5 Practices Eroding Your Landscaper Profit Margins

Unearth the obstacles standing in your way and find the path to flourishing landscaper profits.

After months of sweltering heat or blistering cold (or both!), you’ve reached another year end for your landscaping business.

Before you start popping the champagne though, do you know what you’re celebrating?

Surviving another year as a landscape company certainly deserves a toast, but THRIVING as a wildly profitable landscaper? Now THAT’S worth a real blowout.

So, how do you know how big a party to throw?

Two words: profit margins.

Profit margins are a crucial indicator of financial health for landscapers, and if you’re not sure what yours are – or how they compare to industry standards – it’s time to find out. 

If your numbers aren’t quite where they should be, we’ve got five hints on what might be choking them out.

What are average profit margins for landscapers?

After spending many years analyzing landscaping businesses, Breakthrough Academy has collected a ton of data, which has allowed us to create benchmarks for the industry.

Below are the profit margins we typically see for landscaping businesses, ranging from “Awesome” to “Average” to “Ah…Yikes…”

You’ll notice these numbers are broken out by construction and maintenance, though we realize many companies do both. If that’s the case for your business, we recommend tracking your profit margins for each separately so you can make an accurate comparison.

Gross versus net landscaper profit margins

If you stumble over the difference between gross and net profit margins, here’s a quick overview:

📈Gross profit margin – This is the money you bring in from your projects or services BEFORE you pay any overhead costs, such as salaries (including your own!) and office expenses. Carefully managing your gross profits is a great way to increase profitability.

📈Net profit margin – This is what’s commonly referred to as your “bottom line.” It’s what’s left after you’ve paid ALL your expenses, including project-related costs and overhead. Your net profits can be reinvested into your business to fuel growth.

If you’d like to learn how to calculate your profit margins, take a look at this article.

Are you depleting your landscaping business profits?

If any of the below practices feel familiar, you’re probably inadvertently cutting into your landscaping company’s well-earned profit margins.

#1: You don’t have a clear budget

Maybe you’ve got a spreadsheet or two, or some rough numbers in your head, but without a defined financial system that gives you a clear sense of your numbers on a daily basis you’re going to end up wasting money needlessly.

Having actual financials to work with will allow you to:

• Calculate metrics (like your gross and net profit margins!)
• Set up a cashflow and payments schedule
• Keep your overhead under control
• Make strategic plans for the future 
• Navigate business decisions

A budget is the fertile ground into which you plant your financial success for the future. Want some clear steps to get started? Download the Landscaping Profitability Playbook.

#2: You’re winging your job estimates

Accurate estimating is an essential element of managing your landscape business, and it relies heavily on having a dedicated job costing routine in place. One feeds the other.

With steady job costing practices, you’ll have a firm understanding of whether your projects are meeting their profit margin targets and how well they’re contributing to your bottom line.

Armed with that knowledge, you’ll then be able to be more choosy about the projects you take on, able to tell the difference from the outset whether a project is worth the time and effort for your business.

If you’re currently creating estimates based on “best-guess” scenarios instead of rock solid data, you’re almost definitely digging into your profit margins. Learn how to stop losing money on jobs with this brief video.

#3: You’re undercutting yourself

Almost every successful landscaper we’ve worked with has one thing in common: they’re genuinely nice people. They want to make their customers happy. 

Unfortunately for many entrepreneurs, however, this often comes at a cost to themselves, especially when they discover partway into a project that things are going to cost more than it originally seemed.

Rather than be open about that with the customer, they instead try to make up the difference somewhere else or eat the cost. But you can’t sustain a business that way. According to Shawn Van Dyke, author of Profit First for Contractors, the more you give away, the more you rob yourself of profitability.

Sometimes, the kindest thing you can do for a customer is tell them the truth. The good ones will respect you more for it.

Yet another worthy excuse to systemize your landscaping business for success.

#4: You’re struggling to find dependable crew

Of all the trades, landscaping business owners have one of the toughest struggles with finding and keeping reliable people.

All the more reason why you need to implement a sturdy hiring system, and then incentivize your team with performance pay and exciting career opportunities.

While building Kayben Landscaping, Claude and Judy Kolk learned that even if you find the right staff, without good systems, they’re going to leave. After joining Breakthrough Academy, they doubled the size of their team – and their gross revenue – with dependable, motivated people.

#5: You’re spending too much time training

Once you hire people, your onboarding challenges seem to only begin as you bring your new staff up to speed with how your team operates and runs jobs. 

But no matter how thoroughly you explain the process of cleaning up a site at the end of a work day, they’re still coming to you with time-consuming questions, and making the same mistakes over… and over, taking up time that would otherwise go towards profit-building activities.

Training checklists can go a long way to mitigating that issue.

Jason Hoke from A Cut Above Landscape actually found that implementing training systems was one of the most enjoyable parts of revamping his business because it involved direct engagement from his team.

Double win.

Obviously, life is about more (much more!) than just profit. We readily admit that. But remember you’re running a business, not a charity. That being said, if you’re awesomely profitable, you can also be amazingly charitable because you’ll have plenty of surplus to share.

Download the Landscaping Profitability Playbook for steps to make it happen.

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