Your landscaping business’ financial well-being is extremely important – just as so many other elements of your business are. We know you have to juggle the weight of financial responsibility, along with the daily ins and outs of tackling big projects and keeping your clients’ lawns in tip-top shape.
This blog is about how you can use a fantastic system for your lawn care bookkeeping and managing your finances without dropping every other responsibility.
Like any new system, there are some important to-dos before you can fully implement Profit First for your landscaping business. But the key to beginning your Profit First journey is to start small.
Maybe you’ve seen the profit assessment that Mike Michalowicz outlines in his book. Doing this requires you to gather some business documents like your profit and loss statements, tax returns, and balance sheets from the previous year to calculate your business’s cash flow.
The profit assessment is a helpful tool, but it’s not a prerequisite to using Profit First. If you’re overwhelmed by the time needed to complete the assessment, skip over it for now and come back when you can.
It’s much more important to get your business’ finances on their feet than to hammer out every last detail. The beginning is for just doing what you can.
Here’s what you really need to do to start with Profit First for landscapers.
Open five separate bank accounts.
This might be a surprise since most small businesses only have one bank account. Opening five bank accounts doesn’t have to be an exhausting endeavor, even if it seems that way at first glance.
Here’s a simple breakdown of how to open and use these accounts:
Your original bank account that held all of your incoming and outgoing cash in the past becomes your Operating account – or OpEx for short. These are the expenses that “keep the lights on.” Such things include gas for vehicles, equipment costs, rent, monthly bills, etc.
Next, open your Income account. Say goodbye to the days of depositing customer payments and then watching that money go down the drain as you use it to pay your bills, payroll, and other expenses. This account is a holding place for customer payments, and that’s it. This money won’t be touched until it’s been intentionally moved to its appropriate place.
Once these two accounts are established, you can simply move forward by determining what percentage of your business’s cash needs to be moved into the remaining three accounts: Owner’s Pay, Profit, or Taxes. These percentages do not have to be perfect, especially at the beginning! You can start by simply putting 1% of your income into your accounts for:
- Owner’s Pay
Put the remainder of your finances into Operating Expenses and build out your percentages from there.
Profit First for landscapers is built to be flexible – it can grow with you, and it allows you to scale back when things need to be a bit tighter. Start microscopically, with 1% in three of those five accounts. When you can, start doing some more basic math to determine roughly what percentage of your income needs to go into your accounts and adjust accordingly.
We’re not telling you not to sweat the percentages and particulars because they don’t matter – as accountants, we of all people, care deeply about the specifics of your business’s financial situation! But what matters most is creating the habit and building this new muscle of handling and thinking about your lawn care bookkeeping differently. Start there, and the rest will come.
If you want insight and help throughout the process, we’d love to help. Schedule a call with AccountSolve today and our Profit First professionals will walk you through it!