Is a Landscaping Business Profitable?

What should you consider when aiming to have a profitable landscaping business?

How do most landscaping businesses figure out their pricing? Well, some might think they should charge what others do in their area. Others might look at day rates and materials, or have a feeling about what they should charge, regardless of the margin.

This approach isn't how to grow your landscaping business to achieve a good margin. The fact is, you have to consider all the costs that you might not be thinking about. Let's go through them.

What costs do you need to consider?

• Insurance
• Your time + salary
• Software
• Marketing
• Team and staff costs
• Fuel and vehicle expenses
• Accountant

It's important to include the cost of your own time, even if you're doing the work yourself. Otherwise, you could be busy making money without paying yourself properly. Revenue is what comes into the business; profit is what's left after your costs have been accounted for.

What costs do you have to absorb as a landscaping business?

• Bad weather that's totally outside of our control. Project delays that have a knock-on effect on the next project
• Fuel prices
• Rising minimum wage costs when hiring a team
• Material costs

It's not possible to control every cost, but reviewing material prices before starting a job and planning for potential delays can help protect your margins.

Making sure you make a profit once you have secured the job

You have been back and forth with a customer, and they have agreed to go ahead with the job. Now let's make sure we protect ourselves moving forward.

Deposits – making sure you have cash flow coming into the business.

• Add an expiry date to the quotes you send to customers. Protect yourself from rises in material prices, and review your quotes with the customer before the project kicks off if costs have changed.
• A customer asks, "Can you just do this whilst you are here?" These unforeseen extras should be added to the final balance. Make sure the extra work is agreed upon and quoted before going ahead.
• Milestone payments on bigger projects can help with cash flow. However, delays and discussions with customers can cause issues if it's not clear what exactly counts as a completed milestone.

Without understanding your numbers, you could end up running at a loss and wouldn't even know it until your accountant points it out to you.

Don't be afraid to increase your pricing

Take the time to review the last 3–5 jobs you have completed. Take a look at the numbers and figure out if the pricing was right and whether you achieved the margin you were looking for.

The typical fear is increasing your pricing and customers not wanting to pay. Some customers will always choose the cheapest quote, but explaining the value of your work can help customers understand why your price might be higher. Show them what's involved in the job, the materials you're using, and the work required to deliver the finished result.

The bottom line

To understand if you're profitable, you have to run the numbers. Speak with your accountant, break down your pricing to understand your break-even point, and know your running costs.

Depending on where you fit in the market, you may look to price yourself differently.

At Passive Landscaper, we have an overall understanding of what it takes to run a landscaping business. This has an impact on looking at your online presence and how best to show your process and explain pricing to customers, because they don't always understand the landscaping industry and what it takes.

Price often wins when customers don't understand the value behind the work. Your website, photos, and case studies can help explain your process and show customers what they're paying for.

Taking the time to put down the tools, look at the numbers, and figure out your margins and profit is key.