet. Like a sole proprietorship, it’s easy to set up but doesn’t offer liability protection.
- Corporation: Provides the most liability protection, but there are complex administrative requirements and is more costly to set up and run.
- LLC: A sort of hybrid, offering the liability protection of a corporation but with the tax benefits and ease of administration that a sole proprietorship or partnership offers.
LLCs and sole proprietorships are popular choices for tree services. LLCs due to liability protection, while sole proprietorships are inexpensive to start.
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.
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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: Naming a tree trimming 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.
Obtain business licenses and permits: Most states don’t require a tree trimming service to obtain a specific license to do tree work, though a handful of cities and states require a contractor’s license.
Additionally, the Occupational Safety and Health Administration (OSHA) has some requirements for tree trimming businesses, such as first aid training and the wearing of personal protection equipment.
There are also some general business registrations that may be needed. These vary by location, but some common ones include a local business license and Employer Identification Number if the business has employees.
Certifications: While not a license, having certifications like the ISA (International Society of Arboriculture) Certified Arborist credential can provide a boost to your business.
First and foremost, this certification shows that you know what you’re doing. You’ve passed a rigorous exam that tests your knowledge of tree biology, diagnosis, maintenance practices, safety, and more. When customers see that you’re ISA Certified, they’re likely to trust you over someone who doesn’t have this stamp of approval.
Also, many commercial and governmental contracts require that tree care services be performed by ISA Certified Arborists or under their direct supervision. Whether it’s a local government needing tree maintenance in public spaces or a large property management firm seeking a contractor, these organizations often write ISA Certification into their job requirements. Without it, you won’t even be eligible to bid on these projects.
Step 5: Set Up Operations
So, you’ve done your market research, written a solid business plan, and you’re ready to launch your tree trimming business. Now comes the fun part: setting up the operations to turn your dream into reality. While it may seem overwhelming at first, a well-thought-out operational setup can make your life easier and significantly contribute to your business’s success.
Getting the right tools: The first step in setting up your operations is to acquire the necessary vehicles and equipment. Essential tools for a tree trimming business include chainsaws, ladders, and safety gear like helmets, gloves, and protective clothing. You’ll also need a reliable vehicle, preferably a truck or van, to transport your team and equipment to job sites.
Insurance: After purchasing the necessary equipment, securing liability and worker’s compensation insurance is crucial. This protects you, your employees, and your business from financial losses due to work-related accidents or damages.
Streamlining processes: Once you’ve got the gear, consider the software tools that can help you manage your business more efficiently. Software and mobile apps, such as Jobber and Arborgold can help you with everything from scheduling jobs and planning routes to sending estimates and invoices. With so many tasks to manage, leveraging technology can significantly streamline your operations and reduce time spent on administrative tasks, letting you focus more on the actual tree trimming.
Setting your pricing: Determining your pricing strategy is another essential aspect of setting up your operations. Your rates should be based on costs, competition, and your desired profit margin. It’s important to consider all your expenses, including equipment, insurance, labor, and overhead costs when setting your prices. It’s also beneficial to research what competitors charge for similar services in your area to ensure your prices are competitive.
Handling payments: Last, decide on the payment options you’ll accept. Offering multiple payment methods, such as cash, card, and check, can make it easier for customers to pay for your services and can help improve cash flow.
Step 6: Hire Staff
As you gear up to start your tree service, one aspect to consider is hiring. A tree trimming service can be solely owner-operated, or it can be a larger operation with staff ranging from skilled tree trimmers and climbers to office staff handling bookings and customer service. If hiring is part of your plans, there is an additional layer of responsibility and regulation as an employer.
First up is obtaining an Employer Identification Number (EIN) from the IRS. This unique number identifies your business for tax purposes. Next, you have to verify the employment eligibility of anyone you hire. Basically, you need to make sure they have the legal right to work in the U.S. For state reporting, every state has its own set of rules, such as reporting new hires to your state’s directory shortly after they start.
Worker’s compensation is another box to tick off. Most states require businesses to have worker’s compensation insurance to cover injuries or illnesses that can happen on the job. Last but not least, you’ll need to familiarize yourself with labor laws. These laws cover everything from minimum wage to workplace safety standards.
Also, given the high injury rates in the industry, make safety a top priority by providing extensive training, requiring protective gear, and enforcing safety policies.
Step 7: Prepare to Launch!
