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View Full Version : Mowing Net Profit % Question(s)


USA Lawn Care
02-12-2011, 01:30 AM
Asking this question, I realize everyone works differently, has different size accounts and, where someone might mow 100 yards a week, another company might mow 30 large size yards with the same gross pay.

I'm trying to see if there is an average net profit out there that companies have settled into and expect over the course of 5 years or so minimum. I'm saying 5 years, just because (like the stock market), profits dip and rise and lawn companies might have an equipment purchase one year that nets them more profit the following year when it is paid off but I'm looking for your average net profit.

So, with that said, for companies that just mow grass (or companies who know their profit % of just the mowing can respond also)........what percentage of gross are you expecting as net profit for the year? And....my other question, how specifically have companies improved their net profit to where it consistently climbed higher (maybe 5 or 10% or even higher). I think if we establish an average, that would be good information for new businesses to compare to and if we can give advice on what our best move was to improve that profit margin, that can pretty much help anyone out......maybe one of us will have a V8 "wow...why didn't I think of that" moment!

Steve
02-12-2011, 03:46 PM
We see on average the amount charged for lawn care, nationwide is around $45 an hour.

Now the % of your profit out of that can very greatly depending on your overhead & operational expenses.

If you run your business out of your house and don't need to pay for storage, you can save a lot.

Depending on the type of mowers you are using, you can save a lot.

I haven't seen any averages when it comes to net profit %.

How can you keep your profit to rise over time? You could charge more over time. Or cut your costs over time. Or keep trading up when it comes to your customer base. If you can replace a smaller, less profitable lawn with a larger lawn you can charge a premium for, you will make more.

Or if you can focus on minimizing your travel time between jobs, you can cut expenses and profit more.

USA Lawn Care
02-13-2011, 11:05 PM
yeah, I guess it was an open ended question. I was looking to maybe get a wide variety of answers just so someone new at this (I've seen a few posts from new guys) might have another business to compare theirs to. Perhaps someone running out of their house keeps more %.....or someone with 3 employees and 2 trucks worth of mowing posts their % and it's HIGHER than someone in the same situation. The company in the lower % of take home pay might want to know how the higher % company is increasing their profits. And yes, working smarter by running routes efficiently, cutting loose pain in the rear small profit yards.....it all comes with experience. I'm just surprised there hasn't been some kind of average profit out there. If I were looking to get into the lawn mowing biz, that would be one of my questions on this forum. Interesting. I tend to keep digging and digging and trying to take the best practices from different people and apply them to what I do. Best practices tend to keep the net income on the increase. So....maybe I should have asked about your "most profitable best practices that have resulted in a better profit margin."

thx,

Steve
02-14-2011, 11:04 AM
It's a very good question. If anyone else has thoughts about it, please jump in.

USA Lawn Care
02-18-2011, 12:48 AM
nobody has any thoughts or nobody knows the answer? :)

I'm kind of surprised at the lack of response actually (not mad, just surprised).
Our local Craigslist ads for businesses for sale has 2-3 lawn care companies for sale right now. I wonder if I inquired about the profit margin on the business (one has $45,000 in mowing and another has $55,000) if they would know?

I would ask them but I think that would be rude to waste their time when I'm not interested in buying.

I'm a big watcher of the Fox Business Channel online and their 'small business' videos. I caught one the other night where a UPS top exec explained the reason the trucks ALWAYS turn right to make deliveries. It saves wasted time waiting to turn left and takes away the danger of crossing traffic. Anyhow, to make a long story short, that single move saved UPS something like 34 million or 134 million or some astronomical amount of miles per year. Same amount of packages delivered.....that many less miles driven and you can imagine the cost savings with that one move.

Have we had any 'UPS moments' in our businesses to share? Here's what I specifically changed last year and where I'm at right now. That doesn't mean things won't change, it's just where I decided to work smarter and with less expense. 1) smaller 'minimum price' yards. Just like 4 - 5# bags of dog food cost more than a 20# bag, 4 small $30 minimum price postage stamp yards are smaller than 1 - $120 yard and yield more profit quicker and with less mower time / wear. 2) no trailer. Costs with trailer, lights breaking, maintenance, tags, one more thing to potentially cause an accident, extra 16+ feet dragging behind me.... With my smaller yards, I do not need a sit down rider (but darn those things are nice) and the back of my truck still does the trick. Now, I am in no way saying my way is the best way.....it's just how I do things based on previous experience when I did things the way I saw everyone else doing it when I was new at all this. So, right now, those 2 things and being paid as we mow (which was a game changer last season for me!) were things I actually made a decision to CHANGE and do differently.
Any other ideas? I'm always listening.......
And if your mowing business was for sale this year.......profit margin?

USA Lawn Care
02-18-2011, 12:52 AM
and yes, I guess the large yard advantage is like Walmart....one stop....no driving around town. But then I'm into a rider, trailer, and all that stuff I ditched! :)

wandfsmall
02-18-2011, 09:11 AM
I have a feeling a lot do not really have that number figured out. And I am sure some do not even want to know.;)

USA Lawn Care
02-18-2011, 10:58 AM
a group deer in the headlight look!!:D

wandfsmall
02-18-2011, 11:06 AM
a group deer in the headlight look!!:D

I have the same problem when I look at my profit margin on repairs, it seems you work hard for no money.

Growing Green
02-18-2011, 12:26 PM
I just started in December of last year so profit is something that isn't in the near future. LOL

Every bit of money I make is going right back into the business. Thankfully, y wife is keeping us going right now.

Matt

wellbiz
02-18-2011, 01:45 PM
Asking this question, I realize everyone works differently, has different size accounts and, where someone might mow 100 yards a week, another company might mow 30 large size yards with the same gross pay.

I'm trying to see if there is an average net profit out there that companies have settled into and expect over the course of 5 years or so minimum. I'm saying 5 years, just because (like the stock market), profits dip and rise and lawn companies might have an equipment purchase one year that nets them more profit the following year when it is paid off but I'm looking for your average net profit.

So, with that said, for companies that just mow grass (or companies who know their profit % of just the mowing can respond also)........what percentage of gross are you expecting as net profit for the year? And....my other question, how specifically have companies improved their net profit to where it consistently climbed higher (maybe 5 or 10% or even higher). I think if we establish an average, that would be good information for new businesses to compare to and if we can give advice on what our best move was to improve that profit margin, that can pretty much help anyone out......maybe one of us will have a V8 "wow...why didn't I think of that" moment!

Most of the industry data you are looking for is available from the Professional Landcare Network. PLANET.

I base my pricing on my cost of doing business, salary and a 12% profit. I dont always hit it and sometimes I do better. Really depends on the job. For lawn care it is hard to reach that precentage point and be competitive, however I can usually do better than that on the other services I offer.

Jay

Steve
02-18-2011, 04:15 PM
Our local Craigslist ads for businesses for sale has 2-3 lawn care companies for sale right now. I wonder if I inquired about the profit margin on the business (one has $45,000 in mowing and another has $55,000) if they would know?

I would ask them but I think that would be rude to waste their time when I'm not interested in buying.

There is no harm in asking. Who knows maybe they are able to tell you something that gets you interested in buying their accounts. I do wonder if they even know their %!