How to Prepare a Lawn Care Business Plan
While a formal business plan is key to securing financing for your business, it’s not reserved exclusively for that purpose. We explain why a business plan makes sense and cover how to put a helpful one together.
Whether or not you plan to seek funding of any kind, thinking through business planning elements before you officially start your business is a good practice to increase the odds that you’re still in business down the road.
Already busy working for a long list of clients? A business plan can help you gauge your current success and capabilities, and plan for future growth.
If you’re just getting started, it will lay the foundation for a successful business, and if you’ve been in business for years, it will help you determine where your business truly stands in relation to your goals and your competition.
Bonus: we’re taking you through the main sections of a formal business plan, so if you ever decide to seek financing, you won’t be starting from scratch.
1. Company summary
What industry are you in, who owns your business, what do your finances and assets look like, and who runs your daily operations? These are some of the points you want to cover in your company summary. It’s business planning that might seem like a no brainer, and worth skipping at first glance, but there are many make or break details to be uncovered as you think through this section that can save you from headaches down the road.
It's business planning that might seem like a no brainer, and worth skipping at first glance, but there are many make or break details to be uncovered as you think through this section that can save you from headaches down the road.
Before you start your business, you must determine the right business structure to suit your needs. Sole proprietorship, partnership, corporation, etc.—each business entity has its own tax implications, rules, and regulations.
If you’re going into business with a friend, family member, or formal business partner the right structure will ensure you and the other owner(s) have equal footing, or not, depending on what type of arrangement and level of responsibility you’re looking for.
Is one of you funding the business, but not involved in the daily operations? Talk through and formalize these details as you select the right business structure to match your goals.
What equipment do you need to run your business that you already have? These are your assets.
Do you have a decent push mower? Does your business partner have a riding lawn mower that can be donated to the business? Do you have a vehicle to tow your equipment? A garage to keep your tools, supplies, and other materials?
Before you go out and buy new equipment, list all of the various materials you need to run your business and indicate if you have them in your possession already. Using what you’ve already got will go a long way to keep your startup costs down.
What will it cost you to get new equipment and materials together to actually launch your business? You might already have some equipment that you’ve recorded in assets, but do you need office supplies or business management software to keep organized? A trailer to tow your equipment? A trimmer? Maintenance tools?
Many of these costs will be determined by the services you decide to offer, and vice versa. For example, if you can’t afford an aerator at the time you launch your business, then you won’t be offering aeration as a service.
Based on your assets and what you’ve decided to spend on startup costs, what services are you able to offer right off the bat? These will be your most obvious service offerings.
You can decide which services to offer based on a few factors:
- Your equipment: you’re limited by the equipment you own or plan to buy
- Your competition: perhaps there is a service that is being offered at a very expensive rate
- Your market: is there demand in your market for a service that no one offers yet or are there simply not enough service providers to satisfy the demand for a certain service
Who is your target market? Everyone and anyone with a lawn is too broad. You want to think through the following questions to narrow down where you fit in the market, and who you want to target for business:
- What need does your company fill?
- Who is your ideal customer and what are their demographics?
- Age, income
- Wants and needs specific to your business and service offerings
- How many people are in your target market?
- What does the competition look like? Are there many well-established competitors in your geographic area or are you launching your business in an emerging industry?
- Who are your top competitors?
- What are they charging for similar services?
- Why would someone choose to book your services over your competitors?
You’ve thought through what services you plan to offer, and who you want to offer them to, so now it’s time to think about you’ll connect those dots.
Now that you’re aware of your competition and have zeroed in on who you want to sell your services too, you’re in a better position to establish a pricing structure for your business.
At the end of the day, a healthy profit is what’s going to keep you in business, otherwise you’ll be losing money or merely breaking even. Profit needs to be the focus when determining your pricing, but it’s not 100 per cent about your bottom line. To make the most of your pricing opportunity, you also need to think about the value you’re offering to customers. What we’re talking about is cost-plus pricing versus value-based pricing.
