You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your landscape design business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a landscape design business?
Costs to start a small to medium-sized landscape design business vary. However, in general, you will spend between $5,000 and $10,000 on startup costs. Most of the money goes towards a high-end computer and design software. Starting out, you will also spend a significant amount of money on advertising in your local community.
What are the ongoing expenses for a landscape design business?
Ongoing costs for the design business are minimal. You'll cover utilities and a new computer every few years.
There are also ongoing costs for design software upgrades.
Ongoing expenses for landscaping include maintenance of tools, upkeep of the office and store, and office supplies. Expect to pay between $5,000 and $10,000 per month for maintenance and recurring expenses in a mid-sized company. For a small company, your ongoing costs may only be a few hundred to $1,000 per month.
Who is the target market?
Preferred clients are corporate clients or customers who have signed seasonal or “evergreen” contracts. Large revenue projects are ideal. Bad clients are typically those that do not have the budget for ongoing landscaping work, those who want piecemeal projects with a high overhead, and those with accounts that have extended Net payment terms. An extended net payment term such as "Net-60" means that the client has up to 60 days after completion of the job to pay you for your services.
Landscape architects typically work with medium to larger companies. However, many designers start out with homeowners and small businesses.
How does a landscape design business make money?
They make most of their money by charging clients for design projects. These projects can be charged at either a flat rate or a per hour rate.
How much can you charge customers?
Landscape designers and architects charge by the hour or per project. To simple design for a residential home may cost, on average, $4,000 to $5,000. On a per-hour basis, you should charge clients between $50 and $150 per hour.
If your design company also does construction and maintenance, there are usually 2 rates for landscaping: the maintenance rate and the construction rate.
Maintenance rate is for basic lawn and grounds maintenance. Construction rate is for constructing lawn features, small structures, and building patios or laying brick and stone.
A good maintenance rate is $44.13 per man hour.
Construction rate for residential should be set at $54 per man hour or at least 20% higher than the maintenance rate.
Corporate rates should be set at least 20% to 25% higher for both maintenance and construction.
How much profit can a landscape design business make?
Design can be a high-profit business, but it all depends on the client and how tight your contracts are. Some clients routinely go out of scope and end up costing the business more money than the initial project quote.
Profit should be priced in at at least 10% of cost (minimum), for both the design and the construction businesses. Some companies operate at a 15% margin, but this is rare, especially for a smaller company.
How can you make your business more profitable?
You can make your business more profitable by narrowing your scope of operations towards a background of limited space and teaching landscaping principles to individuals or companies who have their own on-site maintenance team.
You could also offer additional services, bring in a professional master mason who can lay stone, or a bricklayer to lay brick. Partner with a master carpenter and offer custom woodworking and lawn features.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your landscape design business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a landscape architecture firm. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Landscape architect businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your landscape architect business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Because landscapers may interact with harmful chemicals such as pesticides and insecticides, it is important to reference to OSHA’s (Occupational Safety and Health Administration) rules and general standards for chemicals:
- Standard 1910.1200 states that employees be adequately informed of all potential hazards when working with chemicals
- Standard 1910.132 states that the necessary personal protection equipment be provided to the employee working with chemicals, such as safety glasses, a face mask and suitable gloves
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a landscape design business
The easiest way to start this business is to go to networking events and hand out business cards. If you've started with another design firm, you might be able to pick up strategies the company has used to maintain its client base.
Direct mail also works well, but it is better for corporate accounts. Get a list of names of companies that have used design services in the past and offer them more value for the same price.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
To differentiate yourself from the rest of the companies in your area, consider specializing. Every market is different and has unique needs. For example, large corporations often have a certain look they're going after when designing outside spaces. Residential neighborhoods, which cater to Home Owners Associations, will want a different look and feel to their grounds.
If you become familiar with a single market, you are more likely to succeed in that market because you'll understand their unique needs and wants on a deeper level than a company that tries to be a generalist.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Landscape Design Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This is very much a hands-on business. Business owners who start a landscape architect business should be very good with math and comfortable working around computers. A lot of the designer's job is spent at a desk. However, many architects make it out into the field with the contractors and so they must be comfortable working with their hands and getting dirty.
What happens during a typical day at a landscape design business?
Day-to-day activities of the business include a variety of tasks. Client intake forms, invoicing, and meeting with new clients are a given, but the business must also coordinate with contractors, monitor its supplies carefully, and keep clients updated about the project.
What are some skills and experiences that will help you build a successful landscape design business?
At minimum, you will need a bachelor's degree in landscape architecture. Master's degrees are available too. In addition to education, you will want to start as an apprentice to get a feel for the industry and how it works. Becoming a Landscape Gardener apprentice will teach you about the construction and landscaping side of the business, but is not necessary to do design work.
Apprenticeships usually take several years to complete. You can also take school-based apprenticeships.
To work as a landscape engineer, you must be comfortable working indoors in front of a computer all day.
If you decide to work with the construction crew, you will be outdoors in all types of weather conditions. You must be physically fit, able to lift heavy loads, and able to do manual labor for at least 6 to 8 hours per day. You must be able to work flexible hours and work in a team environment.
What is the growth potential for a landscape design business?
Small landscape design firms can be operated as "one man" operations but there's no reason a business owner could not hire an entire team of designers and contractors, turning it into a comprehensive design and construction company.
In fact, larger companies are typically full-service landscapers who also design and build custom lawn features as well as maintain properties.
TRUiC's YouTube Channel
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a landscape design business?
Landscape design businesses depend largely on their reputation. Also, because the business is inherently seasonal, businesses that survive are those that secure “evergreen” contracts. Cash flow management is important. You will have to manage the company’s funds to stay afloat during the off-season when work is light or non-existent.
How and when to build a team
Hire help as soon as you can. The design side of this business requires you work long hours. The construction aspect of this business is very labor intensive. So you’ll need all the help you can get. Ideally, you’ll start with a team of at least 3 to 5 people. Larger companies can employ 10, 20, or more employees.