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 tree service. 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 tree service?
A tree service business’ startup costs are typically between $10,000 and $50,000. It’s a hefty sum, accounting for a business license, liability insurance, disability insurance, a warehouse, auto insurance, equipment insurance, umbrella insurance and workers’ comp. The cost additionally includes your business’s many equipment needs, including trucks, safety gear, ladders, chainsaws, a wood chipper, pruning shears, computers, wheelbarrows, invoicing software, an accounting system, a payroll system, business cards, a professional website and estimate forms.
What are the ongoing expenses for a tree service?
Firstly, a tree service provider must pay its technicians between $10 and $23, per hour, to work. This approximates to between $21,000 and $49,700 per year—on average. You’ll need to purchase safety equipment whenever your current equipment is degraded or outdated. Gas, too, is a common expense. As part of your financial planning, you’ll need to take care of vehicle and equipment depreciation. Aside from these expenses, much of your ongoing money will be directed towards promotion and insurance costs.
Who is the target market?
Tree service companies thrive when working for commercial clients. While you’ll mostly encounter residential clients, commercial land owners require constant tree upkeep to maintain land permit standards. They’re lucrative, professional and easy to work with. Because commercial property owners require consistent services, they’re easy to profile—making services quick, effective and thus incredibly cost effective.
How does a tree service make money?
As a tree care provider, your business will make most of its money by maintaining various properties. While installation, removal and emergency services offer decent lump-sum payoffs, monthly trimming and pruning are far more reliable. Tree rescue, root removal, pressure cutting and branch removal, too, are lucrative jobs. Because they’re in high demand—as not purchasing them can be disastrous—a tree service provider offering highly skilled services can make decent money.
How much can you charge customers?
You should charge clients between $75 and $1,400 per job, depending upon the task’s complexity. Additionally, you can charge more if a lot of time—or a lot of risk—is involved. Artisan tree cutting and large projects, on average, cost more. If you want to be a competitive provider, consider offering free, or low-priced, emergency services.
How much profit can a tree service make?
Individual tree service providers, as stated above, make between $21,000 and $49,000 per year. A tree service business, however, can make about $100,000 to $200,000 in annual gross income. After expenses are deducted, annual profit is around $50,000. These profits are, however, based on average-sized tree service businesses—which are mostly small businesses. It’s entirely possible to shoot past these numbers, becoming a preferred provider in your area.
How can you make your business more profitable?
Make the jump to commercial tree care as soon as possible, as it pays better, has more reliability and will fortify your promotion network. A lot of businesses have partners—and these partners can become your partners. Get good at networking, and prioritize quick, consistent services. Consider expanding your services to other outdoor or garden services for additional income.
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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your tree service 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 tree service. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
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.
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.
Tree services should require clients to sign a services 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 of one such services agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your tree service 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.
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 tree service
It is a good idea to directly approach local businesses. As for homeowners, focus on a landing page. Promote yourself via social media, and make sure you’re getting a lot of visibility. Because disposable incomes are slightly rising, expert jobs are increasing in demand.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
To attract customers, focus on areas which experience a lot of tree damage or tree care needs. Golf courses, schools, beaches and parks are fantastic commercial areas. If you’re focusing on residential landscapes, target medium to high-income neighborhoods. These locations, often, are comprised of valuable hardscape, vehicles and homes. For this reason, tree care is important. Customer retention, for the most part, will be secured by offering quick, effective services. Much of tree care is ordered on an emergency basis. That said, being noninvasive during monthly services is a great way to retain customers.
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 Tree Service In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
A tree care business is a great opportunity for any recent tree care company worker. If you’ve recognized the financial potential of growing your own business, and if you’re skilled in the technical aspects of tree care, you’ll thrive. A tree care business isn’t for everyone, however, as it requires a lot of financial planning, competitive analysis, equipment and effective marketing.
What happens during a typical day at a tree service?
As a tree care business owner, you’ll be responsible for securing relationships with lenders while registering with local, county and state agencies. You’ll also need to secure and maintain operating permits and licenses. As a decision maker, you’ll conduct competitive analysis and make long-range objectives. Your workers will need to be skilled, insured and understand your business’s equipment intimately. On the service end, day-to-day activities include tree installation and removal quoting, actual installation and removal, trimming, pruning and emergency services. During bad weather—or other emergencies—your business will need to be “on call,” to help local property owners.
What are some skills and experiences that will help you build a successful tree service?
Before taking on an administrative role, you’ll need to understand the basics of tree care. On the technician level, you’ll need to have experience with tree felling, knot creation, A-1 climber use, tree rescue, tree trimming, pressure cutting, chainsaw usage, equipment maintenance and wood disposal. Joining a trade school can help.
From an administrative standpoint, you’ll need to be a capable advertiser. You’ll also need to garner service leads. Tree care, in particular, is a lead-heavy business practice. It’s a good idea to obtain small business consulting, too. It additionally pays off to be well-versed in your area’s property regulations, landscaping laws and hardscaping laws.
What is the growth potential for a tree service?
A good tree service provider can become a cross-state staple. That said, a lot of tree service providers are local businesses. Property owners have surprisingly little knowledge about tree service providers, which keeps the market open from a small business standpoint. If a local provider offers competitive pricing, incredibly fast services and skilled labor, it will experience a lot of service. A local tree service business can grow large if its business plan capably serves multiple areas.
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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.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a tree service?
As a tree service provider, you should specialize in either personal lawn trimming or commercial tree care. By having such a niche, you’ll hit a much-needed market angle to get off the ground. By focusing on public spaces, you’ll secure more consistent work. You will, however, need to have a bigger team. If you want to provide personalized lawn care, you can get by with a smaller but highly skilled team.
How and when to build a team
You’ll need to hire independent contractors immediately. They’re cheaper than highly-skilled tree care labor. That said, you should invest in a highly-trained tree crew as soon as you can afford it. If you have friends in the business who are looking for work, offer them a job. You could also search for general labor on Craigslist. Because tree care is incredibly labor-intensive, you’ll need human resources as soon as possible. Aim for at least 10 technicians, as a starting point.