Starting a tree cutting business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful tree cutting business.
Importantly, a critical step in starting a tree cutting business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Tree Cutting Business:
- Choose the Name for Your Tree Cutting Business
- Develop Your Tree Cutting Business Plan
- Choose the Legal Structure for Your Tree Cutting Business
- Secure Startup Funding for Your Tree Cutting Business (If Needed)
- Secure a Location for Your Business
- Register Your Tree Cutting Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Tree Cutting Business
- Buy or Lease the Right Tree Cutting Business Equipment
- Develop Your Tree Cutting Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Tree Cutting Business
- Open for Business
1. Choose the Name for Your Tree Cutting Business
The first step to starting your own tree service business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your tree cutting business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your tree cutting business.
2. Develop Your Tree Cutting Business Plan
One of the most important steps in starting a tree maintenance business is to develop your tree service business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
The following are the components of a business plan:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your tree service business.
- Company Overview – this section tells the reader about the history of your tree cutting business and what type of tree cutting business you operate. For example, are you a commercial tree cutting business, residential tree cutting business, arborist service, or a logging company?
- Industry Analysis – here you will document key information about the tree cutting industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products or services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your tree care business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your tree cutting business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Tree Cutting Business
Next you need to choose a legal structure for your tree cutting business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
2) Partnerships
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start a tree service business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a tree cutting business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a tree cutting business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your own business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Tree Cutting Business (If Needed)
In developing your tree care service business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a tree cutting business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a tree cutting business that they believe has high potential for growth.
5. Secure a Location for Your Business
To find a location for your tree cutting business, you’ll want to consider a few factors:
- The availability of trees in the area
- The zoning regulations for businesses in the area
- The proximity to other businesses
- The cost of leasing or purchasing property in the area
- The ease of access to the site
- The area’s safety
- The distance from residential properties
6. Register Your Tree Cutting Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your tree cutting business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your tree trimming business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
The licensing requirements you need to start a tree cutting business will vary depending on your location. You may need a business license, a tax identification number, a permit to operate a business in your area, and a license to cut trees. Contact your local government office for more information.
10. Get Business Insurance for Your Tree Cutting Business
The type of insurance you need to operate a tree service company depends on the tree services you offer. For instance, if you transport cut trees, you’ll need auto insurance for your vehicle, whereas if your services only include tree cutting, you may not need this type of insurance.
Some business insurance policies you should consider for your tree cutting business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Tree Cutting Business Equipment
If you’re looking to start a tree cutting business, you’ll need some basic equipment. You will need a chainsaw, safety gear, and a sturdy ladder. You may also need a truck or SUV to transport the logs.
12. Develop Your Tree Cutting Business Marketing Materials
Marketing materials will be required to attract and retain customers to your tree cutting business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your tree cutting business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional tree cutting business website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your own website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your tree cutting business.
13. Purchase and Setup the Software Needed to Run Your Tree Cutting Business
To run a tree cutting business, you will need some basic software, such as a word processing program and a spreadsheet program. You may want to use forestry software, which can help you track your trees and logs. Additionally, you may want to invest in software to manage your finances, scheduling, and customers.
14. Open for Business
You are now ready to open your tree cutting business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Tree Cutting Business FAQs
Is it hard to start a tree cutting business?
No, it is not hard to start a tree cutting business. You just need a good business plan, some industry knowledge, and the right equipment. It takes some time and effort to make it successful, but with some careful planning and effort, you should be able to start your tree cutting business without too much difficulty.
How can I start a tree cutting business with no experience?
The best way to start a tree cutting business with no experience is to do some research and find a reputable tree cutting company to help you. You can also check with your local municipality to see if they offer programs for new businesses, or look for an expert in the industry who can help you get started.
What type of tree cutting business is most profitable?
The most profitable type of tree cutting business is one that specializes in large, commercial projects. These businesses can charge more for their services, and they typically have the resources and expertise to complete large-scale jobs quickly and efficiently.
How much does it cost to start a tree cutting business?
Generally, startup costs for a tree cutting business will be between $10,000 - $50,000. This includes the cost of tools, equipment, and trucks. A minimum amount of insurance will also be required.
What are the ongoing expenses for a tree cutting business?
The ongoing expenses for a tree removal business can vary depending on the size of the business, the location, and the services offered. However, some of the most common expenses include online advertising and marketing, equipment and tools, insurance, highly trained tree crew salaries, and fuel expenses.
How does a tree cutting business make money?
Tree service providers can make money by charging a fee for cutting down trees, hauling away wood, and by selling the cut wood to a third party. The business can also make money by providing other services, such as stump removal or tree trimming.
Is owning a tree cutting business profitable?
Yes, because the demand for tree removal services tends to be high, as most people only hire a professional when they need to remove a large or dangerous tree. There is also a lot of stability for tree service companies, as tree cutting and related services will likely always be needed.
Why do tree cutting businesses fail?
One of the most common reasons tree service businesses fail is a lack of planning. Other reasons include a failure to manage money and resources correctly, not having the right equipment, and not marketing or advertising their services properly.
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