Are you happy with the revenue and profitability of your landscaping business? According to the National Association of Landscape Professionals, the landscaping business has grown an average of 5.3 percent per year since 2017. As of 2022, the total market size of the industry was $129 billion. The average landscaping company that participated in the National Association of Landscape Professionals in 2021 had roughly 305 customers with an average per-customer gross income of $12,798, and they experienced an average growth rate of 5 percent. If your business isn’t doing as well as the mentioned statistics and you wish to improve your business’s gross revenue and profitability, keep reading.
First, Know Your Numbers
The first step to improving the profitability of your landscaping and lawncare business is to examine your numbers and know the key metrics you need to track. Most landscaping businesses have a profitability of between 15 and 45 percent. The two categories you may be most familiar with are revenue and expenses.
Revenue: The total amount of money that your business brings in from your products and services.
Expenses: All the costs you incur while running your business. This includes all the equipment you purchase or rent, building rent or mortgage, labor, supplies and utilities.
Revenue
By knowing your overall revenue and the revenue from each category, you can determine your most popular and profitable services. You’ll also get an overall idea of your average monthly, quarterly and yearly income. You can use this along with your expenses in order to set goals and monitor your profitability. A few services you may offer or specialize in are:
- Landscape Design and Installation
- Lawn Cutting
- Monthly Maintenance Packages
- Spring and Fall Cleanup
- Tree and Shrub Trimming
Expenses
Your business expenses include every bill you pay in order to successfully run your landscaping or lawncare company. Once you know your detailed expenses, you can set monthly targets in order to keep them in check.
- Labor Costs: The costs of recruiting, training and paying your employees, plus the associated payroll taxes.
- Equipment Costs: All the costs associated with purchasing, maintaining and repairing the equipment you use on a daily basis for your landscaping and lawncare projects.
- Material Costs: The costs associated with purchasing the plants, shrubs, fertilizer and mulch for your specific jobs.
- Commercial Vehicle Costs: Your expenses related to purchasing fuel for your vehicles and getting all the maintenance performed.
- Business Insurance: The costs associated with your business insurance policies, including liability, workers compensation, commercial car insurance, a BOP policy and umbrella insurance.
- Rent or Mortgage: The monthly cost of renting or paying the mortgage on your commercial building.
- Professional Services: The money you spend on hiring outside help or subcontractors. This can also include the cost of hiring lawyers and accountants.
- Licensing and Taxes: The costs associated with maintaining your business licenses and paying your business taxes.
Tracking and Analyzing Data for Informed Decision-Making
In order to make good decisions for your business, you’ll need to track and monitor your data towards achieving your goals. While this may sound complicated, your data is simply the categories for your business revenue and expenses.
Improve Your Landscaping Company’s Efficiency and Profitability
Have you ever heard the saying about working smarter and not harder? While you may not believe it’s possible with manual labor industries, it absolutely is. When you have accurate data tracking and reports, you’ll be able to streamline your business and tailor your services to your core audience to maximize your productivity, efficiency and profitability. It will also help you stay competitive.
For example: By reviewing your current expenses and revenue, you may find that your profit margin has fallen by 10 percent, even if you’ve increased the number of clients you serve. In order to improve your profit margin, you’ll want to trim expenses and possibly increase the prices for your services.
1. Monitor Your Financial Performance
When it comes to improving your landscaping and lawncare business’s profitability, you’ll need to monitor your performance. This means regularly reviewing your data. As you review your data, keep in mind your business goals and objectives. If you’re not meeting your goals and objectives, how can you change that and improve your profitability?
For example: You may want to increase the lawncare portion of your lawncare and landscaping business to 30 percent from 25 percent per month. As you look at and calculate your numbers, you find that last month’s lawncare services were 27 percent. This is three percent below your goal.
In order to meet your goal, you’ll have to develop a strategy to increase your lawncare services by another 3 percent.
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2. Identify Trends in Your Customer Behavior
Now, look at the trends regarding your customer behavior. What services are they primarily buying? Do these services change, depending on the season? Is there a current trend in your area to do away with grass and use something else, like clover or custom landscaping that takes the place of grass? You may need to look back through several years of data in order to gauge trends and service popularity.
For example: If there’s a trend in your area to stop using grass, you may be seeing a systemic reduction in the need for grass-cutting services. However, this may also mean that you see an increase in the need for mulch and tree and shrub-cutting services. By seeing these trends, you can begin to pivot your business to meet current demand and remain successful for the long term.
3. Use Your Metrics to Make Informed Decisions
Having, reviewing and understanding your metrics is the key to making informed decisions. By knowing your expenses and current revenue as well as what services are rising or falling in popularity, you’ll be able to better position your landscaping business for success. You’ll be able to review your expenses in order to determine if you’re paying too much for your utilities, external services, equipment or insurance. You’ll be able to track your overall sales as well as sales in your specific service categories. You may also be able to review customer feedback, regarding your current services and services your current customers would like to see in the future. It’s in this way that you’ll be able to introduce new services and adjust your pricing to maximize your revenue.
4. Dispatch Your Jobs By Geographical Zones
You can do this by plotting all your customers on a map and then looking at the routes in detail. This would reduce the amount of gas and wear and tear on work commercial vehicles. By keeping all nearby clients on the same day, you may also be able to reduce overtime hours because your workers would get to each job faster.
5. Raise Prices
Once you’ve made all those changes, you’ll want to keep an eye on your expenses. Did they decrease and if so, by how much? Was it enough to get back the percentage in profitability that you’ve lost recently? If not, then you’d want to take a look at your prices and determine if you can raise them. You can do this by examining the prices of your competitors and modifying your pricing to be more in line with the services if you’re bids are too low. To help soften the blow, you might tell your current customers that you’ll keep them grandfathered into their old prices for a few months.