To make the most of your pricing opportunity, you also need to think about the value you’re offering to customers. What we’re talking about is cost-plus pricing versus value-based pricing.
Cost-plus pricing is the nuts and bolts of pricing: labor and materials + overhead + profit = your service pricing. Determining the cost of labor and materials is straightforward, but working with a bookkeeper or accountant is the best way to ensure that you’re charging enough to cover your overhead expenses (indirect business costs such as advertising, equipment maintenance, office rentals, etc.) and also creating a healthy profit in line with your business goals. For example, if your goal is to service multiple markets then you need to price accordingly to save money for extra equipment, personnel, etc.
That being said, value-based pricing allows you to charge above and beyond the practical considerations involved in cost-plus pricing. You’re providing a service that makes your customers’ lives easier, and if you do it well by providing excellent customer service in addition to completing great work, you’ll find you can charge more.
Determining pricing is a topic deserving of its own article, so we put one together. Dive deeper into the art of pricing your services.
Marketing and sales
It’s time to spread the word, and there are plenty of ways to do so. We cover many of key strategies in more detail in the next section, but here are a few to get you thinking.
If your target market is clustered in certain neighborhoods, then securing a single client in each of those neighborhoods is a strategy in itself.
Do a great job and get the neighbors asking for a referral. If referral business starts rolling in, consider putting together a formal referral program to offer incentives to new and existing customers.
In those same neighborhoods pass out flyers (see the section on lawn care flyers in this guide for more information). This is a tried, tested, and true way to win new business.
At the minimum, ensure that you’re collecting online reviews because people are looking for local services online, and they trust online reviews almost as much as they do personal recommendations.
In particular, Facebook reviews are a popular spot to vet local businesses, and we’ve put together a month’s worth of post ideas to help you get a Facebook page started.
When it comes to marketing and sales, there is an endless list of ideas. Explore all of your options and determine which you’re most comfortable taking on. If you’d like to start with flyers, but want to develop an online presence in the future, set a tentative timeline for this next step as you’re working through your business planning.
5. Personnel plan
Labour costs are going to be a recurring line item for your business. That being said, it’s one of the costs that’s within your control to keep down. You need equipment to start your business, but you don’t need employees if you’re willing to do the work.
How much do you need to make to cover your cost of living? Consider this as you plan your pricing, determine your target markets, and decide on your marketing and sales strategies. If you’re the only employee, how many jobs can you do per day, and how much do you need to make from each job. You may decide that certain jobs don’t make enough money for you to focus on selling those services.
When the amount of work coming in begins to consistently surpass your capabilities you should consider these factors before you make your first hire.
6. Financial plan
This is where you bring your entire plan together to tell the story of your (potential) business success. If you were applying for a loan, this would need to be incredibly detailed, and you’d benefit from working with your bookkeeper or accountant on this section.
Your financial plan includes:
- Sales forecast
- Personnel costs
- Budget for expenses
You can project these incoming and outgoing costs for the next year, and if you want to take it a step further, you can think about what you’d like that projection to look like in two years, three years, etc.
Financial plans help you to set goals and ensure that you’re growing your business. Perform your day-to-day work without a plan, and you run the risk of not noticing that you’re only breaking even or that your business is slowly stalling (in which case a business plan can help you get back on track).
There are many free online examples of what a financial plan breakdown looks like, specifically for lawn care, to give you an idea of what you’re working toward. Here is one from Legal Templates (see the financial plan tab), and another from Bplans.
Your ducks are officially in a row
A business plan is a great exercise to get you thinking about the bigger picture from the start, and it’s a way of setting a more solid course if you’re already running your business. It’s easy to be consumed by your day-to-day duties, or to focus on your strengths in the case that you’re a more savvy on the business side than you are on the actual technical lawn care side, and a business plan forces you to examine all aspects of your business equally.
Once your planning is done and your ducks are in a row, you can go out there and win more business knowing your efforts are well spent.
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