Initial Investments to Start a Tree Care Company
Initial investments to start a company will vary depending on many factors. The number and type of vehicles / equipment can vary greatly depending on services offered and the number of initial employees. Offering Plant Health Care or Landscape-based services can greatly add to the initial expenses for different equipment, tools, chemicals and PPE. Also, the potential of the client base can greatly impact your starting expenses. When I started my company, I was able to get it fully operating for $25,000 or so. However, if I was to form a company today, it would require around $500,000 to get started. With a large potential client base, I would have immediate client needs that would require more personnel, vehicles and equipment. Obviously, many of the vehicles would have monthly loan payments, but I would need to be a half-million-dollar company day one.
The BIG Oak would consider these to be the absolute minimum financial requirements to start a tree care company:
Company Identify (name, register company….)
Marketing (logo design, business cards, domain, website design…..)
Vehicles (chip truck, chipper, sales vehicle….)
Equipment (chainsaws, blowers, climbing gear, pole saw, hand saw, cleaning tools…..)
Uniforms & PPE (hard hats, safety glasses, hearing protection, chaps, uniforms, hats….)
Salary & Wages (for you, office or other employees)
Office / Technology (phones, computers, office supplies…..)
Permits & Licensing (city permits, pesticide license…..)
Office / Yard Space (own or rent space….)
Billing system (QuickBooks, ArborGold or other client / billing system)
Human Resources & Insurance (Worker Compensation, business insurance, health insurance…..)
Other expenses like disposal and fuel will be required early but can be built into jobs so they would not be considered an initial expense.
Setting up an Initial Budget
Budgeting for the first year can be somewhat impossible and ever-changing. However, it is still a good idea to try to follow a budget and at least have an understanding of how expenses are tracked. Staying disciplined with financials can make or break the first few years. Obviously, continual profitability is the long-term goal, but creating a functioning business is really the focus for year one. Variations in production will be quite different depending on your geographic location and seasonal variance. Monthly budgeting in Florida would not be the same as Minnesota, for example. In northern climates, winter months can create a negative on the profit line depending on company structure, the severity of winter and other factors. None of my companies ever really made profit in winter months, but quickly turned things around in April and May.
There are typically FIVE important numbers for any budget which include:
Gross Income = How much production / revenue was generated
Cost of Goods Sold = What it costs to produce jobs
Net Income = Income / profit before factoring overhead
Expenses = Total overhead
Net Income = Profit after COGS & overhead (but before taxes)
Below is a sample yearly budget showing typical financial information and budgeting for a medium size tree care company:
