The basics of writing a landscaping business plan
If you enjoy working long hours, spending time outside of the office, and wanting to be your boss, then starting a landscaping business might be worth thinking about.
However, starting a business comes with a set number of predefined tasks that any aspiring business owner has to complete before receiving an official business license. These tasks are usually thought of as mental problems that help create an overview required to run a profitable landscaping business.
A few questions that can get you started are:
- What is the value proposition of your business?
- What are the products and services you plan to offer?
- What is the price of your product or service?
- Who is your target customer?
- How will you finance its operations?
- Who are your competitors?
These are only a few basic questions that should guide your thought process before starting a business.
The answers to these questions are usually drafted on a business plan. Business plans serve as guiding principles for your business. They usually follow a similar structure which we will uncover in this blog.
One of the first developments within the business plan is the executive summary. This will usually set the structure of your landscaping business plan. The executive summary is a brief, yet powerful statement that introduces the company's mission statement, target audience, portfolio of services, management structure, financial structure, and potential growth plans. The executive summary will pave the landscaping businesses’ long-term strategy.
To give you an idea of what an executive summary looks like, we have drafted one for an imaginative company called “Casey's Landscaping”Casey's Landscaping is a seasonal residential lawn care service targeting suburban middle-class homes with larger yards. A large grouping of this demographic is located in the outskirts of Ohio State. Jack (The Owner) will leverage his connection with neighborhoods in the area to sign up new customers.
In year one, Steve will have two employees in addition to himself. By year two Steve will purchase a second vehicle, additional equipment, and hire two new employees to form a second crew.
Casey's Landscaping is projected to reach profitability by year two and will have profits of $10,000 by the end of the third year. Considering that this is a seasonal business, revenue will only be generated from April up to November of each year.
No two businesses are the same. A value proposition makes sure that every planned business differentiates itself from other players in the market. If you have a strong understanding of what the average landscaping business offers, then you should also know where they lack. There is always a space that needs to be filled in the market, and your value proposition should be tailor around it.
Here is an example of how a value proposition should be framed:
Casey's Landscaping will provide customers with professional, custom-design lawn care services at affordable rates. Save money and get a gorgeous lawn in no time.
In a few words: It is all the things that set the business apart from its competitors such as convenience, service, speed, pricing, quality, features, and product availability.
Quick Tip 💡
The undercutting market price is a good strategy when you are interested in gaining market share fast, while pricing at a premium is usually practiced for businesses interested in sustaining high-quality service over the long run.
The objectives section drafts the short- and long-term goals for the company. For example, revenue projections, number of households to be serviced in a year, team size, expected profit margin, and more. Here is a preview:
Casey's Landscaping objectives for the next three (3) years are:
- The utilization of Casey's Landscaping services in at least 20 different residential homes,
- Add 2 new crews - consisting of three members each to the team,
- Achieve profitability by fiscal year 2
- Retain a profit margin of at least 25% by fiscal year 3
Setting objectives from the start can be difficult, yet necessary to paint a clear path that your business needs to achieve profitability.
By this time people will have already read your executive summary, value proposition, and goals. So it’s safe to say that they know a little bit more about your Casey's Landscaping. Now that you have their attention, it's time to dive deeper into the fundamentals of your business.
Every good business starts with the customers. Ask any MBA student about the fundamentals of a business plan, and they will respond with:- What is your value proposition- To whom are you offering those services, and- At what price are you offering your services
So whom you target is the next step in formulating a comprehensive business plan. Start with defining who your landscaping businesses customers are:(1) property owners who do not have the expertise nor technical capabilities to maintain or design their gardens,(2) new property owners who wish to refresh or re-do their landscaping, (3) homeowners who intend to sell their houses and need to update their appearances, or(4) builders who need landscaper staff.
Be as specific as you can in your definition of a target customer. Although you may never return to read this section of the business plan, it is always useful to develop a mental model that will support your sales cycle.
This section is usually the easiest to write. The types of services that you plan to provide should come naturally to you. But, if that is not the case then here are a few types of landscaping services that can get you started:
- Lawn mowing,
- Seasonal display,
- Lead removal- Mulching,
- Lawn cutting,
- Edging & trimming, and more.
Once you have the services defined then setting up a single paragraph that makes sense of how those services are interrelated and adds value to your business is in order. Returning to Casey's Landscaping:
Casey's Landscaping will offer a wide range of services, starting from seasonal cleanups to edging and trimming of lawns. These services will be complemented by optional offerings such as mulching or regular maintenance services that customers can sign up for. We are open, and flexible in terms of scheduling - always adjusting to the client’s needs.
Market analysis and competitors
Market research is costly, and not all starting businesses can afford it. This however should not discourage anyone from pursuing on-budget research. An affordable research study puts in writing your understanding of the market, its segmentation, competitor names, and their scale.
Start by surveying the neighborhood, and get an idea of who may be interested in your services. Always remember the target customer, and try to stick within those demographics and characteristics. Ask them about their current landscaping partners (your competitors) and try to figure out how satisfied they are with that partner's service.
Next, try to understand the dynamics of the market by reading studies that have been published in the past three years by credible authorities. The report published by IBISWorld offers an updated analysis of the market that can help you answer questions related to the types of clients and their preferred services, the significance of seasonality, industry trends, and more.
A market analysis and competitors section are usually longer and more detailed. Start with a summary of the industry and explain how your business fits in it. Next, define the types of clients (i.e. residential or commercial) and what landscaping services their interested in. Write down all competitors, and all relevant information that you have about them.
By taking note of all the above, you will be able to revise your business strategy and make informed decisions about your business.
Setting up a sales strategy
A sales strategy lays out a plan on how a business is supposed to reach new customers. Once you have identified your target customer, it's time to think like them. Introduce your business by sending out brochures or an email advertising your services to governmental institutions, real estate companies, and even to property owners themselves. Remember the neighbors you surveyed? They are all leads that can be converted into actual customers by offering a trial period free of charge or giving them a long-term discount.
The landscaping industry is relatively competitive because of its low starting costs, and thus, you need to start with the assumption that every household with a yard has worked with an individual or company in the past. To switch from that company to yours - especially if they are satisfied with their service - involves a switching cost. For example, the time spent building the relationship is a significant cost to the customer that has to be accounted for in the sales strategy.When offering to these customers, try to establish the value of the switching cost and build an offer around it. Be reasonable and realistic, otherwise, you may fail in your pursuit of customers.
When creating a landscaping business plan, you must thoroughly plan your finances. What you are trying to figure out is whether or not this business idea will bring you profit, and whether it will be successful.
Initially, in absence of information, we start by projecting profit and loss using a Pro Forma Income and Cash flow statement.Definition 💡
An income statement is a summary of all revenues generated in a year minus the expenses incurred in that same year. While a cash flow statement documents all the money coming in and going out of the business.
To get a better understanding of financial statements, we suggest contacting a financial advisor for support.
Note that all values that you input in your financial statements are based on informed assumptions derived from your market research. Ultimately, the main goal of a financial plan within a business plan is to figure out what it takes to take your landscaping business to profitability.
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