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6

Funding your business –
starting up and running strong

Chapter

Find the money you need to get your business
off the ground, it make surprise you.

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Okay it's time to start talking serious scratch.

It's time to really get down into the details about how much money you need to start your business and how much you need to make to reach our $5,000 per month income.

After all, for all of the reasons you want to start a lawn care business – freedom from the corporate grind, the option to choose your own destiny, a way to improve yourself, to be your own boss and more… it's also about the cash, isn't it?

You know – the coin, skrilla, green backs, frog skins, bread, dough, the jingle, a bit of the folding… you get the idea. They say money doesn't grow on trees but it certainly grows in your neighbor's front lawn!

So in this chapter of the blueprint, we're going to talk about two things.

How many lawn care customers and cuts you need to hit your monthly income mark, and several options for you to raise the $25,000 or so that we've been discussing all along.

How many lawn care customers and cuts you need to hit your monthly income mark, and several options for you to raise the $25,000 or so that we've been discussing all along.

Now that we've gone over some things such as average price per cut, expenses and taxes, you know that in order to take home $5K each month, you need to generate more than that in gross revenue in your business. Exactly how much is hard to say. That's going to depend on what you charge, how often you work and so on.

This is just a guideline and you'll have to adjust as you go. Let's take a look at a good example, though.

It's a numbers game

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Before we talked about an average of $35 per cut, The fact is, though, that you're probably never going to have those numbers work out that perfectly.

Unless you're in one of the southernmost states – Arizona, New Mexico, Texas, Louisiana, Mississippi, Alabama or Georgia – seen in red or orange on this map... then you probably won't be cutting grass 12 months out of the year and more like 9 months.

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Even in Florida, where lawn care is a 12 month business, you generally only cut the customers' lawns twice a month from about the end of November to the end of March.

Don't worry... We will teach you have to upsell additional services to keep you busy all year round

Another thing is that not every lawn is going to be a $35 cut. You might have a smaller property that you only charge $25 for, or you might have a 1 acre customer that you charge $75 per cut and so on. You'll find that you give different prices all over the spectrum. Even two lawns the same size may not be the same price. If one lawn has a lot of planters and flower beds and edges that need trimming, you might charge a bit more.

In order to keep things simple, though, let's go with these numbers:

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So each customer is now giving you 32 cuts per year for a total revenue of $1,120.

4 cuts per month X 9 months = 36 cuts

So now it's just a matter of figuring out how many customers you need at this price to get you to that $60,000 paycheck.

In order to figure that out, we also need to know a few other things. We need to know what amount of taxes the company has to pay for you and what your expenses are. We then add that to the $60K number and get your total gross revenue.

Okay, so let's start with taxes. We all have to pay 3 types of taxes: social security and Medicare, income and unemployment. Each one is different and is calculated differently.

Let me break this down for you...

First, there's unemployment. This is actually a pretty small amount of money and only comes out to a couple of hundred bucks per year, so we'll just ignore that one for now. The calculation is a little weird and your accountant will handle it for you. But it's a small amount and not really a bother for us now.

Then there's social security and Medicare. This set of taxes is fairly simple. It's 15.3% of your annual gross income. Now what's tricky here is that when you're working at a job, the job pays half of this for you. As a self-employed person or somebody who owns an LLC, you pay all of it.

So what this means is that if you take 15% of $60K, you have to pay the IRS $9,000. The nice part for you is that half of that is paid by the company, and the other half is paid by you. Yeah, I know you're paying it all, but it affects how you calculate taxes.

Now if we really wanted to get crazy, we'd figure out how much you needed to pay to actually end up with $60K to spend. For now though, we're just going to treat your $5K a month or $60K per year just as if you were working for that salary for some company.

As for income tax, that all comes from your paycheck. If you're making $60,000 per year, your income tax bill using the tax rates at the time of this writing will be something like $9,000.

So, even though you're paying yourself $60,000 a year, when you add up social security and income tax, you have to pay out $13,500 which leaves you with $46,500 in net income.

Of course, there's some things we haven't taken into account yet.

  • Remember the home office deduction?

  • Then there's the $400 free annual bonus you pay yourself.

  • In our example in the last chapter, we talked about a $1,600 deduction for the home office and utilities.

  • Add that bonus and your taxable income goes down to $58 – yet you still got the $60,000.

Basically you just added $2,000 to your net income.

Not bad, right?

Okay, so where are we right now – you need $64,500 in order to pay yourself a salary of $60K.

$60,000 + $4,500 social tax paid by the company.

