This includes examining sales figures, revenue trends over time, and the sources of revenue (like products/services sold or geographical regions). Momentum ties all of this together and shows you cost-per-job, cost-per-visit, and which jobs are profitable—in real time. Understanding these numbers will help you make better financial decisions, from adjusting pricing to managing expenses. You can integrate with your favorite apps to track and manage these metrics. In this chart, we’re showing you the example of a cost structure a typical landscaping business would have (including the upfront costs, for example, to purchase the equipment and vehicles).
These companies are especially appealing in areas with a thriving landscape industry where demand for lawn care and landscaping services is strong. Equipment and maintenance expenses impact both immediate cash flow and long-term profitability. The decision between purchasing and leasing equipment affects monthly costs and tax implications. Regular preventive maintenance reduces costly breakdowns and extends equipment life, while proper utilization ensures you’re not over-investing in underused assets. Tracking equipment hours and costs per job helps identify when upgrades or replacements make financial sense.
Landscaping businesses often struggle with knowing when to hire new employees, invest in training, or purchase additional equipment. Without a budget, these decisions are often made reactively, leading to cash flow problems or misallocated resources. By understanding and applying these key financial ratios, you can create budgets that stay profitable and are primed for scalable success.
- Net profit margin provides the complete picture by accounting for all business expenses.
- When you know exactly what types of jobs fill your coffers, you’ll spot opportunities and avoid dead ends.
- Your lawnmower and other gas-powered equipment will also require gasoline.
Profitability Reporting—Why It Matters for Landscaping Businesses
The tables below show average EBITDA and revenue multiples for landscaping businesses, broken down by industry subsector as well as EBITDA and revenue range. Businesses based on one-time installations or design/build work can generate high revenue but are more volatile. On the other hand, recurring services like mowing, fertilization, and snow removal offer consistent cash flow and are more attractive to buyers. Typically, a landscaping business may fall within a 2x–5x revenue multiple, depending on business size, customer diversity, and financial performance.
Regularly reviewing these ratios ensures that material and equipment spending align with business goals. By providing crews with budget insights, businesses motivate teams to take ownership of financial performance, aligning the field workforce with company success. Root Cause AnalysisProfitability reporting may involve conducting a root cause analysis to identify the factors influencing profitability. This could include examining changes in pricing strategies, fluctuations in demand, shifts in market conditions, or inefficiencies in operations. If you don’t know which jobs are making money and which ones are bleeding cash, you’re working blind. Aspire’s financial management features cover everything from invoicing to reporting for landscaping businesses.
Nurseries and garden centers, for example, actually saw a small rise in multiples during the pandemic of 2020 as more people became more interested in hobbies like gardening. Landscape supply companies experienced a similar bump in EBITDA multiples during this period. In addition, preferred vendor status in neighborhoods or with management companies adds a layer of exclusivity. Businesses that rely heavily on the owner may be valued lower, while scalable companies with clear organizational charts are considered seasoned businesses that are easier to transition.
What is the average turnover for a landscaping business?
- As over 7,000 entrepreneurs before you have done, you can present this document to a financial partner and secure funding for your business.
- Small daily inefficiencies accumulate into significant annual profit drains.
- By systematically reviewing these metrics each month, landscaping businesses can stay financially stable, operationally efficient, and customer-focused.
It’s the process of tracking revenue, costs, and margins so you know where you’re making money—and where you’re not. Aspire is a comprehensive software platform for landscaping and lawn care businesses that want to streamline and integrate their financial processes. These metrics will help you evaluate your financial situation and adjust your landscaping business plan for more significant business growth. Positive working capital means you have enough resources to cover short-term obligations and invest in new equipment or marketing strategies.
For example, construction-based landscaping companies (design, hardscape, tree removal) have performed less favorably in recent years due to a lack of recurring revenue. By contrast, acquirers are valuing maintenance-based businesses (commercial, residential, supply) much more highly due to what they see as a more sound investment. Compared to many other home services companies, landscaping M&A has not experienced severe slowdowns over the last few years. The consistency of the market is due, in part, to its decentralization; the top 50 landscaping companies make up roughly 20% of the total market share. More common in mid-sized to large landscaping companies, EBITDA highlights core profitability and is often used to determine business value for buyers who aren’t involved in day-to-day operations.
Profitability reporting often involves comparing the company’s performance against industry benchmarks or competitors. This comparison provides context for understanding whether the company’s profitability is in line with expectations or if there are areas where it could improve. Your financial model should account for increased revenue during spring and summer (mowing, planting) and reduced revenue during winter (snow removal only). Also note that the charts and examples presented in this article come from our landscaping business financial model template.
