Starting a Tree Service Business

[MetroTreeService]

I'm currently looking into starting a tree service and have a few questions. While I'm not new to running a business I'm new to the tree business. I have marketing in place already and generating 4 customer phone calls a day (this can be scaled to receive more phone calls than I need to keep busy). I have a lead site setup to trade business for firewood but see room to expand and start a service. I understand every person is different and every area is different but just looking for ballpark figures from experienced people. I already have some people I can hire with experience to do the actual work but wanted some unbiased opinions. I feel this can be a pretty successful operation because most people in the business in my area are not professional and do not answer all of their phone calls. As far as my questions:

1) What is the average conversion from customer calls to jobs booked? My other business is 1:25 but I'm assuming a tree service being more specific would be much better.

2) What is the average price of a job? I understand a tree trimming might only be a few hundred and a huge tree might be $5-10,000, but looking for an average.

3) Is a budget of $50-100k enough to buy all of the equipment I will need used without cutting corners doing things inefficiently?

4) How much does insurance cost for a new company?

5) What type of profit margins do businesses like this average when run correctly? My other business which is pretty similar setup to tree service does about 20-25% profit, would this be feasible?

 

[climbhightree]

One thing yous should know, it is not a cheap business to be in. I only have one employee, and been in business since 2002. My expenses are 90 plus grand a year (last year 139 grand)...20 grand just in the insurances. All my equipment was bought used (except for a mini skid and new forestry dump).

New chipper looking about 50 grand. Looking at about the same or more for a new truck and forestry body.

I do about 40 percent removals, 3o percent trimming, 30 percent in other odds and ends. I only do tree work, all year around and I keep busy just doing that.

"Kiss My Axe"
Associate degree in forestry from PSU Mont Alto
Certified Arborist
Owner/operator of Climb High Tree Service established in 2002
www.climbhightree.com
https://m.facebook.com/ClimbHighTreeService
https://www.youtube.com/user/climbhightree
https://www.youtube.com/user/2treekiller2

 

[BC WetCoast]

First off expect 100-150% turnover in staff per year. If you can't do the work, that means you will constantly be on the lookout for climbers. Go through the Commercial forum and see the trials and tribulations people have at finding capable crew.

The constant axiom I hear in the business, finding work is easy, finding equipment is easy, finding reliable crew is hard. And that rings true whether you are a one truck start up or a big operation like Bartlett or Davey.

I would estimate we close on 70% of our appointments, which is someone actually on site meeting with the customer. For you it would depend on who is doing your sales. Sounds like you don't have the knowledge or experience to "talk the lingo" to do the sales. You will need a salesman who knows business and can do proper estimates.

The average price per job? Depends on what you sell, who your clientele are, what neighbourhoods you target, what your competition is up to, time of year, general economy etc. Instead of trying to estimate average job price, work on determining your target daily revenue. For us, a 2 man crew should do about $1500 for an 8 hr day regardless of the type of work. That could be 3 $500 prune jobs or 1 $1500 removal.

Your equipment budget will be partially determined by the crew you hire. It is easier to hire bucket operators than climbers, and most climbers can easily learn how to operate buckets. Minimum you will need a chip truck and chipper, along with the miscellaneous small equipment, saws, blowers, rigging gear etc which will run you $5k +. You will also want something as a spare truck to use to haul wood and if your truck breaks down (customers are only so patient when you have equipment breakdowns).

Your profitability is truly dependent on your ability to sell the jobs for what they are worth. That includes being able to estimate the job and then producing it efficiently. Again look at the commercial forum and read the complaints about low pricing. We have some salesmen who's jobs make about 20% profit and others who are about 5%. Again it comes back to things like neighbourhoods, crews (if you run multiple crews, you may find a huge discrepancy in the production between crews - I've seen up to 50%)

This is a tough gig to get into, especially if you don't know the business or how the work is done.

If you want to be really profitable in this business, get into Plant Health Care, spraying and fertilization. 1 guy fertilizing can produce the same revenue as 2.5 people doing tree work, with no risk of property damage or injury.

 

[TheJollyLogger]

I'm on vacation, y'all can have this one.

 

[JRoland]

Curious as to what you mean by, "I have a lead site setup to trade business for firewood"?

 

[Jed1124]

I don't get these threads. Why don't you start a construction co, or carpentry, or a plumbing co, or maybe a electrical co. Let me guess you probably would not consider those, because they are skilled trades! You have no idea how to bid jobs, because you have no idea how to do the job, but you want to run the company? You don't know what equipment to get, how will you conduct the interview to hire employees. You don't know what to ask them.
Arborists are skilled tradesman, you don't become one because you decide to start a company. Drag some brush for crying out loud.
Rant over.

 

[MetroTreeService]

Thank you all that provided valuable feedback. I agree 100% that charging too little will destroy a company. I think it goes for any service business, do something that sets you apart from the competition and charge more than they do and you will not only make more profit but you will get the better clients. Cheap pita customers shop it around to get the best price.