At this stage, you’ve done your market research, drafted a business plan, and you’re gearing up to start your tree trimming business. Before you start revving those chainsaws, let’s tie up some essential loose ends. Every business will have different needs, but here are some of the most common:
Setting up bookkeeping: Setting up a bookkeeping system is essential for tracking income, expenses, and monitoring overall financial health. This is where software like Wave Accounting (FREE) or Quickbooks or hiring an accountant can come in handy.
Contracts: In the tree trimming business, contracts like Tree Removal Agreements, Service Contracts, and Liability Waivers are the norm. Having written agreements shields you legally and clarifies the scope of work for your customers. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.
Opening a business bank account: Keep your personal and business finances separate. This not only simplifies bookkeeping but also makes life easier during tax season.
Develop a marketing strategy: Develop a marketing strategy to promote your business. This should include creating a professional logo and website, leveraging social media, and considering local advertising.
Industry associations: Consider joining organizations like the Tree Care Industry Association (TCIA), the International Society of Arboriculture (ISA), and the American Society of Consulting Arborists (ASCA). These associations provide networking opportunities and professional development resources.
Common Questions When Starting A Tree Trimming Business
How much does it cost to start a tree trimming business?
On average, starting a tree trimming business requires an initial investment of approximately $12,000 to $50,000.
Equipment: One of the biggest initial expenses is purchasing the essential equipment. You’ll need chainsaws, ladders, safety gear, and perhaps even specialized machinery for larger jobs. Depending on the quality and amount of equipment, this can run you anywhere from $5,000 to $15,000.
Vehicles: A reliable truck or van to haul equipment is crucial. Used vehicles can start around $5,000 while new ones can exceed $30,000. Costs can go higher with more specialized vehicles like a bucket truck.
Insurance: General liability insurance and workers’ compensation insurance coverage are important, especially given the dangers of tree trimming. Initial insurance costs can be around $1,000 to $2,000.
Licenses and permits: Business licenses and any tree care specific permits could cost you another $200 to $500.
Marketing: Setting up a website, creating business cards, and initial advertising can cost around $500 to $1,000.
Miscellaneous costs: Miscellaneous items like office supplies, uniforms, or first-aid kits can add another $300 to $500 to your startup costs.
How profitable is a tree trimming business?
The profitability of a tree service business can vary depending on various factors like location, competition, and scale of operations, but let’s estimate some numbers for a clearer picture.
A common formula in the tree trimming industry to estimate revenue is to consider the average price of a job, which can be around $500 to $700 depending on your location and the complexity of the work. If you complete about four jobs a week, that equates to approximately $2,000 to $2,800 per week. Multiply this by 50 weeks a year (allowing two weeks off), and your estimated annual revenue comes in at $100,000 to $140,000.
Now, let’s talk about expenses. You have ongoing costs like fuel for vehicles, equipment maintenance, and employee wages if you have a staff. These can easily eat up about 40% of your revenue. Let’s say expenses tally up to $60,000 per year.
To find the estimated annual profit, you’d subtract the total expenses from the total revenue. If your estimated annual revenue is $100,000 and your expenses total $60,000, then your profit would be $40,000. If you’re on the higher end with $140,000 in revenue and $60,000 in expenses, your profit could be $80,000 per year.
These are rough estimates, of course, and your mileage may vary. However, these calculations can give you a ballpark idea of what you might expect to earn in a tree trimming business.
What skills are needed to run a tree care business?
Starting a tree care business doesn’t require a business degree, but certain skills and experiences can increase the business’s chance of success.
Tree removal experience: Knowledge and experience in tree removal are essential. Ideally, a business owner will have worked for another tree trimming business before starting their own. Certification is also available from the International Society of Arboriculture (ISA), which may improve your business’s credibility.
Arborist knowledge: Knowledge of tree health and care is also important in this industry, especially if a business is offering maintenance and care services. The ISA Certified Arborist designation is available to help further professionals in the field.
Safety training: Tree trimming and removal are highly dangerous activities, so business owners should have previous experience in safety training, and they should design and implement safety training programs for employees.
Management skills: When evaluating potential employees and hiring, training, and managing staff, previous management experience and skills will be valuable.
Customer service skills: A business owner will also benefit from customer service skills. Good phone etiquette, the ability to understand customer concerns, and punctuality will improve a business’s reputation and encourage customers to become repeat clients.
Marketing talents: Most customers only need tree trimming or tree removal services occasionally, so it’s important for business owners to take an active role in marketing the business on an ongoing basis.
What is the NAICS code for a tree trimming business?
The NAICS code for a tree trimming business is 561730, which is categorized under Landscaping Services.
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?