Lawn care services can provide an excellent revenue stream, whether that's your primary business or as an additional service that you provide to your existing customer base.
However, when preparing a budget for a lawn care company or division, there are some important benchmark distinctions that you need to understand.
Unique budget benchmarks
- Revenue: A full-time lawn care technician working 40 man-hours per week for seven months should produce between $150,000 and $200,000 per year. Technicians working in a non-seasonal area should produce more. A good minimum daily revenue goal for a technician is $1,000. This translates into the following:
$1,000 per day x 7 months x 22 work days per month = $154,000 per year
$1,000 per day ÷ 8 man-hours per day = $125 per man-hour
- Customers: It requires about 350 customers generating roughly $450 per year each to keep a technician busy throughout the season.
350 customers per year x $450 per year per customer = $157,500
- Direct costs as a percent of sales:
- Materials usually run between 20-25%.
- Field labor usually runs 20% +/- 5%.
- Labor burden (payroll taxes, insurances, holidays, vacations, health care, 401K, etc.) usually runs 30% +/- 5% of field labor costs or 5% +/- 2% of sales.
- Field equipment and vehicles usually total 8% +/- 2% of sales. This includes all costs such as fuel, depreciation, insurance, repairs, mechanics, etc.
- Subcontractor costs are minimal if there are any at all.
- Direct costs total approximately 50% of sales +/- 5%.
- Gross profit for a lawn care company is usually 50% +/- 5% of sales.
- General and administrative (G&A) overhead costs: G&A overhead costs for a lawn care company or division usually adds up to about 30% +/- 2% of its sales. On a per man-hour (OPH) basis, it is about $35 +/- $3. These figures are significantly higher than those for a landscape maintenance or installation company. G&A overhead for landscape companies usually equals 25% of sales. Measured on a per man-hour basis, landscape maintenance companies usually run $10 +/- $2 per man-hour while the OPH for an installation company is usually $18 +/- $5.
The primary reason why G&A overhead costs are so much more for a lawn care company is that it requires more marketing and advertising costs. These can run as high as 6% of sales. All other G&A overhead costs are equivalent to those of a typical landscape company.
Budgeting for a lawn care company is very similar as doing so for a landscape maintenance or installation one. However, there are important distinctions that, once understood, make the budgeting process more meaningful and accurate.
