From Vertical IQ comes some general information about the landscape industry gathered from the study of 61,882 landscape companies across the USA.

The average landscape company;

  • Has 8 employees
  • Sells $714,000 in work
  • Has a payroll of $212,000
  • Owns $40,000 of equipment
  • Spends $5,000 on advertising

Obviously there are huge landscapers, but when averaging out the multitude of smaller firms lowers the numbers.  88% of landscape firms have less than 10 employees.  Landscaping is an easy business to enter and has a growing demand, so it attracts young entrepreneurs.

An interesting finding; the larger the firm the less revenue per person they bring in.  For example; landscapers with less than 5 employees earn about $115,000 per person.  Those with more than 110 employees earn about $78,000 per person.

Vertical IQ identified the keys to making money;

  1. High utilization of labor hours and equipment
  2. Pricing jobs at higher margins
  3. Controlling labor expenses

No surprise here.  Smart operators have been working on these factors at least since the recession.

Vertical also points out the seasonality and adverse weather as factors challenging profits.  Yup, we all know about that.  Additionally, they say shortage of qualified labor is the single largest drag on a landscaper’s ability to grow.   Again, we are all aware of that!

Employment at landscaper firms is growing at around 5.3%.  So are wages.  The average wage for non-management employees is $16,40 per hour.  On average wages have grown around 3% per year since 2015.

Landscapers fail or merge more frequently than other business types.  The failure/merge rate in 2014-2015 was 10.17%.

The top management trends include;

  1. Staff development-  Finding, growing, and keeping good staff is taking top priority.  A lot of work is being done to educate and coach employees.
  2. Marketing-   While advertising budgets tend to hover around 1%, landscapers are becoming very good at getting a nice bang for their advertising dollars.  Many becoming adept at social media and email marketing.
  3. Environmental proficiency-  A growing demand for conservation and avoiding environmental hazards has helped many landscapers. Homeowners are aware and demanding such attributes for their landscape.  Landscapers who themselves are knowledgeable are able to gain sales at higher margins.

Financial information;

Current Ratio- 1.60 measures ability to pay bills.  Generally, want to be above 2.0. Has not been above 1.65 for three years.
Days Receivables- 22.48 Number of days it takes to collect customer payments. Not bad but a reduction would serious help cash flow. Contractors in other trades have converted most to pay upon completion. Would also help current ratio.
Days Payables- 24.55 Days to pay vendors and other bills.
Pre-tax Net Profit- 7.77%
Pre-tax Return on Assets- 25.14% A good number. Can directly compare to other investment options, such as the stock market. Must be high teens or more to account for the high risk associated with landscape trades.

A caveat to the above numbers must be understood.  Many landscapers operate small businesses and practice some things that could not be tolerated in larger companies.  Such activities skew the numbers.

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