How to Start a Stump Grinding Business

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Quick Reference

Are you experienced with using heavy tools and like working outdoors? If you have experience working in a tree trimming business but don’t want to start a tree trimming business and face tough competition and high liability, you might consider a more niche business like stump grinding.

Business Overview

Often, when trees die or become a problem in a yard, such as hitting utility lines, the trees are cut down, but the extra step to remove the tree stump is not taken. Most homeowners don’t have the equipment to remove stumps from trees or large bushes but want to get them out of the way. A stump grinding business will have the right tools and labor to remove stumps quickly and easily.

Industry Summary

According to IBIS World, tree trimming as a whole is a $21 billion industry and has grown 7.7% per year from 2015-2020. Stump grinding is a part of some tree trimming businesses, but not all, and homeowners often just need to remove an old stump to get it out of the way of landscaping or a patio installation.

 

Industry Trends

Outdoor living is a large part of people’s lives at home, and they want to invest in their outdoor spaces so that they provide maximum enjoyment. Old stumps are an eyesore, or they get in the way of mowing and can be a trip hazard. It’s a service that will always be in demand, but it is subject to market volatility. It is not always a necessary service for consumers, so in economic downturns, when people don’t have as much cash on hand, they will overlook stump removal to save money.

Target Market

Target customers for a stump grinding business include homeowners, realtors, architects, and construction companies that are clearing land for building. Homeowners in more established areas are more likely to have stump removal needs.

Skills, Experience, and Education Useful in Running a Stump Grinding Business

There are only a few skills required to run a stump grinding business.

  • Stump grinding experience. While stump grinding is easy to learn, it’s best to have some experience to show your credibility when talking to potential customers.
  • Business knowledge and experience. You will need to have some basic knowledge of marketing, contracts, finance/accounting, and human resources.
  • Sales. You have to be able to make a sales pitch when you meet potential customers.
  • Customer service. You’ll need to be able to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.

Costs to Start a Stump Grinding Business

The costs to start a stump grinding business are mainly for equipment, but here are some others.

  • Setting up a business name and corporation costs approximately $200.
  • Business cards, brochures, postcards for marketing $200 – $300
  • Website setup $100 – 200 for a basic, do it yourself website, $1,000- $2,000 for a professional site
  • Stump Grinder $6,000+ used or $15,000+ new
  • Chain saw and clean up equipment such as a blower $300 – $1,000
  • Safety equipment (face shield or glasses, gloves, hearing protection, etc.) $100 – $200
  • Van or truck with a trailer for equipment $10,000 +

Steps to Starting a Stump Grinding Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your stump grinding business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect stump grinding business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

You don’t need a shop to have a stump removal business. You just need a place to store your tools and equipment, and many start out of their garage. You’ll also need to choose a service area, depending on how far you want to travel to work.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

You may need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Some common local, state, and federal registrations a stump grinding business may need include a sales tax permit and an Employer Identification Number if you plan to hire employees.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a stump grinding business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Startup costs for a stump grinding business are mainly for equipment and a truck and trailer, so if you already have any of those things, you are ahead of the game.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A stump grinding business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a stump grinding business include social media marketing, ads on Craigslist, print advertising, direct mail advertising, and coupons or special promotions. Developing a website can be a significant expense, but it can also give your stump grinding business greater visibility online.

Related: Low-cost ideas to market a new business

Step 9: Get Insurance

A stump grinding business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Property and casualty insurance protects you if your equipment is damaged.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need employees to help you run the stump grinding business as you grow your customer base.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

RelatedHiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your stump grinding business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Stump Grinding Business?

Stump grinding businesses typically price their services one of two ways. The first way is to visit the property and estimate the time it would take to do the job, travel, site conditions, etc. Another method is to measure the diameter of the stump at its widest point and charge a set dollar amount per inch. With either method, most businesses will have a minimum charge to cover travel expenses and make it worth their time.

Consumers generally pay between $100 – $400 for stump grinding and removal, depending on the size. If you can build your customer base successfully and average 4 stumps removed per week at an average of $200, and you work 32 weeks out of the year, annual revenues in this scenario would reach $25,600. The key is to get as much volume as possible and work whenever weather permits.

Stump grinding is a business that may not make a lot of money by itself because of the costly capital equipment needed to get the job done. It can be a good way to make some additional income, but this service is often better to add along with other services such as lawn care, tree trimming, etc., since the customer base is typically the same.

Things to Consider Before Starting a Stump Grinding Business

Running a stump grinding or stump removal service will have its challenges. You need to be prepared and make sure that you know what you’re getting into.

The first consideration is the cost to get your equipment to get started. You’re going to need to work enough to recover your money, and if you don’t, you’re taking a loss. To do this, you will need to market yourself successfully and try to network with realtors or people in the construction industry to grow your business.

Second, your business will be seasonal, depending on where you are located. You can’t grind stumps in the ice and snow, so you won’t be working much or at all during certain times of the year.

Operator safety is important due to the safety hazards of the equipment. Be sure to keep your body and ears protected as the machine is loud and will kick up wood chips, rock, etc.

Cleanup and disposal of debris is often the most time-consuming part of the job, and many operators don’t price themselves accordingly for their time. A higher price is always justified, but if the homeowner is price conscious, you can offer to let them clear the debris instead.

When evaluating your costs and pricing, be sure to add in maintenance costs such as oil changes, hydraulic fluid changes, and blade replacement. A set of teeth can cost $100 + and last for a few months before needing to be sharpened.

Talk to other business owners for tips on starting a business and do your homework to determine costs. Find some other stump grinding businesses online (not your competition) and try to talk to the owners about how they run things and what they offer.

Resources:
Tree Care Industry Association

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