Why start a landscaping business?
If you enjoy gardening and spending time outdoors, you may have considered working as a landscaper. Once you’ve built up enough experience, you may be ready to start your own landscaping business. It’s important to consider both the benefits and disadvantages of starting a landscaping company to see if it's right for you.
Owning a landscaping business has plenty of benefits. As the entrepreneur of this new business, you can be your own boss. You can set your working hours and choose your clients. Plus you have control of your finances and can set the prices you want to charge for your services. The freedom to work outdoors is one of the biggest benefits, with an opportunity to shape the environment you live and work in. The earning potential of landscaping businesses can be good, though this depends on the clients you have, where you are based, and the types of services you provide. High-quality landscaping jobs may pay you more.
There are also disadvantages to being a landscaping business owner. It is hard work and involves physical labor. Your business can be affected by inclement weather, and in some states, there could be slow seasons in areas with a lot of snow. Managing a business can be stressful, but the right tools can help you stay on top of your cash flow and get paid faster.
Types of landscaping businesses
There are many types of landscaping businesses, but some are highly specialized, and you need to ensure you have the right certifications, skills and experience to offer a high-quality service.
The four most common types of businesses are:
- General landscaping: This can be commercial or residential, and involves arranging plants, soil, and organic materials in a garden or open space. A permit may be needed in some states. This could include things like tree trimming, leaf removal, and hedging.
- Interior landscaping: These services are usually provided to large offices, shopping malls, government buildings, and large indoor public spaces. This type of landscaping involves planting and maintaining indoor gardens.
- Gardening and groundskeeping: This is one of the more common services and involves caring for gardens in general. Tasks include lawn mowing, fertilizing, weeding, and sod and lawn installation. It can be commercial or residential. A lawn care business would fall into this category.
- Landscaping design and architecture: This is the most technical type of service, and you usually need a college degree in a related field. Projects include the design of large public spaces such as a college campus or an apartment complex. Knowledge of design software is essential, and projects often involve working with professionals such as architects.
13 steps to starting a landscaping business
After you have chosen the type of landscaping you want your business to provide, you are ready to formalize your business. Here are 13 steps for setting up your landscaping business. If this is the first time you are creating a business, you can read the guide to how to start a business for even more tips.
1. Form your business’s legal structure
You will need to choose a business structure. The three structures below are the most common for landscaping businesses.
- Sole proprietorship: This is a business operated by a single person. It’s the easiest structure, as all the profits and losses are received by the owner and reported on their personal income tax return. However, this structure doesn’t offer legal protection, and the owner’s personal assets may be at risk if they are sued or if anything goes wrong.
- S Corporation: This corporate legal structure has special tax characteristics and is commonly used by landscaping companies. The name comes from the IRS classification of this type of business. In an S Corp, the owners are also employees, and unlike a traditional C Corporation, it helps businesses avoid double taxation.
- Limited liability company: An LLC is often chosen because it provides some legal protection for the owners, and can be flexible for both ownership and taxation. Some who have an LLC file the paperwork to be an S Corporation for tax reasons. It is important to note that the liability protection isn’t complete, and business owners can still be held liable in some instances. The LLC business structure is based on a state statute rather than a federal one. Check the requirements of your local government or state for further information.
2. Register for a business license and needed permits
Registering your business and getting a business license is critical for paying taxes, opening a business bank account, and applying for loans.
In most cases, you’ll be required to register your business with your state. You may also need to register a DBA (doing business as) if using a trade or brand name.
Information required for a business license usually includes:
- business name
- business location
- ownership, management structure, or directors
Some states also require permits or industry-specific licenses. You can check with your state’s secretary of state office or similar government office to find out which permits you need. Some common permits and industry licenses include:
- landscaping license
- permit for handling pesticides or fertilizers
- contractor license surety bond
3. Apply for an EIN
Before you can pay sales or payroll taxes, you’ll need to apply for an EIN (employer identification number). You can apply for an EIN online or by mail.
4. Register for taxes
You may need to register to pay sales tax (state and local) and payroll taxes (when you have payroll). It’s recommended you consult a tax advisor about your business plan and do research on what the requirements are in your state before registering.
5. Establish a business bank account
Keep your personal finances separate and open a business bank account. This is critical if you’ve formed an entity for your business and, even for sole proprietors, it makes it easier to do your taxes and create financial reports. To open an account, you will need your EIN. Many banks do allow sole proprietors to use their social security number to open a bank account. Banks vary in their services, but it is handy to have a credit card and a checking account. Take a look at your options and choose the best one for your needs.
6. Develop your business plan
Your business plan should consider each of the following areas:
- Executive summary: Brief overview of your plan.
- Company overview: An overview of your company, vision, mission, owners.
- Industry analysis: Overview of the industry, government regulations, details of your services, and potential risks.
- Customer analysis: Your likely target customer.
- Competitive analysis: Who your key competitors are.
- Marketing plan: How and where you want to advertise.
- Operations plan: Procurement, office location, key asset management.
