How much does it cost to run a lawn mowing business?

How much does it cost to run a lawn mowing business? 

As you probably know, there is no straightforward answer to this question. There are a lot of variables, such as the size and type of business you run. Even the country you work in will make a difference as there are different growing sessions and snow in some places. 

A real-life example.

The best way to give you an example of the actual running costs is to use a real-life test case. I took the figures that we submitted in our business for the last financial year and broke them down. 

This is by no means the be-all and end-all, but it should give you a good idea of where to start when looking at your own figures. 

Things to consider when looking at these figures. 

• Our business is mature, so it has little in the way of plant or vehicle loans. 

• My wife and I were 59 years old and only ran this business for 20 hours a week. 

• We only mow small (ish) lawns and use smaller mowers.

• The area we cover is 13 km long by 7 km wide. 

• The turnover for the year was around $120K. 

• Our business is based in New Zealand

• We had no employees that year. 

Our expenses for the year ending 2021. 

Here I will talk about each area of expenditure and the percentage of income. I will also attach a table at the end to make visualisation easier. This list is in alphabetical order. 

ACC.

$1471 = 1.23% of income

This is a necessary evil. We use the cover plus extra plan, which would give us a set amount of cover for lower premiums if we were to need it. 

Accountant.

$250 = 0.12% of income

Rule number one is always to have a separate bank account for your business and not use it for personal expenses. Pay yourself once a week. This will reduce your accountant fees. 

This would be around $1K for most businesses, but we do most of the work ourselves. Some services like Hnry will do this automatically for you for only 1% of turnover. Last time I checked, they capped fees at $ 1K. 

Advertising

$1360 = 1.13%

The costs are slightly lower here as we are a mature business. A new business should spend around 5% of turnover. You could decrease it by about 0.5% yearly, but I would keep it above 1%. You cannot rely 100% on organic traffic. 

Bank Fees

$143 = 0.12%

Shop around for a good deal when it comes to banks. Fees can be a killer. When we remortgaged and changed banks, we found their deposit fees were really high. 

Because of the sheer amount of weekly deposits, we made our old business account (which didn’t have those fees) our deposit-only account. We now transfer all the funds once a week and avoid the fees. 

Drawings

$78430 = 65.36%

Do remember that taxes have to come out of this amount. My wife and I have a partnership in the business, so we split this 50/50. This reduces the tax bill quite a bit. 

When you start, pay yourself 50% of the turnover once a week on a Friday. 

This will keep things simple, and you can pay your tax bill by taking drawings of that amount when it is due.

The other option would be to set up a tax account and transfer 10% of your turnover into that account so it doesn’t sit in your business account as an available balance. 

Dump Fees

$580 = 0.48%

We have a dump on each side of town. One free and one paid, so you could double that cost. If you only mulch lawns (like most businesses in Auckland), then lucky you. 

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Mower repairs and new equipment. 

$3600 = 3%

We run a few mowers and usually replace a mower and maybe a small piece of equipment yearly. There are also repairs and accessories such as weed eater cord, spark plugs, filters and two-stroke oil in this list as well. 

Fuel

$7846 = 6.54%

One of our highest costs. Rember that we cover an area that is 13 km long by 7 km wide and run two vehicles, so your costs may differ. 

The most effective way to reduce this cost is to sell (or swap) lawns on the peripherals of your area. This reduces travel and will cut fuel costs and increase profit simultaneously.

GST (Goods and Services Tax)

$10753 = 8.96%

This is basically a sales tax. In other countries, it has different names; in some countries, there can even be state taxes. 

Here in New Zealand, you must register for GST once you hit the threshold of $60K at the time of writing. Many people need to realise that you can be liable if you intend to make over the threshold. 

Quote from IRD

“Whether you’re a sole trader, contractor, in a partnership or a company, as soon as you think you’ll earn more than $60,000 in 12 months, you must register for GST. You may be charged penalties if you don’t register when you need to.”

My advice is to hold off registering until you are confident your business will push past the threshold. Many people make the mistake of registering when they start their business to claim some money back on their equipment. This will cost you more money in the long run. 

If you spend 25K on your set-up and claim a GST refund, you will receive around 3.2k back. 

The amount of GST you will have paid when you finally hit the threshold is almost 5.5k. (after claiming 9% back in expenses) 

I will leave you to do the sums on that one. 

Insurance

$3918 = 3.25%

This is a general insurance, including public liability. I suggest going through a broker for the best deal. Make sure you read the policies carefully. 

Try to get a free vehicle glass replacement addon if you can. It could come in handy. I have broken a few windows in the last 30 years. 

Phone

$995 = 0.83%

Just one thing here. Always answer your phone. You would be amazed how many contractors dont answer their phones. We get their quotes because we do. 

Safety Equipment

$406 = 0.34%

Boots, earmuffs, safety glasses etc. 

Admin

$820 = 0.68%

Printing, subscriptions, power and software

Plant Finance

$630 = 0.53%

This is the tail end of our vehicle finance. 

If you are paying off a vehicle, you may be around the $5200 mark. 

Vehicle Costs

$1633 = 1.36%

Repairs, regos WOFs etc. 

The total costs.

I have always aimed to keep my total operating costs under 40% of turnover. The idea is to run a lean, efficient business that allows you to keep 60% of turnover for yourself. 

Below is a table you may want to duplicate with your figures. 

Income	$120,000.00
ACC	$1,474.00	1.23%
Accountant	$250.00	0.21%
Advertising	$1,360.00	1.13%
Bank Fees	$143.00	0.12%
Drawings	$78,430.00	65.36%
Dump fees	$580.00	0.48%
New Equipment, Maintenance Repairs	$3,600.00	3.00%
Fuel	$7,846.00	6.54%
GST	$10,753.00	8.96%
Insurance	$3,918.00	3.27%
Phone	$995.00	0.83%
Safety	$406.00	0.34%
Software admin	$820.00	0.68%
Plant APS	$630.00	0.53%
Vehicle costs	$1,633.00	1.36%

I hope this helps you with your lawn mowing journey. 

If you want more help, you can always join our membership, where we help people build successful lawn-mowing businesses and make more profit every year while working less