So, you want to start a business in the tree service industry. Congratulations! Starting a tree service business can be very rewarding and profitable. Tree services are always in high demand, as there is never a shortage of trees needing special attention, no matter the season.
Now, you need to learn more about the industry and how to start a tree service business. You aren’t sure what is needed to start a tree service? Wondering ‘Is a tree-cutting business profitable’ or what equipment is needed to start a tree removal business? Not to worry, you’ve come to the right place.
We’ve put together a step-by-step guide explaining the basics and equipping you with the necessary knowledge to get started.
What Does Starting a Tree Service Business Involve?
If you are an experienced arborist, that’s great and very useful, but you don’t have to be. You can always hire other people to get down to the nitty-gritty and do the dirty work for you.
Establishing any successful business involves first learning the basics, and it’s no different for a tree service business.
What you need to know initially is how much you should expect to invest in your business to get it off the ground. How much does it cost to start a tree business?
Then, you have to think about licensing. Will you need a license or a permit to operate legally, and if so, what kind?
Finally, you want to have a general idea of how much a tree-trimming business makes. You might have questions like how much does a tree service owner make?
We have answers, so read on.
How Much Does It Cost to Start a Tree Business?
It would be best to prepare to invest anywhere from $10,000 to $50,000 to get your company going.
How much does it cost to start a tree-cutting business? The exact cost will depend on how many and what kind of services you want to offer such as stump grinding or tree trimming, the type of equipment you will need to buy, and how many employees you will hire to work for you.
Do You Need a Business License?
More than likely, the answer will be yes. Whether or not you will have to apply for a tree service business license will depend on your state and local requirements. Individual arborists are rarely required to have a permit, but this is not always the case for a tree care company.
To operate your business legally, you will need to apply for a business license from your state, county, or city. You may also need a contractor’s license that is separate from your business license.
You can start by visiting your state’s official government website and performing a “business license” search to find out license requirements. One thing to remember about licenses and permits is that they usually have to be renewed yearly.
Something else to consider is obtaining a certificate from the International Society of Arboriculture. Even though this is not a legal requirement to run a tree service business, becoming a certified arborist will solidify your reputation and let people know you are a skilled and reliable service provider.
In turn, this will maximize your chances of booking work quickly and easily, and of course, your profits.
How Much Does a Tree Care Business Make?
You can expect to earn anywhere from $100,000 to $200,000 in gross per year as a smaller start-up business. After the deduction of business expenses, your annual profit would be around $50,000.
Once you establish your business better, solidify your reputation, and start expanding, your gross annual earnings can range anywhere from $540,000 to $1,150,000. As a business owner, you will generally bring home around 10% of your total revenue.
Your sales, quality of service, reputation, and way of managing are the factors that will determine how successful and profitable your tree service company will be. Remember that people place great value on effective management and dedicated customer service.
We have outlined six easy steps for you to take to get your business going.
1. Analyze the Market.
2. Price Your Services.
3. Legitimize your business.
4. Choose a name and logo for your business.
5. Market your business.
6. Choose a tree service software to manage your business.
1. Analyze the Market
You will have to do a fundamental analysis of the market and determine what type of service you will offer and how you will compete with other companies.
You don’t have to offer a whole lot of services right away. You can test the waters by starting a tree removal business only, for example.
Of course, if you want to keep things simple and one type of service is enough for you, then stick to it. Chances are, though, you will want to expand after a while, even if you don’t think so now.
As your goals change and get bigger, you can broaden your services as well, and you can do this slowly as you go. One way is by taking on various jobs you can subcontract to other companies and businesses. This way, you will also build valuable connections within your industry.
But whether you are thinking of offering an individual service or plan on providing multiple services—tree consulting, risk assessments, storm damage repair, parasite treatment, tree trimming, tree bracing, tree planting, stump pruning, and grinding, to name a few—you have to make sure you set prices that can compete with those of competitors and can ensure gaining a decent profit at the same time.
2. Price Your Services
As we mentioned above, keep competitors’ prices in mind. However, it would be best not to rely exclusively on them or solely on market data.
Come up with a pricing strategy that works best for you. Don’t forget to consider your skill and experience, the value you will be adding to the project, the type of project, the level of service, the necessary equipment, the labor involved, and so on.
You want to make sure you are allowing room for a decent profit—the primary goal of running a business.