Curious as to what you mean by, "I have a lead site setup to trade business for firewood"?

I specialize in marketing and run a few businesses. I own a large warehouse and set up a tree service website to exchange customer leads to a local tree company in exchange for firewood that I use to heat my building. Every company I have dealt with has been dishonest and screwed me over one way or another. Pretty much all of them have let half of the customer calls go to voicemail.

I don't get these threads. Why don't you start a construction co, or carpentry, or a plumbing co, or maybe a electrical co. Let me guess you probably would not consider those, because they are skilled trades! You have no idea how to bid jobs, because you have no idea how to do the job, but you want to run the company? You don't know what equipment to get, how will you conduct the interview to hire employees. You don't know what to ask them.
Arborists are skilled tradesman, you don't become one because you decide to start a company. Drag some brush for crying out loud.
Rant over.

Like most other successful business owners I will hire someone who specializes in what I need done and learn just enough to hire the right people to do things right. This will not be the first or last time I followed this formula. Take a look at a majority of successful businesses in the country and you will see a similar pattern.

 

[BC WetCoast]

Like most other successful business owners I will hire someone who specializes in what I need done and learn just enough to hire the right people to do things right. This will not be the first or last time I followed this formula. Take a look at a majority of successful businesses in the country and you will see a similar pattern.

This statement I think will be the problem should you fail. Finding the right people seems to be the hardest thing to do in this biz. Unlike a lot of other business, there isn't a lot of skill transfer from other industries to this one. The pool of skilled people is small, there aren't a lot of schools providing apprentice type individuals, so most people start from the bottom at some company. A very inefficient way of increasing the pool of skilled workers.

So to find this individual who is going to run your company, you essentially will need to steal them from another company.

 

[Zale]

There are easier ways to make a dollar than running a tree company. If you get into it, it will not end well for you.

 

[JRoland]

I would think that if you already have "a couple businesses" going in your warehouse it might be more profitable to grow those than to start a new business, which you have no experience in. I agree that it will be hard to find people who can operate your company for wages, the people with skills and experience to run a tree service are doing that already. I also think there's a lot of variables with your questions.
For example,
Question 1: you're going to have to figure out what your new crew is capable of and has equipment for before you start booking jobs. You aren't going to want to book 100% of the jobs you look at there are some you're going to want to walk away from.
Question 2: again, depends on the job. It won't matter what the average is if you end up spending more on it than you charge. I would think a projected profit percentage per job would be a better gauge.
Question 3: again, depends on what you want to do. If you want to have a couple guys that climb and all you need is a truck and chipper for equipment, then do that and put the rest of the $ back in your pocket where it will be safe. If you want to go large, better get some more capital.
Question 4: better talk to your insurance agent. I have a feeling that when you fill out the application and there's the blank for " number of years in business" and the answer is 0 and the blank for " number of years experience" and the answer is also 0 that may be a red flag for the underwriter.
Question 5: I wish I would have answered this one first. If you have a business getting you 25% profit already, why are you starting another one?

 

[jefflovstrom]

 

[Oak Savanna]

Yep! Another "I am gonna start a tree business and make millions". You think the other tree co's were dishonest? Try hiring some one to run it for you when you have no clue and see how that goes! Gonna be tough to get respect from your men if you have never worked in a tree! As far as the tree companies "letting the calls go to voicemail". I have anywhere from 2 to 15 calls a day go to voicemail..... Kinda hard to talk on the phone and run a saw at the same time!

 

[treesmith]

I fancy starting a career in fire fighting, I know nothing about putting out fires but I own a lighter and I can extinguish that pretty easily. I also have limited experience of barbeques. If I start some fires and then watch when the firemen turn up I reckon I could pick it up quickly. Also, how much should I charge and how much would my profit margin be? Can't be too hard

 

[Arclight]

Thank you all that provided valuable feedback. I agree 100% that charging too little will destroy a company. I think it goes for any service business, do something that sets you apart from the competition and charge more than they do and you will not only make more profit but you will get the better clients. Cheap pita customers shop it around to get the best price.

I recommend hiring flirtatious supermodels with chainsaws and have them pose on the work site: Doing nothing will never look so good, and it requires no prior experience to establish.

I fancy starting a career in fire fighting, I know nothing about putting out fires but I own a lighter and I can extinguish that pretty easily. I also have limited experience of barbeques. If I start some fires and then watch when the firemen turn up I reckon I could pick it up quickly. Also, how much should I charge and how much would my profit margin be? Can't be too hard

Your training videos can be 'Backdraft' and 'Fahrenheit 451'.

 

[Wayne Wilkinson]

Backdraft and Fahrenheit 451? YOUTUBE!!!! lol

 

[Del_]

I recommend hiring flirtatious supermodels with chainsaws and have them pose on the work site: Doing nothing will never look so good, and it requires no prior experience to establish.

.......ah yes, supermodels with no prior experience.

That would be a rare bird.