Okay, now let's look at expenses. What will these be? I have no idea, but we can do a little guessing. Assuming that you took out a loan of $25,000 to get started, you'll probably have a monthly payment of something like $600 or so – based on a 5 year loan at a little over 7%.

Then there are regular expenses like gas for the truck and the equipment, oil and parts. Let's just say that comes out to about $400 per month – probably high, but we'll just use these numbers for simplicity.

Okay, so where are you now:

  • $64,500 salary

  • $12,000 annual operating costs

  • Total revenue:

    $76,500

So now all we have to do is divide that number by our annual per customer income, and we get:

$76,500 / $1,120 = 68

Well, for one, it means that in the 7 months where you're cutting their lawns every week, you're cutting 68 lawns per week.

If it takes you an average of a half hour to do 1 lawn, you're mowing and trimming and edging and blowing for 34 hours a week. On the slower months, you're working only 17 hours per week.

But of course nothing works quite that perfectly. So let's add a little driving time. In the busy months, we'll say you're putting in 50 hours per week and in the slower months, 23. Not bad, really, is it?

And hell – for 3 months out of the year, you aren't working at all, are you?

On the other hand, in the next chapter where we talk about some extra services you can provide, you could still work part time during those months and maybe add $10 or $12 grand to your income without having to work so hard. Kind of exciting when you think about it, really

.

Okay, so let's turn to something that's probably been weighing on your mind for this entire blueprint – where in the hell you're going to get $25,000 to start your company!

Finding the dough to make the bread

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Believe it or not, there are lots of places to find cash.
Especially a measly $25K. I know that to some that might seem like a big chunk of cash – but it's all in how you look at it. Here are some ideas for where you can look:

  • Your bank

  • Credit union

  • Online lenders

  • Credit cards

  • Family

  • Equity in your home

  • Any kind of retirement plan – 401K or IRA

  • Savings

  • Starting a GoFundMe Campaign

  • Blood, sweat and tears

I'm not going to bore you with all of these. Some may or may not apply to you but at least a couple of them will. Some will require pretty good credit and some won't. Some will cost you more per month than others, etc.

Let's examine a couple of these options in more detail, though…

Your bank or credit union

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All banks and credit unions offer personal loans.

Some offer business loans as well. Generally, you're going to find short terms like 5 years or less and interest rates ranging from 5 to 10 percent.

I kind of based my $600 monthly payment above on a 5 year loan at about 7.5% interest for $25,000.

What's nice about this method is that you get one loan that covers it all.

Remember, this $25K loan covers your truck, trailer, mower, trimming gear, safety gear, business setup costs, marketing for your first 25 customers and minor stuff like business cards, shirts and the like.

One loan is better than several, because it's easier to pay and every loan you get makes getting another that much harder.

Now... what will the bank or credit union require in terms of a credit score?

Hard to say, they all have their own set of rules. Often, it's a combination of the score and whether or not you've got a credit history and whether that history shows that you've made installment payments.

You may have a credit card or two but not an installment loan, which could hurt you. Installment loans are loans like a mortgage or a car loan. Don't' be afraid to go to 5 or 6 different banks. If you're applying for the same type of loan in a short amount of time, your credit report won't take much of a hit because of the inquiries. The credit reporting companies understand that you're shopping around for the best loan.

Getting Started with Credit Cards

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Yeah, they'll charge a lot of interest, but if you've got enough space on your cards, this can be one of the simplest and easiest way to get going.

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A warning here, though. Unlike applying for multiple installment loans, applying for a bunch of cards will negatively affect your credit score in terms of the number of inquiries.

The reason is simple – if you get 6 inquiries in 2 weeks on your credit report from car dealers, mortgage companies or banks – it's understood that you aren't going to open 6 loans. You're just shopping and that's taken into account and treated as a single inquiry which hits your score for like 5 points.

No big deal.

On the other hand, if you're applying for 6 credit cards, then it's entirely possible you'll open 6 credit cards and that counts as 6 inquiries. After all, each new account you open puts the others in jeopardy, in theory.

Yeah, credit is a crazy messed up game.

Considering Online Lenders to get rolling

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Now there are online banks like Avant who are sort of like those buy here, pay here car dealers. You know, they'll give you a loan, but it's at like 25% interest.

For instance, Avant might lend you $25K at 28% interest for 5 years with monthly payments of $800.

It's high… but then again, if it gets you off the ground… and you can pay it for a while… it could be worth it.

Suppose you have this $800 monthly payment and another $300 in expenses. Okay, then you know you need to mow 36 lawns in order to break even. That's only 9 or 10 customers. Is that doable in the first 30-45 days of your business?

You bet!

Getting started with sheer hustle ,
blood , sweat , and tears

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Let's suppose that nothing works for you.

