Expanding/Investing Your Business

[SECTLANDSCAPING]

Just wondering what percent of profits you guys put back into your business? In year 1, I didnt spend much and enjoyed a small profit. Year 2/3, I dumped a ton of money back into the business. I received a few RFP's that I didnt have the equipment for. I didnt want to be in that predicament again. Year 4, thats where I'm at now. I told myself I was going to enjoy my money after buying way to much but just in Jan I spent 6k in equipment and repairs.

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South Eastern Connecticut Landscaping /Lawn Care /Pressure Washing /Snow Removal /Gutter Cleaning
52" Brutus/52" Super Surfer/44" Pro Line/60" ZMaster
EB630/EB802/EBZ7150/EBZ8000/BR400/Billy Goat 8Hp
FS55&90/FC95/km110/L322&326/TR2350S
HC150/HC155/CHTZ2460
CS440/MS290
Case 1816 Skid

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Last edited by SECTLANDSCAPING; 02-05-2013 at 09:42 PM.

[Cashin H&P]

Lawn care business tips

Originally Posted by SECTLANDSCAPING Just wondering what percent of profits you guys put back into your business? In year 1, I didnt spend much and enjoyed a small profit. Year 2/3, I dumped a ton of money back into the business. I received a few RFP's that I didnt have the equipment for. I didnt want to be in that predicament again. Year 4, thats where I'm at now. I told myself I was going to enjoy my money after buying way to much but just in Jan I spent 6k in equipment and repairs. I put almost all my profit back in the business. Im 20 and I rent the second floor from my grandparents (more of do lawn care/plow) so my personal expences are very little. There fore while I can afford to I am putting almost all the profit back into the company so I have all the nessary equipment. My thought is that when I do have much more personal expences I will be making more and not have to invest as much.

[SECTLANDSCAPING]

Originally Posted by cashin home and property

There fore while I can afford to I am putting almost all the profit back into the company so I have all the nessary equipment. My thought is that when I do have much more personal expences I will be making more and not have to invest as much.

I understand that. I kinda see it as once you stop investing. Youll start to shrink. I know theres no connection between revenue and equipment purchases but it seems like it in my mind.

You also get to a point where you cant grow without spending. Your better off picking it up when the price is good then when you absolutely need it. That leads to impulse buying.

At this point I have back ups for back ups. I have equipment that I dont even need to use but do just to spread the wear out. If a mower,blower,truck,trailer, goes down, I'm covered.

[LawnBoy0311]

I consider myself ultra cheap. If something goes down and needs to be replaced, it will. But just to buy something because it's cool or looks good...that I have a hard time doing. I don't know why I'm like that, I always am. I start out spending like crazy, then all of a sudden stop and have to justify everything to myself.

On that note, I paid all my equipment off my first year. My personal expenses were covered by my full time job. This year I'll be putting 20% back into the business. I'm debating on doing more...just not sure at the moment. Wifey and I plan to move next year so I may do more to cover costs when I start up after we move.

[stevef1201]

Because I figure reinvestment in cost of doing business, my expenses are about 25 dollars an hour. Add the cost of my helper and it goes up to about 35 an hour. Each month I have a set amount to reinvest, that goes into the bank (Savings), until I need it. It is real nice when a weed eater goes out, and I just pop into the store and buy a new one and not worry about how I am going to pay for it. It was not that way in the beginning, I overused credit cards, borrowed from family, scrimped every step of the way.

[LawnBoy0311]

Originally Posted by stevef1201

Because I figure reinvestment in cost of doing business, my expenses are about 25 dollars an hour. Add the cost of my helper and it goes up to about 35 an hour. Each month I have a set amount to reinvest, that goes into the bank (Savings), until I need it. It is real nice when a weed eater goes out, and I just pop into the store and buy a new one and not worry about how I am going to pay for it. It was not that way in the beginning, I overused credit cards, borrowed from family, scrimped every step of the way.

Do you use a percentage or a set amount?

