This is the first operator feature in The Blue Collar Founder. Once a month or so, I’ll be sharing another owner’s real numbers, not just my own. My painting company is one data point. Seeing how other trades work is where the real lessons are.
This feature: a landscaping company based in the Carolinas that does both design-and-install work and ongoing maintenance.
The numbers (last full year)
Revenue: $4.2 million
Design and install: $3.7 million (about 88%)
Maintenance: $500,000 (about 12%)
Cost of goods sold: $3.0 million
Gross profit: $1.2 million — about a 29% gross margin
EBITDA: about $450,000 — roughly an 11% EBITDA margin
Marketing spend: less than $5,000
What stands out
1. The margin is slim
A 29% gross margin is well below the 45–50% I target in painting. But these are different businesses. Landscape installation carries heavy material costs: plants, stone, hardscape, soil plus crews and equipment. Every trade has its own margin profile, and comparing across trades only works if you understand what’s inside the cost of each job.
What matters more is what’s left at the bottom. After about $750,000 in operating costs, this business still produces roughly $450,000 in EBITDA on a $4.2 million base.
2. Less than $5,000 on marketing. On $4.2 million in revenue.
That’s about one-tenth of one percent. Nearly all of their work comes from relationships and repeat customers, especially builders and contractors who send them install work again and again.
It’s the same pattern I see in my own business, where every lead in August came from a referral. In the trades, doing good work and being reliable is the marketing.
3. It’s asset-heavy and that cuts both ways.
Landscaping takes trucks, trailers, mowers, skid steers, and a lot of other equipment.
The upside: that equipment is a barrier to entry. Not just anyone can show up and compete on a large install.
The downside: it takes real capital to buy, maintain, and replace, and that cost doesn’t show up in EBITDA. It’s a very different model from my painting company, where subcontractors bring their own equipment and I stay light on assets.
The hard parts
Finding and keeping good people. The same theme comes up in nearly every trade business I talk to.
Cash flow from builder work. A large share of their install revenue comes from builders and contractors. That work can be big and steady, but it often comes with slower payment terms, which means carrying costs for crews and materials before the money comes in.
Seasonality. Landscaping follows the weather. Busy seasons have to carry the slower months.
The five-year plan
The owners plan to keep their design-and-install business strong while pushing harder to grow maintenance, so the company is more balanced.
I think that’s a smart move, for a few reasons:
Maintenance is recurring. Customers on regular service contracts create predictable revenue month after month.
It smooths cash flow. Steady maintenance payments help offset the swings of install projects and builder payment timing.
Buyers value it. When trade businesses sell, recurring revenue is one of the first things buyers look for. It typically makes a company more valuable than the same revenue from one-off projects.
Right now, maintenance is about 12% of their revenue. Growing that share is how a strong install company becomes a more stable, and eventually more sellable business.
My 2 cents
This is a solid business on several fronts. It has real revenue potential, a base of repeat clients that keeps work coming with almost no marketing spend, and equipment that makes it hard for just anyone to compete.
But there are a few things I don’t love.
The margins make me a little nervous. At roughly 29% gross margin, there isn’t a lot of room for error. If revenue dips, things can get tight quickly. Here’s a rough example: if revenue fell 10%, that’s about $120,000 less gross profit. If operating costs stayed about the same, EBITDA would drop from around $450,000 to about $330,000 — more than a 25% hit from a 10% slowdown.
The equipment cuts both ways. It’s a barrier to entry, but it’s also a lot of maintenance, repair, and eventual replacement. Costs that don’t show up in EBITDA but come out of your pocket all the same.
One thing I forgot to ask: how much of their labor is W-2 employees versus 1099 subcontractors. With seasonality, I’d imagine carrying a mostly W-2 crew through the slow months could be tough.
Overall, though, this is a solid business. I can’t hate on someone making $450,000 a year and in control of their own destiny.
And I think they’re spot on with their plan to diversify away from install and build up maintenance. That’s exactly what I’d focus on too.
Zac
P.S. Own a trade business and are willing to open your books for a future feature? Reply and let me know. You can stay anonymous.