Last year (year two in business) did 103k revenue. 76% gross profit. 46% net profit. One man. Reinvested profit into another truck, marketing, training. Projected to do 200-225k this year with net profit of 40% (the goal).
This is great info. I’m currently reading Profit First for Contractors and man has that book opened my eyes and helped me understand how to stay profitable and to know ifs time to up those prices. I reccomend this book to anyone wondering where all their profits have gone at the end of the year.
Last year I did about 50k in revenue and took home 25k in profit. This year I plan on doing 100k in revenue and taking home 30k. I’m still a Highschool student the guys that are working for me are other students and are expected to use their own trucks. That allows me to keep my margins higher despite 100% growth.
In the highschool mindset roll in the money... If you want to build that business for something to sustain yourself after high school, company vehicles, workers comp, machines? If youre taking home 25k thats your salery though, not profit . Id hope about 5-10k of that went back into the business for this year for growth. Hope this helps, good work!
@@lawn-n-orderlandscaping1389 Yeah, you’re right. I took less than $2,000 out of the business for personal use. I’m saving the rest of the money to fund my growth after graduation when I can actually work full time.
Awesome video! Follow up question to this. I'm an LLC and just pay myself owners distribution as my pay. At what point does it make sense to switch to maybe an S-corp and pay myself as a w2?
Mike when you are growing, do you lower prices to gain more customers? For example, when going into a new market and you are handing out quotes for mowing, do you quote lower than you would if you were already established so that you can rapidly increase the number of customers?
Hey mike, I’m currently in college for business management and one of the assignments is to interview someone that we admire in our field. It’s due before April 5th I know you are super busy but if you have some time that would be amazing!
Well what if I don’t intend to buy any other assets for the company in 25 yet I want to scale 50% more. Will the equation still apply? Or is the equation specifically focused on an increase in assets, materials, equipment, etc?
Would the example of growth through price increase not cause a loss to profits? In my head I'm thinking if i had 50 clients and i average $50 per cut (approx 75k per year) and raise all rates by 10% (now 82,500 in a perfect world with no loss to the 50 clients), wouldn't the margin stay @ 20% because im not using cash to make this gross increase? So i would profit 15,000 with 75K top line and 16,500 with a 82,500 top line or am i missing something? Using your 800k to 880k example (if the growth is just through price increase) wouldnt the profit margain not take that 10% growth hit?
@@CurationHub I fully understood the point he was getting across. I just wanted to make sure i was thinking on the correct track because the example of 800 to 880 through me off a bit if all we are doing is price increases. Lol glad I'm on track
Mike can you help me with margins please. I live in Ireland and have recently started a lawn care service and I’m happy the way it’s going.. one thing I’m finding hard is to know what to charge.. I know I’m in a different country but it’s the same principal is it not ? So could you suggest 1. The hour rate I should charge 2. What should I charge for spreading fertiliser? 3. What should I charge for spreading iron sulphate with a knapsack sprayer 4. What should I charge for spraying weeds.. 5. What should I charge for over-seeding ? 6. Spreading peat moss? 7. Mowing lawns price? This would really help me if you could point me in the right direction and If there is anything I have left out then feel free to add it to my list… At the end of the day I guess the answers to my questions will determine my eventual profit margins....
Hey mike great video. I’m a high schooler starting my landscaping company. I’m still learning alot so I have a question. Is the profit part of your pay check along with your salary or do you keep the profit in the company’s bank account. As well does the rest of the money once you take profit does the rest go to the company, gas, workers, advertisement?
Sorry Mike but you messed up here. You confused cash flow with profitability. Finance the assets (vehicles, equipment, working capital, about 20-30k at 80% ltv) and you'll see you break even your first year. First 3-6 months operating at a loss (-20%) due to lack of route density, hiring costs and learning curve for staff then profits from then on (+20%) so on the first 12 months you roughly break even, maybe around 5k cash out of pocket but on the balance as owners equity.
Great info Mike! Thank you! Question..when you did your examples of say 800K gross with 20% profit (160,000) and then grew 50% to 1.2M...wouldn’t the profit then be 20% on that new gross revenue number? (1.2M gross 240,00 profit - growth rate of 50% = $120K) Does this question make sense? Thank you
Sorry for the confusion… as I was making the video I realized I sorta switched from YOY historical growth to “projected growth” … either way it is a matter of growth RATE…. So essentially how fast are you growing
@@MikeAndes sweet, thanks! Somehow I missed it along the way. I would like to lower salary and raise contributions since I’m much less active in the business now.