[dpld]

after 23 years i don't think the investment ever ends.
sure you make more money and own more equipment then when you started out but nothing lasts forever and things need fixing and replacing as well as marketing and so on and so on.

when i was starting out it was easier to baby my equipment and make it last forever but as soon as you get to the point where you have other people running your gear those days are over and reality sets in.

things were easier in that regard when i was smaller but i was not making as much money either and as a business and as you grow the only path is onward and upward.
you can not spend the rest of your life making 30, 40, 50k a year.
it may seem like good money but it is not even middle class these days.

when i started out i worked for a company for 5 years and i knew early that this is what i wanted to do so i worked my way up the ladder in the company and constantly expanded my knowledge and i saved every dime i made that i could for 5 years so when i started out i went out and bought all new mowers and blowers and such right from the get go.
it was also back in the 1991 and you could find a old chevy or ford mason dump that was in excellent shape for 1 to 2K that ran for years compared to today you will spend 15k on a piece of crap.

so i never really looked at my business as a investment i looked at it like my savings and when i started out i just switched my savings in cash over to equipment and a business that was gonna continue to accumulate and bring me more cash savings.
there is always something to spend money on in a business as well as you throw life in general into the fray and the money flies out the door quick.

plus as a business if you are making big money you need to only keep a certain percentage in the account and you want to make sure you not only give yourself a income but absorb most of the profits in the form of bonuses and such.
this way you pay income tax on that money as a individual which is far lower then the rates on a business.

with a business the money you have siting around in the form of profit the term " use it or lose " comes into play.

[SECTLANDSCAPING]

Originally Posted by dpld

you can not spend the rest of your life making 30, 40, 50k a year.
it may seem like good money but it is not even middle class these days.

This is a good point. I see more then half the guys on here are content where there at. Most of these guys are solo ops. I cant see a solo guy making more then 60k a year. After expenses there barely making 30gs which is a low paying job. Its better then some in this economy but well below the average in every state. The idea of a business is to make money not have a below average job.

I'm at the point now where I'm looking to go into different fields. Not sure yet if it will be Excavating, Home Improvement, Paving, Hauling, Towing, Mulch yard, Garage, etc. There all appealing in one way or another and complement my business.

This isnt because I cant grow the landscaping part either. Its just another way to bring in revenue and some will lower my overhead and expenses. It also diversifies my income so when one part isnt doing so well the other might.

[fieroboi]

This is an interesting question. I believe that if one wants continued growth, we do need to invest a portion of profit back into business. It is a good business practice to do that. As for the portion, I am sure I've been investing approximately 20%. That can change depending on what I am looking to purchase and what equipment I am after.

This year the big plan is to add another truck to the fleet, a mortar mixer and a hydraulic dump wagon as I hate borrowing a friends for odd jobs. Which means that this years investment will be larger than most. Otherwise in normal situations what happens is equipment is always being updated. For example, updating one of the mowers or snowthrowers every couple of years means that over time, they are all in decent shape and rarely break down.

What I refuse to do is borrow money to update equipment. A truck purchase can be a different story, but I`m still at a stage that purchasing a new one will not happen. I used to sell vehicles for a living and they are the most expensive thing someone can own. I saw too many people in the cycle of replacing their vehicle every three to five years and all one is doing is making payments the rest of their life. NO Thanks, i don`t want to work for a payment.


Lloyd
Blue`s Yard FX
Camrose, AB

[dpld]

Originally Posted by SECTLANDSCAPING

This is a good point. I see more then half the guys on here are content where there at. Most of these guys are solo ops. I cant see a solo guy making more then 60k a year. After expenses there barely making 30gs which is a low paying job. Its better then some in this economy but well below the average in every state. The idea of a business is to make money not have a below average job.

the thing that most in this industry don't grasp is that no matter what business you are in you have to constantly grow and expand.
you can not stay even and remain content as well as what most don't take into consideration because they are all young is that you will not be able to do all the work until you die or retire which ever comes first.

my business is my income and my retirement and i expect it to support me until the day i die so i am constantly trying to improve upon it and have the systems in place to let it run itself.

i still work on the jobs and am active in 100% of the operation but at 47 and 30 years being a lawn monkey/ tree climber it would be nice to start cutting some of those parts of the job out of the picture.