By implementing a Balanced Scorecard, landscaping businesses can increase accountability, improve efficiency, and maintain steady profitability. Many landscaping companies struggle with inconsistent profitability, workforce inefficiencies, and unclear performance benchmarks. A well-implemented Balanced Scorecard solves these challenges by providing a clear, objective way to measure success at the company, department, and crew levels.
From Messy Books to Confident Decisions: Our 3-Step Process
Making profitable decisions requires accurate, real-time data about your business performance. The lack of powerful reporting means you will miss opportunities to identify inefficiencies and optimize operations. RealGreen’s sophisticated reporting capabilities enable you to track key performance indicators like job profitability, crew productivity, customer acquisition costs and seasonal revenue patterns. This intelligent data analysis reveals which services generate the highest margins, which crews perform most efficiently and which customers provide the best long-term value. Armed with these insights, you can make informed decisions about pricing adjustments, resource allocation and service offerings.
Book a free demo with Aspire and see how their platform can simplify financial reports and ratios for profitable landscaping companies your financial management. A high ratio means you’re using too much debt, which could impact your ability to get future financing. The current ratio measures your business’s ability to repay its short-term liabilities with its assets.
Key Factors Affecting Your Landscaping Business Profit
They must plan for costs such as labor (40-50% of revenue), materials (20-30%), and overhead (15-25%). If they don’t account for these numbers in their budget, they may price jobs incorrectly and struggle to maintain profitability. Many landscaping businesses operate reactively, addressing financial issues only when they arise. Top-performing companies take a proactive approach, however, using company-wide, departmental, and crew-level budgets as powerful tools for decision-making. These budgets clarify financial health and drive efficiency, accountability, and long-term success.
By leveraging automation, job costing systems, and reporting tools, you can gain financial clarity, improve forecasting, and optimize decision-making. Whether tracking daily expenses, analyzing project profitability, or aligning crews with financial goals, technology makes budgeting a proactive tool rather than a reactive headache. A field crew working on a hardscape installation project with a budget of $75,000 must complete the job within 2 weeks, with a target labor cost of $25,000. If they exceed labor costs due to inefficiencies, the job’s profitability suffers. If they stay within budget, however, they contribute to higher profit margins—potentially leading to crew bonuses and wage increases. Take, for example, a landscaping company that operates both an installation and maintenance division.
With the basics in hand, you’re set up to weather slow seasons, plan for growth, and make sure you—and your team—can rely on a steady paycheck. Creating a culture of financial accountability starts with open and transparent discussions about business performance. Many landscaping companies make the mistake of only discussing financials at the ownership level, disconnecting employees from the bigger picture. By providing training sessions on financial literacy, you can inspire your crew to make smarter decisions, reduce waste, and maximize profitability. When financial performance improves, crews directly benefit through higher wages, incentives, and job security. By optimizing efficiency, you can complete more jobs per season, boosting revenue without increasing labor costs.
We found that on average, a landscaping business with 6 employees generating a total annual turnover of $700,000 can reach a profit margin of about 10%. As explained above, there were over 632,800 landscaping companies in the US in 2022 generating a total revenue of $128.8 billion. In other words, the average US landscaping company generates an average annual turnover of $203,509.
Look for unexpected variations that might indicate problems or opportunities. That’s why regular review matters so much—if net profit is thin, it’s time to examine every expense (starting at the top) and see what can be trimmed or reworked. Picture it as the price tag attached to every lawn mowed, bed mulched, or garden planted. Tracking income isn’t about catching mistakes (though it helps there, too). When you know exactly what types of jobs fill your coffers, you’ll spot opportunities and avoid dead ends.
If labor costs exceed 50%, it signals a need to improve crew efficiency, optimize job scheduling, or revisit pricing strategies. Maintaining financial health by effectively managing operating costs also enhances profit margins, improves cash flow, and supports sustainable growth. Consider a landscaping company that generates $3 million in annual revenue.
Revenue per Hour: Ensuring Profit Margins in Estimating & Execution
Monthly meetings also serve as a platform for continuous learning and problem-solving. Rather than waiting until the end of the year to assess performance, you can use these check-ins to course-correct in real time. Many landscapers still use averages and gut feel to bid jobs and hope that it all works out by the end of the year. This template is designed to help landscaping professionals confidently evaluate potential acquisitions, partnerships, or… Working capital is the difference between current assets and liabilities, a measure of your business’s short-term financial health.
