How Much Does it Cost to Start a Landscaping Business?
A landscaping business can be a fun and enjoyable venture with an adaptable operation model. Some people run a one-person landscaping business and make limited but focused profits that give them a comfortable lifestyle. Others may expand to include multiple different landscaping teams with various project scopes. As a result, the costs of opening one of these businesses can vary.
So, how much does it cost to start a landscaping business? We’re going to give you an in-depth understanding of the various investments that you’ll need to make to ensure that you get the best results when starting one. We’ll examine things like your general business costs and the equipment, salary, and other expenses necessary to get your landscaping company off the ground.
General Business Expenses
The first expenses you’re going to have to consider are your general business formation costs. These typically vary depending on several factors, including your business size and type. However, they usually fall within a specific minimum and maximum price, rates that are generally consistent. These fees include things like applying for licenses, permits, insurance, and other types of essential costs.
For a landscaping business, you’ll need licenses to perform landscaping duties, permits for opening a new business, insurance for all your equipment and operations, and unemployment insurance for your potential employees. These costs can add up quickly and include many prices that you may not expense. For example, just a few of the minimum and maximum costs include:
- Starting an LLC: Between $50 to $500, depending on your size
- Small Business Insurance: Between $500 to $2,000, depending on your size
- Permit Fees: Between $50 to $700, again depending on your size
- Licensing Fees: Between $50 to $700, contingent on your operating size
Talking with a lawyer about these prices is a good idea before investing in them yourself. A lawyer can help you better understand what kind of insurance you need, such as coverage for personal insurance for each of your employees. Note that this legal assistance will also cost you specific fees, often as high as $1,500 or so for the whole business set-up process.
In some cases, you might get a lawyer who will wrap their fees into your set-up costs, such as applying them to your initial start-up loan. This option is excellent but does add money to your loan, which can increase its life and make it harder to pay off. Talk to your legal team about these options to ensure that you choose one that makes the most sense for your company’s needs.
Salary Costs
General business rules dictate that you pay your landscaping team at least 25-50% of your total budget, even when you’re not making much money. So if you bring in $6,000 in a month, your budget should include $1,500 to $3,000 in salary. Note: this amount also consists of any compensation that you mean to earn as a business owner. You have to integrate that cost to stay within your budget.
These extensive costs require a steady income source, including regular landscaping gigs. You may also find investors interested in you who will cover your early salary costs. Unfortunately, these expenses can be what kill many new businesses when they don’t plan properly. As a result, it is vital to consider the following costs when budgeting to start your new landscaping company:
- Gross Pay: How much money are your employees going to make before taxes? Make sure that you carefully budget and prepare for this cost when starting up a new landscaping business.
- Net Pay: Net pay is the gross pay minus any taxes or other expenses that you or your employees have to pay on their earnings. Calculate this amount when starting up your landscaping business.
- Overtime Pay: If you pay your employees hourly, you need to make sure you budget overtime pay (which is typically 1.5 their average rate) into your overall investment.
- Extra Pay: Are you planning on setting up things like health insurance and paid vacation for your landscapers? This money must be carefully planned and budgeted before starting your business.
- Commission Pay: While commission pay is probably rare for landscapers, you might reward your team for finding new customers and give them higher income on these jobs.
- Bonus Pay: Bonuses can be a great extra for your landscapers and incentivize them to take on bigger jobs. Try to create a bonus system that’s at least 5-10% of their pay to reward them.
Note that your employees cost 1.25 to 1.4 times their salary every year. That’s because you have to factor in payroll taxes, insurance, and much more. So if you have five landscapers earning $40,000, each will cost around $54,000 or so. That is a difference between $270,000 in total costs versus $200,000 for just their salary: that’s $70,000 you have to make up somehow.
How much are you likely to pay your landscaping employees? A typical employee earns around $28,000 per year or $14 per hour, according to Zippia. However, that doesn’t mean you have to pay them at that level: you may pay higher rates as you expand. That’s why it is often wise to start out your landscaping business with just yourself or a few other people and then expand it to include more.
Equipment Costs
It is vitally important to invest in various types of landscaping equipment when answering, “how much does it cost to start a landscaping business?” Landscaping equipment should cost between 8-14 percent of your monthly budget to ensure that you can provide high-quality service to your customers. So if you operate at about $1 million, that can be as much as $100,000 to $140,000 of your total budget.
It would help if you also considered things like upgrades and upkeep on your tools. Depending on various factors, this can include 1-5 percent of your budget. For example, you need to budget for your equipment’s gasoline, as you may go through one or more fuel tanks per item. It is also essential to pay for things like oiling your landscaping tools and replacing any broken items on your landscaping tools.
Furthermore, you also need money to train your employees to use your landscaping equipment. Most landscaping tools are pretty simple and can be learned in a day or two of hands-on operation. However, this means you’re paying your team members to learn while doing no work. That extra pay is vital to the budget to ensure that you keep your equipment operational.
Office or Storage Space
Landscaping businesses may or may not have a small or large office where they operate. A smaller, one-person company probably doesn’t need specialized office space because they may operate right out of your home! Even businesses with 5-10 employees may operate primarily out of the owner’s home because the employees can meet there, pick up their equipment, and go to a job.
However, suppose you do plan on opening up an office for a more significant landscaping facility or as a business front where people can visit. In that case, you may need to pay between $100 to $1,000 per employee per month. Of course, that depends on the type of office you want. For example, more extensive facilities with larger storage facilities (where you can place your landscaping equipment) are essential for service-based companies.
Even if you don’t open up a new office, you still need to find a storage center where you can place your equipment. Those costs are similar to that for office spaces, usually between $100 to $1,000 per month. In addition, you want a secure facility where you can lock up your equipment and temperature and moisture management tools that keep your equipment safe from high or low temperatures and excessive moisture.
Don’t forget: you’ll also need to pay a few hundred to a few thousand dollars to pay for trailers to haul your equipment. Even riding mowers and landscaping equipment (such as dirt movers) need open-bed trailers or closed trailers for transportation. Closed trailers will cost more than a flat-bed trailer but keep your equipment stabler while moving it from place to place between your gigs.
Other Costs
Let’s look at a few other essential costs that you need to cover when starting up and running your new landscaping business:
- Costs for Registering Your Business: Up to $750 per company
- Purchasing Accounting Services and Permits: Up to $3,300 to start
- Marketing Your Landscaping company: Around $3,500 on fliers and online marketing
- Finding a Business Consultant: About $2,500, including writing a business plan
- Insuring Your Business: About $2,400 to start
- Setting Up Utilities for Your Facility: Around $500 for phone and $2,500 on utilities
- Buying Equipment: $50,000 for tools and around $45,000 for trucks and trailers
- Renting and Upgrading an Office: Between $20,000 to $80,000 depending on facility size
- Buying Office Equipment: Up to $4,000 to begin
- Other Costs (such as starting a website and hosting a first-day opening): Around $3,100 or so
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