Lawn Service Business Basics – What Not To Do
Years ago I had a lawn service business. My spouse and I decided we needed some extra income. We needed a way to do that without impacting our current full time jobs. Plus, we needed a side gig that allowed us to still meet the demands of kid’s schedules and our own home maintenance. So just as he did when he was a teenager, my husband started offering his lawn service skills around our neighborhood. We started small, with our own mower and two willing neighbors. Through luck and opportunity, it grew. For five years, it was great. But let’s talk about what we did wrong.
Our Record keeping Left Much to Be Desired
So they say that hindsight is clear vision. Whoever “they” are, they’re right. Looking back I see how much money we lost by not keeping good records. Not setting up a tickler folder cost us at least $60 a year. Seems small, but this is just one of the incidences I can think of that I can actually quantify. Because I didn’t set up calendar reminders for myself, I would forget to file our quarterly sales tax collection report. As a service, we didn’t charge or collect sales tax but I had to report anyway or be fined. You guessed it, $15 overdue fee almost every quarter for five years. For my defense, I can only provide lame excuses about being too busy to get organized.
There were other ways that lack of record keeping took money out of our lawn service business revenue. As we grew, we didn’t perform any cost analysis to see if our variable and fixed expenses were covered by our standard charge for a 1/4 acre homesite. Our customer records were not complete enough for us to compare any data had we even thought to do so for marketing or pricing planning. We were lucky if all of our customers actually paid us! Not because they didn’t intend to, but we didn’t have any system for invoicing besides “Did you get a check from Mr. Jones for last month yet?” When most of your customers are neighbors or co-workers that may be alright, but it isn’t good business. In our defense, we did the “who’s paid and who’s not” summary about every other day, so there was verbal record keeping.
Our Business Planning Was Non-existent
They also say that if you fail to plan, you really plan to fail. Again, “they” are correct. Even a part-time business needs a plan. Our plan should have included how we were going to control growth. Toward the end of our business adventure, the demands of the business were causing stress with the family and our full-time jobs. Taking time to identify our mission as a lawn service business would have helped us to define our target market and use our resources more wisely. Simply mapping out our accounts would have helped us to reduce travel time and costs. Planning helps reduce the uncertainty that causes stress. Yes, we needed that. Admittedly, we would have needed to keep better records for our business plan to be most effective.
Our Financial Management was Haphazard at Best
While I was really good at planning which household bills needed to be paid when, I was terrible at managing business cash flow. It helps to now know that cash flow is the hardest factor to manage in business. It would be great for any business if all the money it was owed was paid and available to use when expenses need to be covered. It doesn’t always happen that way. Licenses need to be renewed, gas tanks need to be filled, and supplies bought, but the customers haven’t paid their bill yet! Yikes! Plotting those recurring expenses on a calendar can help a business identify potential cash shortages and take steps to mitigate it. Maybe the results would have indicated that an incentive for faster payment was necessary.
I wish I could tell you that within two years our lawn service business was profitable. I would know that if we had ever completed any annual financial statements. The only statement we ever referred to was our bank statement and that will never show the whole picture. For instance, say we had purchased a weed trimmer on a credit card. The expense for that won’t show up on the bank statement until a payment is made on the credit card. What about the interest expense for carrying a balance? This would ultimately be reflected on a cash flow statement. What about the increased value of equipment now in inventory? That would need to shown on a Statement of Owners Equity. Completing a Profit & Loss Statement would have helped us to know if we were actually making any money or just coasting on cash flow.
Our Use of Resources Could Have Been Better
We needed to use the research-based, non-biased information available at our local Extension office. Fortunately, your business has access to these tools. For information on record keeping is part of this publication. Here are some links for business plans and marketing. Need to know how easy it is to create a marketing plan? Click here. How would you like a guide for financial generalizations? Click here. Here’s information about what to know before you even start a business? Better yet, check the St. Lucie Extension calendar so you can register for the next “Business Basics for Your Landscape Business” class.
Over the years, it seemed like we had a little more cash from our lawn service business but were we successful? Well, I always managed to pay the $15 late fee for the Florida department of Revenue.