You don't have credit, nobody will give you a loan, except maybe the truck dealer, no friends or family have any bread or won't give you any, you have no savings and even the high interest online guys won't cut you a break.

What do you do then?

Well, this is where the men are truly separated from the boys… or the women from the girls. You may have to start with minimal equipment and resources and slowly build your business up until it starts giving you enough cash to fund better gear.

I've seen this done. I know several White greenpal logo b747d864caca986b91b7ec4c361e30b7ca94257b78088ffb0f1b7f77863c8f28users who have started this way with nothing more than their own lawn mowers and trimming gear and their personal vehicle. One of these was a single mom in Georgia who now has a thriving business with several crews working for her.

Think I'm joking?

Check this lady out, pretty impressive

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At a minimum, you're going to still need to print business cards, register your business and get some door hangers. If you don't have $500 to $1,000 for this… I have to be honest, you're probably not going to make it.

I don't mean to be a downer, but there just comes a point when you've got to have something to get started. If you don't, that means that something has to be changed in your life. Maybe you need to work more hours at your current job or get a second job for a few months to save some money and pay some things off. Maybe you could sacrifice a little for a couple of months and save the $1,000 you might need to get off the ground. The good news is.. GreenPal is free to join.. so there is no excuses to getting started.

It all comes down to how determined you are and how bad you want to change your life. Because if you're in this category, then something isn't working for you.

Your job isn't paying you enough and you're probably never going to get out of the rat race until you do something dramatic. I know it can be tough – but if you want this bad enough, you'll find a way.

Fixing your credit

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Now this blueprint isn't a guide to personal finance.

You can actually find quite a lot about that online for free if you need to. Yet I know that for many folks looking to get started, poor or no credit can be the one thing holding them back.

So here are a couple of tips you can use to improve your credit rating and get yourself closer to that $25K loan that's going to skyrocket your business.

Let's say you have no credit:

In order to even have a FICO credit score, you've got to have at least 2 accounts open to generate a score. Even if you have a single credit card and you pay it on time, you won't have a score.

So you need at least 2 accounts in good standing. You can get a small department store or gas credit card. You can also go to one of the big credit card companies like CapitalOne and get a secured credit card.

Basically, you give them a few hundred bucks and then they give you a card with that amount on it. You use the card and pay it off just like a regular card. After a time, this gets reported to the credit agencies and it begins to push your score up. In time you can either close this card or ask to have it moved over to an unsecured card and get your money back.

One nice thing about CapitalOne is that if you want a $300 credit card, you may not need to give them $300. It could be half that much or even as little as $50. So check into that.

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Bad credit:

This is going to take some work and some time, but you really can improve your credit score. Here is a list of things that negatively affect your score:

  • Utilization – The ratio of what you owe to what your limits are. Put extra money on your debts until the amount you owe is about 30% of the limit – say a balance of $300 on a credit card with a $1,000 limit.

  • Length of time accounts have been open. The longer your accounts are open the better, especially if they're in good standing.

  • Payment history. Make those payments on time!

  • Too many accounts. If you've got a lot of credit cards open, you appear risky to a new lender. Try closing a few down and keep just 2.

  • Charged off accounts. You failed to pay a credit card, for example, and they closed you. Not much you can do here. You can settle the bill or wait for 7 years and they'll disappear on their own.

  • Too many inquiries. Try to avoid applying for a lot of different things. The fewer times your credit score is pulled the better.

Again, there are a lot of resources online on this topic. But the most critical one is you. If you've damaged your credit, then only hard work and time will repair it.

Be creative, because with hard work, perseverance and time, you truly can create a successful lawn care company that pays you $5,000 each month.

Worst case scenario…

You get a push mower, save every dime you make mowing some neighbors' lawns… stay at your current job a little longer, and slowly cash flow your way into some real equipment.

This may take a couple of lawn mowing seasons to get some momentum rolling, however there is nothing stopping you.

Chapter Review

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Your best bet for getting started on the right foot is to find the $25,000 or so in capital to launch your company. It can be done the hard way, and if that's your only option, then go for it. There's few things in life as satisfying as being a successful underdog.

Get creative in your search for funds.

Try banks and credit unions, friends and family, online lenders or even a Go Fund Me campaign. If your credit is poor or non-existent, take a little time and do what you can to boost that score. It'll help you now and in the future of your business.

One more thing – create your own blueprint. Use this guide and come up with a plan of action.

When you go to ask someone to invest in you, showing them your step by step plan will help you persuade them that you're worth the risk.

In the next chapter, we'll explore a few ideas on how to add additional services to Mean Green to keep money flowing in even in the coldest of winters!