You can decide to charge by the hour or by the service. How much you charge per hour, for example, will be up to you, of course, with hourly rates varying from $100 to $500. Even if you decide to set hourly rates, make sure to account for the service level and risk involved.
Always do a thorough analysis and evaluation of the project before you provide a quote or an estimate.
3. Legitimize Your Business
To run a successful business, you will need to make sure it’s legitimate. Having all your documents in order will give you peace of mind and allow you to focus on making money and being the best at what you do.
Not only that, you will avoid legal issues and possibly being shut down and losing your right to run a business at all.
You will need to address this by focusing on the following tasks:
Choosing the Right Business Structure
The business structures to choose from are sole proprietorship, partnership, C corporation, S corporation, limited liability company (LLC), or non-profit organization.
All these structures have different tax-filing requirements that will depend on your state.
Usually, most small and start-up businesses choose to incorporate an LLC. It can be a safer choice because owners have limited liability if the worst happens, and a client sues them.
What’s more, you can opt for a single-member LLC if you are the sole owner. It’s a good option when you start, and don’t know how much you may end up expanding or if you’d be open to partnering up with someone in the future.
As you grow, you can upgrade to a corporation. You are never stuck with your original choice.
Getting a Tax Identification Number (TIN) from the IRS
Obtaining a TIN, or an employer identification number (EIN), is an easy, straightforward process, and you can do it online.
In a way, the nine-digit EIN takes the role of a social security number for your business and identifies it for tax purposes.
Without this number, you won’t be able to apply for the necessary licenses and permits, open a business account, or file your tax returns.
Registering Your Business
Your next step is to register your business with the state. You have to contact your local municipality to inquire about the types of permits and licenses you will need to obtain.
As mentioned above, requirements will vary by location, but your local business development center should be able to help point you in the right direction.
Usually, your county or city’s official website will be your best resource.
Opening a Business Bank Account and Talking to an Accountant
Make sure you open a business bank account to use for all your business transactions. It makes you look more credible to both clients and creditors.
It’s also crucial to keep your business and personal expenses separate and ensure a smooth start when it comes to recordkeeping and taxes.
Getting Business Insurance
Obtaining insurance for your business is essential and keeps you covered in case of property damage or liability claims.
The primary types of insurance you will need are basic liability insurance and worker’s compensation insurance for your employees.
4. Choose a Name and Logo for Your Business
Deciding what you will call your tree care business and coming up with a logo design is the fun part but can still be overwhelming.
It’s true that you are never stuck with a particular choice and can always update it, but it’s not a great idea to go back and forth a lot. Changing your company’s name after you’re already on your way to solidifying your reputation and place in the industry can cause unnecessary headaches.
As far as your business logo is concerned, you can always hire a graphic designer to develop something outstanding, unless you have artistic tendencies and want to create something on your own.
Keep in mind that hiring an expert doesn’t have to be pricey and can guarantee excellent results.
5. Market Your Business
Okay, so you’ve taken care of the legalities and are ready to start working.
You may be the best at what you do, but if people don’t know about your existence, your business won’t prosper.
The world we live in keeps changing and evolving and word-of-mouth advertising is not as effective as it once was. Today, pretty much everything is done virtually, and you should think about your online presence and the online tools you can use to get and increase leads.
Even though you don’t need a website to operate a business, it’s an excellent idea to have one. It makes you look more professional, dependable, and reliable. It can also have a significant impact on your marketing strategy.
There are also ways to create your own website for free, but often they don’t look very professional. Remember, you have to be prepared to invest and spend money to make money.
Consider consulting with a search engine optimization (SEO) agency. The SEO experts can help you build a fantastic website or do it for you. They will then optimize it to ensure the people looking for your services can find you easily and, sometimes, even before they know they need you.
6. Choose a Tree Service Software to Manage Your Business
Don’t forget to consider tree service software, which you will need to manage your tree service business. You will use this software for online bookings, scheduling, putting together quotes and estimates, sending invoices, tracking time, managing your employees, and so on.
Choosing the right software for your business is crucial, as it will save you much time, keep you organized and produce valuable reports to monitor your performance and finances. It should make things easier for you, not complicate them, so choose wisely.
Final Thoughts
We hope the information shared here helps you start planning on the set-up of a tree care service business. Whether you are looking to start a tree trimming business or a full-on landscaping one, you will have a better chance at success if you do your homework; prepare a business plan, know your customers, and have a clear marketing strategy. It might all seem a bit daunting now, but it will pay off in the end.