@@MikeAndes Are you able to get away with paying yourself such a small salary because you're essentially an absentee owner? It would have to be higher if you were an active manager, right?
@@WhiteOakNW he can pay himself a small salary because he lives so frugally and has no spouse or children to support. And he has other investments. Most of us would not be able to take such a small salary. At least not for very long.
@@kylelieb2977 No, his salary is legally different from his income from the business. I was referring to his salary. He is taking 300k in distribution income from the business, but paying himself 1k every two weeks as a salary as an absentee owner. Any business that is incorporated or electing to be taxed as an S Corporation has to pay the owner a salary on payroll, with a W-2 at the end of the year. The rest of the profits can be taken as "owner's draws" or "distributions" that are taxed differently than a salary. My question was how he could get away from only paying himself 2k per month as a salary, as the IRS usually requires an owner to pay themselves more than that - what they call a "reasonable salary" - for running the business. A managing owner usually needs to give themselves at least a 50-60k yearly salary to be considered "reasonable" and not like someone is trying to dodge taxes.
Last year (year two in business) did 103k revenue. 76% gross profit. 46% net profit. One man. Reinvested profit into another truck, marketing, training. Projected to do 200-225k this year with net profit of 40% (the goal).
Good work!
This is great info. I’m currently reading Profit First for Contractors and man has that book opened my eyes and helped me understand how to stay profitable and to know ifs time to up those prices. I reccomend this book to anyone wondering where all their profits have gone at the end of the year.
Last year I did about 50k in revenue and took home 25k in profit. This year I plan on doing 100k in revenue and taking home 30k. I’m still a Highschool student the guys that are working for me are other students and are expected to use their own trucks. That allows me to keep my margins higher despite 100% growth.
In the highschool mindset roll in the money... If you want to build that business for something to sustain yourself after high school, company vehicles, workers comp, machines? If youre taking home 25k thats your salery though, not profit . Id hope about 5-10k of that went back into the business for this year for growth. Hope this helps, good work!
@@lawn-n-orderlandscaping1389 Yeah, you’re right. I took less than $2,000 out of the business for personal use. I’m saving the rest of the money to fund my growth after graduation when I can actually work full time.
@@justinsells7473 smart man
Great video thanks Mike! This is good to know as we grow. Going through a 50% growth phase this year and its painful.
Very interesting, thank you for shining a light on this side of the business.
You explain this really well Mike - keep up the great work.
Awesome video! Follow up question to this. I'm an LLC and just pay myself owners distribution as my pay. At what point does it make sense to switch to maybe an S-corp and pay myself as a w2?
Hi Mike, this was insightful and really encouraging. Thanks so much for being so generous with your knowledge and experience.
Mike when you are growing, do you lower prices to gain more customers? For example, when going into a new market and you are handing out quotes for mowing, do you quote lower than you would if you were already established so that you can rapidly increase the number of customers?
Hey mike, I’m currently in college for business management and one of the assignments is to interview someone that we admire in our field. It’s due before April 5th I know you are super busy but if you have some time that would be amazing!
Email me at landscapebusinesscourse@gmail.com
If you give me questions I can try to send voice note
Solid video brother! Thanks for the numbers and examples!
Well what if I don’t intend to buy any other assets for the company in 25 yet I want to scale 50% more. Will the equation still apply? Or is the equation specifically focused on an increase in assets, materials, equipment, etc?
4:48 totally agree with
100% We only do custom work, but staffing is our biggest issue. Finding crew who you can trust with a custom design is quite tough.
Would the example of growth through price increase not cause a loss to profits? In my head I'm thinking if i had 50 clients and i average $50 per cut (approx 75k per year) and raise all rates by 10% (now 82,500 in a perfect world with no loss to the 50 clients), wouldn't the margin stay @ 20% because im not using cash to make this gross increase? So i would profit 15,000 with 75K top line and 16,500 with a 82,500 top line or am i missing something? Using your 800k to 880k example (if the growth is just through price increase) wouldnt the profit margain not take that 10% growth hit?
I was thinking the same thing and you’re correct. I understand what he’s trying to say though, growth through reinvestment will decrease profit%.
