Start a tree stump removal business by following these 10 steps:
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 guide to starting your tree stump removal business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- 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 stump removal business?
Many business owners get into stump grinding because the startup costs are manageable. They run between $10,000 and $50,000, and it’s easy to stay on the lower end of this range when starting out.
Jared of Stump Shark Stump Grinding got started with just a truck, stump grinder and trailer. He bought all of the equipment used, paying $4,400 for the truck, and $6,200 for the grinder and trailer.
Jared soon purchased a $1,100 chainsaw and a commercial leaf blower because they saved time on each job, but these pieces of equipment are optional. They can be purchased after a business has generated enough revenue to pay for the items.
Business owners should also have some basic safety equipment, such as a hard hat, safety goggles, and earplugs. This equipment isn’t expensive, though.
What are the ongoing expenses for a tree stump removal business?
The ongoing expenses for a tree stump removal business are manageable. They include vehicle maintenance, grinder maintenance, and fuel (for both the truck and grinder).
Business owners can help keep their ongoing expenses lower by scheduling multiple stump grindings for a single day. Batching several jobs together lets business owners reduce their mileage by driving directly from one location to the next. Most customer’s aren’t overly concerned with when a job is done as long as it’s completed in a reasonable timeframe.
Who is the target market?
The target market for this type of business is large. Anyone who has property on which there are cut-down trees may need to have stumps removed.
How does a tree stump removal business make money?
A tree stump removal business makes money by charging customers to grind up and remove tree stumps. Businesses may charge a lump sum or by the inch (measuring at the stump’s widest point). Most businesses have minimum fees for smaller stumps.
How much can you charge customers?
Business owners generally aim to earn between $35 and $50 per hour, regardless of how they actually set up their pricing. For Jared, this means charging under $150 for smaller trees, $150 to $200 for most larger trees, and around $20 for additional trees. Those who have per-inch fees might charge anywhere between $1.50 and $2.00 per inch.
(Larger companies that offer stump grinding as one of many services may charge $5 to $7 per inch, leaving room for stump removal specialists to underbid them.)
How much profit can a tree stump removal business make?
For many business owners, tree stump removal is a profitable side-job or part-time business. Jared hoped to make $1,000 starting out (and he has reached that mark). Other business owners have annual revenues of $20,000 to $25,000 working a few days each week.
How can you make your business more profitable?
A bare patch will be left after any stump is removed. Business owners can offer to cover the area with topsoil and grass seed at an additional charge.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Tree Stump Removal Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your tree stump removal business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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 stump removal 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 stump removal 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.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a tree stump removal business
Advertising on Craigslist is a free and effective way to market a tree stump removal business.
Marlow and Jared also both use cold calling and word of mouth to gain more customers. After finishing a job, they’ll ask any neighbors who have stumps in their yard whether they’d like the stumps removed. As long as business owners can provide a quote on the spot, this can generate more business without increasing drive time significantly.
How to keep customers coming back
Businesses can set themselves apart from the competition by offering estimates via text. If customers send in a picture, experienced business owners should be able to judge how much the job will cost and give the customer a quote. Even if business owners occasionally underbid, they’re able to save a lot of fuel and time by not driving to customers’ locations simply to give estimates.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Tree Stump Removal Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who enjoys working outside and is willing to work hard may enjoy running a tree stump removal business. There is some manual labor involved in grinding up tree stumps and removing the wood chips, but business owners get to be outdoors while working.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a tree stump removal business?
A typical day at a tree stump removal business involves driving to customers’ locations and grinding up their tree stumps. Grinding a tree stump can take anywhere from 15 minutes to 2 hours, depending on the size of the stump. Most businesses also remove the wood chips after the grinding is finished.
When not removing stumps, business owners work on marketing their businesses.
What are some skills and experiences that will help you build a successful tree stump removal business?
Prospective business owners may want to spend a season working for an arborist in Business owners must have a good knowledge of how to grind up tree stumps, and they need a basic knowledge of other tree services. A book like Trees of North America or Audubon Society Field Guide to North American Trees (Eastern Region) will have enough information on trees to get your started. To learn about tree services, their area.
What is the growth potential for a tree stump removal business?
Most tree stump removal businesses remain small and serve a local area. Marlow Haverland has a fairly typical setup, working in a 100-mile radius around Abercrombie, North Dakota.
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Take the Next Step
Find a business mentor
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 stump removal business?
Existing arborists and landscapers may be good sources for regular work. Many of these companies don’t want to invest in a stump grinder and will gladly subcontract the work -- especially if they can add on a nominal fee to the price. To find arborists and landscapers who will provide referrals, businesses should contact service providers in their area and ask whether they remove stumps.
How and when to build a team
Most business owners work by themselves and don’t hire employees. If a business becomes busy enough to support an employee, one can be hired at that point.