Start a tree stump removal business by following these 9 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.
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 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 very important. Read our detailed guide on how to name your business. 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 stump removal business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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.
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: 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 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.
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.