@@CurationHub I fully understood the point he was getting across. I just wanted to make sure i was thinking on the correct track because the example of 800 to 880 through me off a bit if all we are doing is price increases. Lol glad I'm on track
Hey, Mike saw one of your beefy Augusta trucks in Renton, WA. on Tuesday! 👍
Let’s go! Brandon and Thomas are the owners down there ✅👍🏻
@@MikeAndes hope to meet them!
Can we apply this to a sign company?
Mike can you help me with margins please. I live in Ireland and have recently started a lawn care service and I’m happy the way it’s going..
one thing I’m finding hard is to know what to charge..
I know I’m in a different country but it’s the same principal is it not ? So could you suggest
1. The hour rate I should charge
2. What should I charge for spreading fertiliser?
3. What should I charge for spreading iron sulphate with a knapsack sprayer
4. What should I charge for spraying weeds..
5. What should I charge for over-seeding ?
6. Spreading peat moss?
7. Mowing lawns price?
This would really help me if you could point me in the right direction and
If there is anything I have left out then feel free to add it to my list…
At the end of the day I guess the answers to my questions will determine my eventual profit margins....
Hey mike great video. I’m a high schooler starting my landscaping company. I’m still learning alot so I have a question. Is the profit part of your pay check along with your salary or do you keep the profit in the company’s bank account. As well does the rest of the money once you take profit does the rest go to the company, gas, workers, advertisement?
I take the profit in the form of owner distributions
@@MikeAndes ohhh ok thank you mike!
Sorry Mike but you messed up here. You confused cash flow with profitability. Finance the assets (vehicles, equipment, working capital, about 20-30k at 80% ltv) and you'll see you break even your first year. First 3-6 months operating at a loss (-20%) due to lack of route density, hiring costs and learning curve for staff then profits from then on (+20%) so on the first 12 months you roughly break even, maybe around 5k cash out of pocket but on the balance as owners equity.
Great info Mike! Thank you! Question..when you did your examples of say 800K gross with 20% profit (160,000) and then grew 50% to 1.2M...wouldn’t the profit then be 20% on that new gross revenue number? (1.2M gross 240,00 profit - growth rate of 50% = $120K)
Does this question make sense? Thank you
You have to then subtract out how growth sucks cash. Don’t grow the next year and you can keep all the profit.
Sorry for the confusion… as I was making the video I realized I sorta switched from YOY historical growth to “projected growth” … either way it is a matter of growth RATE…. So essentially how fast are you growing
How come you have no snow plowing videos
What industry would you say there’s more money in. Lawn Care or Trucking?
Statistically in trucking since it has a larger market cap/ revenue
We did $16k last year, and are in hyper growth to hit $250k, I take no salary. Is this doable?
Sure can! We grew by 325k in lawn maintenance last year.
Totally possible, No salary is fine, but I hope youre paying yourself something.
You have often mentioned the 300k distribution; but with what salary being absentee?
Sick, forgot to mention that. I’ve said it in other videos. It is a small salary (for tax sake) of $1000 each PayPeriod (every two weeks)
@@MikeAndes sweet, thanks! Somehow I missed it along the way. I would like to lower salary and raise contributions since I’m much less active in the business now.
@@MikeAndes Are you able to get away with paying yourself such a small salary because you're essentially an absentee owner? It would have to be higher if you were an active manager, right?
@@WhiteOakNW he can pay himself a small salary because he lives so frugally and has no spouse or children to support. And he has other investments. Most of us would not be able to take such a small salary. At least not for very long.
@@kylelieb2977 No, his salary is legally different from his income from the business. I was referring to his salary. He is taking 300k in distribution income from the business, but paying himself 1k every two weeks as a salary as an absentee owner. Any business that is incorporated or electing to be taxed as an S Corporation has to pay the owner a salary on payroll, with a W-2 at the end of the year. The rest of the profits can be taken as "owner's draws" or "distributions" that are taxed differently than a salary. My question was how he could get away from only paying himself 2k per month as a salary, as the IRS usually requires an owner to pay themselves more than that - what they call a "reasonable salary" - for running the business. A managing owner usually needs to give themselves at least a 50-60k yearly salary to be considered "reasonable" and not like someone is trying to dodge taxes.
Good info
Algorithm, I don't give a fuck about the lawn mowing egomaniac.a
Maybe the algorithm cares for you...
@@MikeAndes stop beating the algorithms.
2m . 550 profit last year
Nice. What services?