According to the US Bureau of Labor Statistics, around 20% of new small businesses fail within the first year. While that may seem like a lot, the rate can be much higher in certain industries. There are many reasons for such a high failure rate, but profit margins are chief among them. Let’s explore six ways lawn care businesses can increase profits not only to survive the initial period but to grow and continue to thrive.
1. Invest in New Spray Equipment
Inefficiency is another key way profit margins often suffer. Landscaping companies may waste materials and spend more time on lawn care tasks than they should. Investing in new equipment helps you avoid repairs and other costs. Choosing the right spray equipment ensures you use the appropriate quantity of materials, which can be costly. It also allows your team to complete projects in a timely manner and move on to the next one.
2. Targeted Customer Acquisition
You do not have to spend significant money to market to new customers in the Internet age. Take advantage of local directories, social media, and other online platforms. Institute a referral program to help you acquire new clients through your existing base. Engage with the communities you serve as well. Participate in local events and look for other networking opportunities through which you can build brand awareness.
3. Increase Prices
A common mistake new lawn care companies make is underbidding commercial jobs and offering low rates to residential clients to secure an initial customer base. The problem is that it’s simply not a sustainable approach. Even breaking even wastes time that you can put toward actual growth. Determine sustainable rates, and increase current prices to achieve them. You do not have to increase them all once. Raise them in small increments, including among existing customers, and be honest with them about why you are making the changes.
4. Reduce Overhead
Keep your overhead as low as possible and only expand it when you are confident that you have the consistent income to support it. If your current overhead is too high, slash it wherever you can. Even having a small target, such as $100 a month, can make a big difference. Look for savings everywhere including phone bills, rental fees, and insurance.
5. Upsell to Customers
Develop high-profit add-on services that provide real value to your customers at affordable prices. Avoid hard selling on services they do not need. Instead, soft sell on services that can make you money while beautifying their properties and making them healthier.
6. Invest in Good Labor
Do not price jobs based solely on the cost of labor plus the cost of materials. Add profit as a factor as well. Invest in your labor too. If you have a landscaper that makes you money, incentivize them to achieve even greater success. You may have to pay them more and should factor that added cost into your pricing.
To take your lawn care business to the next level, try some of the above ideas to increase your profits.