If you are a business owner, you’re no stranger to spending money. You’ve got expenses directly related to producing income and you’ve got overhead costs, and you’re likely familiar with categorizing them all. Unfortunately, it’s a bit of a pain to break them down by category, and even more to break them down by dollar amount. Luckily, at least in the case of overhead costs, you can know which of these categories will be the most expensive without spending too much time sorting through countless individual charges!
Your biggest overhead costs for a landscaping business are many small to medium-sized individual category charges, invoking what is called ‘overhead creep.’ The most expensive categories for a landscaping business will typically be salaries, advertising, equipment maintenance, small tools, rent, and insurance.
It’s important to remember that overhead costs can vary from business to business, and your biggest overhead costs may be entirely different from these. It all depends on your management style, and how you prioritize spending- though, as a whole, these will tend to be a landscaping company’s biggest expenses. Let’s go over them in some more detail.
Salaries
Whether you run a small or large business, or even if your only employee is yourself, salaries are likely to be at the top of the list for the biggest overhead costs. After all, people need to be paid!
Salaries tend to be at least somewhat proportional to income, as you will need more employees to work your bigger, more profitable jobs. Unless you’re the only person managing the yard of somebody’s mansion, in which case, you should be charging far more than you currently are! You might be the most hardworking person on the planet!
It is incredibly unlikely that salaries and wages will ever not be amongst your most expensive overhead costs, but there are certainly ways to minimize them, if not prevent them from getting too high in the first place. A good precautionary measure is to hire only as many employees as you need, and make sure that they’re good employees! Hiring too many people can not only cause you to spend far more than you should but to have some employees idling as all the responsibilities have been filled by other employees. In that case, you would be quite literally spending money on nothing.
You can also minimize salary costs by firing employees. Nobody likes to think about this, but it’s an unfortunate reality of running a business. If an employee is superfluous or simply does not provide the value they are paid for, you may want to let them go to save you a good chunk of money- and you can use that money to hire a better employee!
To learn about the tips to start a landscaping business from scratch, check out this article.
Advertising
The bane of many a wallet, advertising can be very expensive. If you are not careful, you could end up sinking way more into advertising than your budget initially allowed! Advertising comes in many forms, including telemarketing, billboards, lead purchases, stickers, and signs.
As with most other overhead costs, exactly how much you spend on advertising will typically scale up proportionally with how much income your company makes. As your company expands, you will naturally want more customers, of course! With more growth, you may invest in bigger, more expensive forms of advertising, such as staffing a dedicated call center to call potential customers.
Advertising is also, thankfully, very easy to cut down on. While you could certainly cut costs across the board and lower your advertising budget, a more practical tactic would be to compile all of your customers and see how they heard about your service. It will be best to keep purchasing your effective ads and cut the budget of your less effective ads, if not cutting them out entirely.
Of course, the best advertising is free- word-of-mouth advertising won’t cost you a penny! If your focus is on providing a good service for your customers and making their lawn look as good as possible, then recommendations (and reviews!) from your customers could be just as beneficial, if not more, than any traditional form of advertising you’ve spent money on. It’s a good thing to keep in mind!
Equipment Maintenance
As the owner of a landscaping business, you are likely fully aware of how important your equipment is to your operation. You can’t exactly mow lawns without a lawn mower or weed whacker, and you can’t trim hedges with a pocket knife- you need the right equipment!
In the landscaping business, equipment maintenance can eat up a good chunk of your overhead budget, as landscaping and lawn care equipment are typically very specialized- save for work vans and trucks, which are more or less standard across all labor fields. In an office environment, equipment may not be as big a cost, as printers and computers tend to last a while, but landscaping equipment is under constant physical use. They need a lot of repair and maintenance!
Make sure to keep track of your maintenance costs- if they begin to rival the cost of purchasing the equipment in the first place, it might be a smart idea to simply get a new piece of equipment. A shiny new leaf blower will last longer, require less maintenance, and break down less than one that’s been refurbished for a decade, and vehicles are in the same boat. While your work vans can likely be repaired indefinitely, there’s a point where you will have to consider if it’s worth the investment, or if it would be of better value to buy a new one.
To learn about landscaping expenses, check out this article.
Small Tools
For convenience’s sake, we will count small tools as separate from equipment, as they can cost just as much as equipment maintenance. Going to Lowe’s or Home Depot and buying a screwdriver because your old one broke does not sound like a big deal, but imagine several crews having to do this roughly once every other week. Consider, also, how many small tools you will have to use- rope, tape, trowels, soil knives, hand hoes, the list goes on and on. It all adds up fast!
Buying good, quality tools right off the bat can help minimize overhead creep in the tools department. A good tool will be more expensive on an initial purchase, but it is less likely to break and you’ll be able to use it for longer! This same principle goes for larger equipment as well. For quality of service, customer satisfaction, and employee safety, it’s important to buy good tools and equipment. If your weed whacker breaks while at a customer’s home, not only will you have to spend precious time trying to get it to work, but it could seriously injure somebody. Remember to invest in your success!
Rent and Insurance
Rent and insurance- two things nobody likes to deal with, but once again, it’s an unfortunate reality of owning a business. Unless you own the building, you operate out of, you will likely have to pay rent. Even if you do own the building, you may have to pay a mortgage!
In just about every single state, insurance is required for several aspects of running a business. If you own work vans or trucks, you will need car insurance for them. You may also have health insurance for yourself or your employees. To tie it all together, if you rent your office space, you may even need renter’s insurance!
Unfortunately, there’s no real way around rent and insurance costs. The only way to avoid rent is to own a building, which can be far more expensive, and avoiding insurance costs is outright illegal. Thankfully, what you can do is shop around beforehand. In a free market, every company is competing for more customers and their prices will reflect that. This is true in every industry- especially rentals and insurance! Before you settle on an insurance company or a rental space, look at all the options you can and weigh their value versus their price. If your wallet won’t thank you, your company’s quality will!
In Conclusion
In conclusion, many costs could be your biggest. If you’ve been paying attention, you may have noticed that many of them are administrative- if you couldn’t tell, it does take money to make money! Exactly which categories are the most expensive can also vary from business to business, and it all depends on what your management style is. Thankfully, the categories tend to remain the same, you just have to worry about which order they’re in!
Frequently Asked Questions
Is it a bad thing if my biggest overhead costs are anything not on this list?
No! You’ll likely be perfectly fine. Every business works differently, and yours could be one of the outliers with odd overhead costs. As long as your business is still operating, you’ll be fine!
How will I know which overhead costs to keep and which to cut?
This is a matter where you will have to trust your gut instinct. Some things seem pretty clear- obviously, you will need to keep at least some salaries! At a certain point, however, you simply have to decide what is important to running your business and what isn’t.
To learn more on how you can start your own landscaping business, check out my startup documents here.
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Meet Shawn Chun: Entrepreneur and Landscape Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a landscape business owner at a job site, driving down the road or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Landscaping Business Boss: I want to help landscape business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.