Business Plan for Landscapers
A landscaping business plan can literally cover a lot of territory. That also goes if you are looking to build a lawn care business plan. Not only do most landscaping companies travel a fair amount of distance each day taking care of clients, but they also have to deal with a seasonal business. Seasonal businesses are dependent upon a few things, not the least of which is Mother Nature and in landscaping, Mother Nature sets the pace the business must keep up with. A business plan may seem like a bit of a stretch for a bunch of lawn mowing garden weeders, but the truth is growing a landscaping business is a lot like growing grass or garden flowers - it takes time, nurturing, and the right amount of fertilizer at the right times.
Start with the Basics
Writing a business plan is different today than it was twenty or ten years ago. Gone are the 70-page dissertations with market analysis and spreadsheets up the wazoo. In the 21st Century, it's important to convey the right information the right way to get the right result. Let's face it; most landscapers aren't exactly accounting-minded or even accounting-capable. That's okay because the best way to build a business plan is to go to the end of the book to see how everything turns out. That's right; don't start with the beginning, start with the ending and work your way forward. For example, every business has two calculations that are inescapable, income and expenses. Income can be the total amount of revenue the company wants to receive over the course of a year's activity. Expenses are then a percentage of the income because at the end of the year, the company has to produce a profit or it will cease to function.
Business Plan Table of Contents
All business plans should contain sufficient information to answer questions and provide independent verification of the information contained in the plan. In other words, the business plan should cover the main areas of the business' function with commonly used talking points and simple language. The business plan table of contents should include the following topics:
Business Overview -
This would be a couple of paragraphs describing the business, its focus, and the way it will accomplish its goals.
Management - Even though it starts small with only one person, it's important to provide information about the background and skills of the owner.
Services Offered -
A brief description of what the company will offer clients in the way of services that generate the company's revenues.
Market Analysis - Understanding the market for the services is essential to future success and awareness of where the company stands compared to its competition is important for determining future growth plans. This is where the prices to be charged for services will be decided upon based upon what competitors are charging.
Sales and Marketing Plans -
Sales and marketing are two different activities that are related to each other. Sales is the process of starting and closing a deal. Marketing is the process of getting everything in place for sales to be successful. Marketing resources must be managed closely to determine the success or lack thereof for any advertising campaigns. Costs for an internet presence, advertising pieces, and other considerations must be balanced against the revenues or else too much money can be spent in ratio to the income it is generating.
Milestone Chart -
Knowing if the company is on track or not is important and a Milestone Chart can help set the course for the company. Milestones include considerations like the number of customers, average revenue per customer, and other financial findings that demonstrate that the company is on track to meet goals. Milestones are like destinations on a trip and reaching milestones is an important indication of the company owner's skills and abilities to manage the enterprise.
Financial Projections -
Each business follows its own path toward success and that success is determined by where the owner wishes to be at the end of the year. Projecting the financial operations of the company means understanding the who, what, where, when, and how of getting paid by customers. Issues like accounts receivable, cash flow, and credit management are part and parcel of the financial projections for a company's operations. Setting up a simple spreadsheet divided into weeks with income and expense expectations is a great way to start producing financial projections.
Operating Budget -
This is the one financial area most businesses dread and avoid investigating. It shouldn't be that way because a budget is just a good guess made by a company owner. Few things ever work according to the plan and a budget is no different. That's why a budget should be considered a living, breathing component of the business plan. Situations change, conditions are altered, things happen, and a budget needs to reflect those changes and considerations as time passes. Remember, the company should know where it stands concerning the budget, for both income and expenses, if it is to know how to adjust and compensate for changes in conditions. In other words, smart landscaping business owners check to see where the company stands during the month to make adjustments and keep things on track. Waiting until a month has ended before determining what happened during the month makes it too late to implement adjustments and improve conditions.
Investments and Loans -
All businesses require capital and a landscaping business is no different. Where that capital comes from is an important part of the business plan information. If the owner is the source of all operating funds or if the money will be borrowed and repaid is critical to know. More importantly, managing capital and repaying debts is vital to keeping the company in business and functioning properly.
Profit is Always the Goal
Every business enterprise must focus on generating a profit. There are a lot of reasons for that but for this discussion, suffice it to say that the best measure of a company is its profit. Expenses must be kept under control and less money has to be spent on expenses than is earned in income. If a company isn't producing a profit, it's more of a hobby with the owner supporting the hobby with their own money and not their customer's money. Landscaping businesses, on average nationally, produce about 20% profit after expenses. For landscaping companies that are starting small, with one person doing the work, the profit margin should be a little higher if the company is going to grow. The company owner must decide how much income they want to receive and then calculate backward for how much work will have to be done to meet the goal. That's the starting point of every business plan.
Be Realistic and Don't Be Afraid to Push
Starting small is okay and most companies start exactly that way. The smart owners have an idea of where they want the business to go and what they need to do to get it there. The problem is it is awfully easy to get lost in the forest of everyday activities and a business plan will help keep the company on the right path headed for the ultimate goal. That doesn't mean an owner has to be timid in their projected income, but they should understand some limits should be respected before launching into a multi-million dollar success story. One person can only do so much work and generate so much income. To grow the company, the business plan must have appropriate calculations and not some wild-eyed objectives. The first calculation made for total income is the primary guide that should be formulated to reflect the owner's goals. For example:
Year #1 -
One person - $100,000 Gross Revenue equals average income of $8,333 per month for 12 months. That breaks down to approximately $2,800 per week or a little less than $600 per day. How much work must be done to generate $500 per day 5 days a week? That's what the owner should be deciding and that's how to start a business plan. Start at the end and determine what it will take to achieve the end goal. It's called "budgeting" and the budget guides everything that will happen in a company. The goal for this business is a $20,000 profit at the end of the year.
Year #2 -
Three workers - $250,000 Gross Revenue increases to $20,800 per month or $5,200 per week. Costs for employees, insurance coverage, and other expenses increase and profit margins can be tougher to achieve if budgeted costs aren't monitored closely. The profit goal would be approximately $50,000 with a 20% profit margin being maintained.
Year #3 -
Six workers - $500,000 Gross Revenue doubles revenue over the previous year and increases the costs for labor. Sales and marketing are important components to maintain a higher level of operations for the company. Managing schedules, customer satisfaction, equipment, training, and transportation become focus points for the owner. Planning and management of resources becomes much more critical on a day-to-day basis. The result of operations with a 20% profit margin would be $100,000.
Business Plans Serve Many Purposes
While it may seem somewhat daunting to produce a business plan, it doesn't have to be. There are many resources available to assist in the process of assembling the data, documents, and calculations that can be included in the plan. A business plan is a dynamic document that changes over time as the business matures and the management of the business becomes better attuned to the conditions it operates under. Starting with a simple business plan is a good idea but more importantly, is the process of reviewing the plan to determine whether the business is following the path the owner thought it would follow or not. When business is good, following the plan and improving on it is much easier. When business is bad, a good business plan offers insights into ways to correct the problems and get back on track. In any case, a smart landscaping business knows the value of a business plan and the value of using the plan to guide the company to success.