- Management team: This is your leadership team.
- Financial plan: How you will finance your business and startup. This ideally includes information for the next three years.
- Insurance plan: You’ll need to determine what is the best insurance coverage for your business.
7. Determine your services
Check the offerings of competitors in your area and consider your strengths and interests.
The two most common categories are landscaping services and lawn care services, including maintenance. You may offer a mix of both or one type of service.
Landscaping could include projects such as patio and fence installation (which may need a construction license), sod installation, or creating flower beds. It is wide-ranging, so you could choose to niche in one or two specific services, depending on if you prefer residential or commercial clients.
Lawn care company recurring maintenance services offer a diverse range of projects. These could include some of the following:
- lawn mowing
- planting and plant care
- applying fertilizer or pesticides
- lawn aeration
When deciding on your services, consider your target market and their likely needs. To reduce your startup costs, you could consider offering a limited range of services until you have become more experienced and established.
8. Determine what equipment you need
Once you have decided on your services, you can plan what landscaping equipment you will need to provide your services. Some essential equipment will include:
- leaf blower
- fertilizing equipment
- safety equipment, for example, ear protection
- gardening gloves
If your startup fund is small, consider renting some of the more expensive items before you invest in buying them. This will give you time to explore exactly what you need and your favorite brands.
Another important consideration is the vehicle you use. Common types of vehicles for landscaping businesses are pickup trucks, vans, and utility trailers. One of these is essential for your business. You will have to choose whether to rent or buy your vehicle. Your vehicle is also an advertising opportunity. You can put signage with your company branding and contact details on the vehicle..
9. Establish your target market
Knowing who your potential customers are is an important part of your business planning. In landscaping. You can choose either commercial or residential clients or a mix of both.
Commercial work often involves working with fewer clients in large spaces. You can charge more, and they have a budget. But it can be difficult for a new landscaping business to break into commercial work unless you have good industry contacts. You are likely to need to hire employees.
Residential work may offer a better initial entry point and opportunities for custom work. You’ll need more customers, but you can offer specialized services to make yours a more premium service.
Who you choose to work with will depend on your interests, your capabilities, and your desired margins.
Understanding what your competitors offer can also help you define your target market. By differentiating your service and niching, you’ll be better able to narrow down your preferred clientele. This will help you stand out from your competitors, which will help with marketing.
10. Set your prices
Setting your prices is a key part of your business plan. Take a look at what other local successful landscaping businesses are charging and how they price their services.
There are three main ways to price your services:
- by project
- hourly rate
- per square foot
When setting your prices, you’ll need to factor in a range of considerations. These include your overhead costs (insurance, equipment), direct costs (mulch, fertilizer), and job-specific features such as property size, location, and condition.
Be prepared to offer an initial estimate for a client, followed by a final invoice upon completion. Consider invoicing software if you plan to have an automated system and want to accept credit card payments online.
11. Build your brand
Building a brand is an important part of establishing your business identity. Branding can help you stand out from similar businesses and become known in your community. Activities to build your brand include:
- Choose a business name that is memorable and unique.
- Define your unique selling proposition (USP). How will you stand out from your competitors?
- Get a logo designed.
- Create your brand guide. Include your colors, fonts, tone, values, and mission statement.
- Get a website and have it professionally designed.
12. Understand insurance requirements
Business insurance is an important expense to protect you from unexpected costs of running your business. Events such as natural disasters, accidents, and lawsuits could wipe you out without the right insurance.
Each state has different insurance requirements. It is a good idea to find a reputable licensed agent to help you assess your risks and your needs. Shop around to find one that suits you.
These are some common types of insurance:
- General liability insurance: This is a key insurance and covers financial loss for a variety of reasons, including property damage, bodily injury, and defending lawsuits.
- Worker’s compensation: If you have employees, this is required in most states and provides assistance to workers injured while working.
- Commercial auto insurance: Provides protection for your work vehicles.
- Contractor’s tools and equipment insurance: Provides protection to repair or replace damaged tools or equipment.
- Equipment breakdown insurance: This provides cover to repair or replace equipment that is broken down or damaged
- Business owner’s insurance: This is an insurance plan that covers a combination of insurance needs for business owners. These plans vary but can usually be tailored.
13. Market your small business
Marketing your landscaping business is an essential part of attracting new customers. There are a lot of different ways to do marketing without having to spend a lot of money.
Here are a few common, cost-effective ways to market a small business:
- Business cards: Give them to clients and people thinking about your services.
- Referrals: Ask clients or people you know for referrals. Word of mouth matters a lot.
- Testimonials and reviews: Ask past clients for a testimonial and add it to your website and social media.
- Establish a Google Business Profile: It’s free and easy to establish. You can ask customers to rate your services.
- Social media: Choose one or two of your favorite platforms. Create a business page on Facebook. You can showcase examples of your work.
- Advertising: You can do this in local publications and websites.
Landscaping is a hard but rewarding business. By following these steps, you can get your landscaping company off the ground.
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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