6. Lower Fixed Costs
Explore other fixed expenses you can potentially lower, like renegotiating your insurance policies to reduce your monthly premiums. We recommend starting with your worker’s compensation policy to make sure it’s accurate and that all your employees are classified correctly. You could also raise any deductible to help make your premiums more affordable.
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7. Utilize Field Service Software for Tracking and Analysis
At this point, you might be wondering what software you should be using in order to accurately track your business operations to better streamline your operations to save you time and monitor job profitability. Field service management software (FSM) provides a broad range of features including scheduling and dispatch, invoicing, inventory management, estimates and quotes, payment processing, employee time tracking, customer communication and even Quickbooks integration. FSM software is designed to help you automate routine processes and give you a single dashboard to manage the core of your operations so that you can save time and improve your profits.
- Scheduling & Dispatch – Automate job creation and assign them to teams with a user-friendly drag-and-drop interface.
- Landscape Bidding & Estimates – If you’ve ever had trouble keeping track of your estimates, FSM allows you to easily create and send quotes to your customers.
- Landscape Job Planning – Oversee the entire job and get job progress updates. This system allows you to store notes, details about the job, the equipment needed to complete the job and even pictures.
- Landscape Invoicing – Once the job is complete, seamlessly send invoices detailing the work completed and the costs so that you can receive timely payments.
- Inventory Management – Make sure you know where your equipment and materials are, whether it’s in the field, office, warehouse, or other locations.
- Customer Relations Management – Keep track of all the communications you have with your customers, including estimates, jobs, invoices, payments and communications from the customer.
- Crew Communications – Get push alerts and notifications about the job from technicians in the field too.
By utilizing the right technology for your business, you can streamline operations, reduce the time it takes you to perform office tasks and focus on growing your business while providing excellent customer service.
Utilize Strategies for Increasing Profitability
Next, utilize some strategies for increasing profitability, like adding additional services, upselling and cross-selling your existing services and utilizing referral programs to attract new clients.
7. Add Additional Services
To increase the profitability of your landscaping and lawncare business, consider adding additional services that can increase your current margins and help keep you busy in the off-season. These could include:
- Bushhogging – Clearing property of thick brush and trees for homeowners who wish to build new homes or farmers who need to clear and prepare new fields.
- Hardscaping – Build new decks and outdoor structures for homeowners and businesses.
- Pest Control – Offer mosquito and tick control to help homeowners and business owners better enjoy their properties.
- Pressure Washing and Gutter Cleaning – Develop a service to pressure wash buildings, sidewalks and driveways and clean gutters.
- Putting Up and Taking Down Holiday Decorations and Lighting – Consider offering holiday decoration installation and takedown services. This can help keep you busy during the off-season.
- Snow and Ice Removal – Buy snow plows and salting equipment so that you can retrofit your existing fleet of trucks for snow removal.
- Tree and Stump Removal – Offer tree and stump removal services along with your tree and hedge trimming services.
8. Upselling and Cross-Sell Services
When providing a service, like a one-time spring cleaning service for a homeowner’s yard, listen to what the homeowner says. If they indicate that they don’t like mowing grass, trimming trees or picking up sticks, you might want to suggest that service as a monthly package. This would allow the homeowner to enjoy their yard over the summer rather than just simply working in it. If it’s nearing the season, and your landscaping business operates in an area that gets snow and ice, inform your clients that you offer snow and ice removal services. With a little bit of creativity and ingenuity, you can make your one-time and seasonal customers year-round customers.
9. Create a Referral Program
Word of mouth is still the best and most cost-effective way to advertise your business. Consider creating a word-of-mouth referral program where if a client refers another customer, you offer them a monetary bonus or free service, like free grass mowing for a month.
10. Provide 5-Star Customer Service
When you think about providing great customer service, you probably think about starting and getting the job done on time and incorporating everything your clients want into the service while communicating the progress of the job, and growing online 5-star reviews. You may even think of it in terms of handling customer complaints effectively. The truth is that customer service is everything your business does from answering your phone to completing jobs and following up with the customer to make sure they’re satisfied.
11. Hire Great Employees
When we talk about providing excellent customer service, we mean starting from the ground up. For industries like landscaping and lawn care, your employees are your biggest asset. Take the time to recruit and hire the right staff members. Of course, you’ll want to make sure they have the strength, endurance and ingenuity to actually perform the job. However, you also want to make sure they have the right soft skills, like communicating and listening. Once you have a good team of employees, make sure to offer incentives to keep them around. For example, if you have a record profit year, you might consider giving holiday or end-of-the-season bonuses.
12. Buy Reliable Equipment
Remember to use good quality equipment. Customers don’t usually start to complain until their projects aren’t completed on time or to their expectations. Buying good equipment can help minimize the time that equipment is down for repairs.
13. Go Above and Beyond
When you’re first starting, it’s important to provide the best possible services at the highest quality, and that may include doing a few more tasks other than the specific job.
For example, if a client hires you to trim their trees and bushes, make sure to pick up all the sticks in their yard, not just the ones you trimmed. If you’re hired to mow the grass, take the time to trim the weeds and blow all the grass and leaves from their sidewalks and driveways. Going above and beyond can impress clients and help you retain them. They may even recommend you to their neighbors.
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When it comes to increasing the profitability of your landscaping business, remember to consistently look at your income and expenses, track your metrics, make informed decisions, and have the right services available at the right time for the right prices. In addition, you can save time and money by implementing the right FSM software that can help you track projects, equipment customer interactions and even payments.