Start & Run a Landscaping Business. Joel LaRusic

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СКАЧАТЬ is that a good residential client is worth one month’s revenue. Do you have friends in the business who may throw you a bone as they move on to bigger and better customers? Take these things into account as you forecast your revenue.

      After calculating income, you need to estimate your first year’s expenses.

      You can develop your own profit and loss statement using the form provided in your accounting software package (see chapter 7 for more information). Then every month you can compare your projections to your actual monthly totals. Don’t wait for the whole year to go by before you analyze how your projections/goals compare to your actual totals. Check how you are doing each month to see if you are meeting your goals, and take action if you are not.

      2.7b The balance sheet

      You need to include your current balance sheet as part of your business plan (see chapter 7 for more information on balance sheets). If you are preparing your business plan for an investor, you should also include a pro forma balance sheet that projects where your company will be in one year.

      2.7c Cash flow projections

      The cash flow projection is probably one of the most overlooked aspects of business planning. Although you have estimated, in your profit and loss statement, what your revenue and expenses are going to be, it is even more crucial to know when you will receive and spend that money.

       The Importance of Cash Flow

      I learned the lesson of cash flow the hard way when I started out. December was my favorite month at one time. Not because of Christmas, but because I was so busy in November, finishing up the fall cleanup and getting people’s lawns ready for winter. I made a lot of money in November, but that money had a 30-day lag since I usually billed at the end of the month and received checks throughout the following month. December, on the other hand, was slow, so I did not have to spend the money I received to buy supplies, pay staff, and so on. This created the impression that I had a lot of extra disposable income. March, on the other hand, was the opposite. I was busy, running full crews, buying lime and fertilizer and all sorts of other spring supplies, but because February was slow, I had little money coming into the business. Had I analyzed my cash flow in the early days, I would have saved myself some grief by making sure I planned for these types of situations.

      Using the tool of a cash flow projection worksheet, you will be able to see trouble spots ahead of time, such as March and April when expenses are high and income may be low.

      Total estimated sales for the month (from the pro forma profit and loss statement) are listed by category: cash sales and term sales. When you think about your own cash flow projection, ask yourself how much of total sales is jobs that you bill (and get paid for) when the job is done. A general rule that I use is that regular maintenance customers (i.e., those who receive scheduled weekly or biweekly visits) are entitled to the privilege of getting a single invoice at the end of the month with “net 20” payment terms, but non-regular customers are expected to pay at the completion of the job. You need to estimate how you will split the cash sales and term sales..

      For term sales, you need to determine how much you expect to see in the following month (that is, how many people will pay on time). The best way to estimate is from historical data, but if you don’t have any history, try using a formula. Take your total term sales for the month and assume that you will receive 80 percent in the next month. Of the remaining 20 percent, assume that 15 percent will come in during the second month and the final 5 percent will finally roll in during the third month. If you stay on top of receivables and let your customers know that prompt payment is important to you, then an 80/15/5 breakdown will work for you in these projections.

      You can apply similar logic in figuring out expenditures. Use your pro forma statement to see what expenditures you expect, then break them into one of two groups: cash expenditures and term expenditures. If you expect to cut a check for the purchase at the time you buy it, that would be a cash expenditure. If, however, you decide to take advantage of terms offered by your vendors and buy goods on credit, put these in the term expenditures line.

      What you do next is up to you, but it is best to be committed to maintaining good credit with all of your suppliers, which means you should pay all expenditures in the next month, when they are due (assuming you get “net 30” terms from your suppliers).

      The key line in a cash flow projection worksheet is “Net Cash Flow.” If the number in this line is positive, it means you have enough money coming in during that particular month to cover your expenses. If the number is negative, you do not have enough money and you will need to resort to cash that you have retained from more lucrative months.

      Finding yourself short on a given month is a hassle. It will cost you in money and reputation because you may not have enough cash to pay your creditors on time. It may cost you again in the same fashion as you cut checks with little room for error, struggling hard to stay on top of things. Sooner or later you will make an error and those checks will start bouncing back to you. However, by using the valuable information in your cash flow projection worksheet, you can plan how you will spend the money that comes in from your business so that you do not find yourself short.

      4

      Choosing The Right Equipment For The Job

      You are a landscaping professional, so it is important that you select equipment made for professionals. First of all, you want to look the part of a lawn care expert. Would an expert show up at a jobsite with a tiny, 0.5 horsepower, electric weed whacker? No. Leave that for the kid next door, who will cut your lawn for five bucks. To separate yourself from that kid-next-door image, you must purchase professional equipment.

      Second, you’re going to be giving your equipment a thorough workout day after day, which means you need commercial-quality equipment. The equipment made for the average homeowner will simply not stand up to this use and in the long run will end up costing you more money, more frustration, and more downtime.

      You may not need all the equipment listed in this chapter for your own business; what you need will depend on what services you are planning to offer. As well, you may not have the cash to buy everything you want right away. However, I wanted to provide information on all the essentials, as well as advice on which items can wait until you have cash coming in regularly.

      You will notice that I recommend specific brand names for many of the tools of the trade. Generally these are the biggest manufacturers of each of the major pieces of equipment. That is not to say there are no other reputable companies from which you can buy, but the names supplied will help you get started. Check out the companies’ websites to see what they offer. Then, when you visit your local dealer, you will have an idea of what you need and what you are talking about.

       Choosing a Dealer

      Become familiar with your local equipment dealers. If possible, talk to other landscapers and see where they shop. As you investigate equipment suppliers, ask yourself the following questions:

      • What lines of equipment manufacturers do they carry? Do they specialize in one line of equipment or do they offer you a choice?

      • What type of clientele do they have? Do they deal strictly with commercial companies or are they also a retail outlet? They will probably be more helpful to you if they specialize in commercial equipment.

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