Dear lawn or landscape business owner: The idea of lowering truck costs grabbed the attention of a pile of landscapers last week. I can say this with confidence because my email inbox with requests for more details on this subject was going ding, ding, ding starting about 6:15 am. We received more than 300% more personalized replies last week than a typical week.
That’s good. We enjoy the feedback very much.
The Truth About Truck Costs
Successful business owners become financially successful because they understand their costs.
When you look at the real costs of owning and operating a lawn or landscape company, you can count on the following:
- Labor is your biggest category of expenses typically accounting for 35% to 55% of your cost to provide services
- Company overhead costs for things like insurance, facility payments, phone bills, marketing, and your retirement program will demand 20% to 30% of the cost to provide services
- Materials and job supplies will vary depending on whether you provide a lawn service or landscaping service. We find materials costs between 10% to 30% of the costs to provide services.
- For well-run landscaping businesses, equipment costs come in between 10% to 18% of the costs to provide services. And when you carefully review your entire equipment list and the costs associated with all of your equipment, from trucks to skid loaders to back pack blowers, trucks will demand the majority of your total equipment costs. When fuel prices rise – like they have the past few years – you immediately feel the pain at the pump.
When you step back and look at the big picture of your costs for doing business, you must understand that the costs for trucks is a pretty small expense compared to labor, overhead, and materials purchases.
Since most lawn and landscape companies provide services at job sites that require travel to and from those locations on a daily basis, trucks are going to be required in order to be a contractor. There’s always going to be costs associated with trucks…just like the costs associated with labor, overhead and materials. You gotta know your cost!
Getting Rich Buying Trucks?
Trucks are the foundation required to provide lawn and landscape services. You can’t be a contractor if you can’t load up people, equipment and job supplies and get to a job site! Understand?
Just like labor costs, overhead costs, and materials costs, your trucks are costs that must be understood and passed on to the customer through your service fees. Think of it this way.
Trucks should NEVER cost YOU one thin dime! You must understand your costs and how to pass those costs along to your customer in a fair and accurate manner.
Company owners that understand their costs better than their competitors understand that the way to lower their prices is to lower their labor costs… since labor is the single biggest category of the cost to provide lawn and landscape services. Companies that become efficient lower their labor costs. Lower labor costs create the opportunity for lower prices for the customer. Lower (but accurate) prices for lawn services create instant opportunities for growth in market share.
The more trucks you have to haul more labor, equipment and supplies to job sites, the richer the business owner can become. Trucks are an asset contractors must have. Without them, you’re not even in the contracting business.
Your job is to rent out your trucks to your customers on an hourly or daily basis.
Every single truck should have an hourly pay rate, just like every employee has an hourly or daily pay rate. And IF your truck is rented out each and every week, say 30 or 40 or 50 hours a week, you simply collect the appropriate fees to recover your costs for the truck and you never have to pay one thin dime of YOUR money to own and operate a work truck.
Lawn and landscape companies that grow understand their costs. They pass their costs along to their customers. They methodically and meticulously study and review their costs… understanding that the fastest way to go broke or get rich is by understanding labor costs. Labor costs between 8 and 10 times MORE than the costs of a truck in a lawn or landscaping company.
If a truck can help you become a more efficient company…managing the movement of people, equipment and supplies more efficiently…you should buy it immediately.
The asset (the truck) rarely goes to zero in value. Even if the truck gets totaled (wrecked or destroyed) in an accident, you probably have insurance to help replace it. But as soon as you waste an hour of labor doing silly things like looking for tools that are lost in a messy and unorganized truck, that money you spent on labor is gone forever.
Here’s the truth about getting rich in landscaping.
The way to riches in the lawn and landscape business will include:
- Focusing your efforts to become more efficient with your labor
- Understanding your cost structure so you pass along your cost in your pricing model, and…
- Buying MORE trucks so you can expand your business and serve more customers.
Yes…we still have strategies for lowering your costs for trucks. We will be sharing more of those details with you soon. But we want you to know the truth about becoming rich from landscaping.
It doesn’t matter if your trucks were given to you free and clear without any acquisition costs. You will still have ownership costs such as insurance, registration and tag. You will still have operating costs such as fuel, oil, tires and repairs. So you must understand your costs so you can pass those costs along to your customer. Got it?
I know the guys and gals who stick around this industry for a few decades understand exactly what I’m talking about. But even the lucky ones who seem to be making ends meet (newbies and veterans) can get better profits when they understand their costs.
Let me know if this discussion has helped you today. Just hit reply and share your thoughts.
Profit greatly,
Tony Bass, founder
866-923-0027
PS – In case you missed the message on Lower Truck Costs last week, click here for the 3 minute read.
