Tanner Larsson, author of Cashing in On Christmas - How to Have Your Very Own Christmas Light Installation Business, shares his tips and advice about how to start a holiday lighting installation business. He reveals insider information about buying the right lights, equipment, and more. [21 min.]
To learn more about his Christmas Light Installation book, click here.
Tanner, you’ve been in this business quite awhile. Give us an overview of how the Christmas light installation business works.
The Christmas light business has a couple different names, it’s also called holiday lighting or Christmas lighting. It is a service that you provide to customers, both residential and commercial, to install Christmas lights and holiday decorations on their home or business. You’re basically just saving them time by doing all the installation and design work yourself. It’s a luxury service for those people who don’t want to waste time or don’t have the time to install their own decorations.
I’ll ask the question everyone wants to know: how much money can you make doing this?
It depends upon how you run your business, how you structure it, and the aggressiveness with which you market and promote yourself, because really with any business it comes down to marketing and converting prospects into customers. However, the average earnings for someone in the Christmas light business, first-year earnings for someone that I’ve trained, basically earn a minimum of about $50,000 their first year. And I have many, many students who have gone over $100,000 in their first year. And by first year I really only mean 60 or 70 days of work, because it is a seasonal business, so they’re only working a limited amount of time. So even on the low end, $50,000 in 60 days is not bad. A single person doing it by himself with no help or employees might make a little bit less than that. But if you put together a decent crew of a couple people, then you could easily earn between 50 and a 100 grand.
What kind of demand is there for this service? How many people can afford to pay someone to put up their holiday lighting?
When I first started it just shocked me how expensive I thought the service was, yet how many people were just clamoring over everybody else to pay for it and just give you their money. A couple factual numbers here: 80 million homes last year were decorated nationwide using holiday decorating services. That was just last year alone, and the industry has been growing by an average of 35% a year. So just in terms of industry and market growth it’s a huge, huge thing. The demand is phenomenal. Most professional installers that I know, including myself, wind up turning away business every single year because we just can’t keep up with demand. You have to turn away customer after customer after customer, even if they’re real high paying jobs because you just physically can’t do any more work, you can’t get any more crews, you’re just swamped.
What about commercial holiday lighting installation? Is here a high demand for that?
Yes, residential is actually the easiest market to get into, just like with most businesses. Residential services are fairly easy to sell because you can get access to homeowners much easier than you can get access to business owners. However, the commercial side of Christmas lighting is very big as well, mainly because holiday decorations and Christmas cheer and the whole thing is all tied together with increasing holiday sales. The whole point of a business during the holidays is to increase their sales, make themselves stand out from their competitors, and really drive the foot traffic to their storefronts or locations, so they can increase their revenue during the Christmas season. A well-designed Christmas display, whether it’s themed for Christmas or just a general holiday design, has been proven to increase conversions and foot traffic by upwards of 30% in terms of a store without versus a store with decorations. It’s just definitely a lot more friendly and people who are in a decorated atmosphere, in a Christmas atmosphere, typically have looser wallets. They’re willing to spend more because they get caught up in the whole theme of it. Almost 45% of our business comes straight from commercial. We actually are targeting commercial more specially now because it’s just a phenomenally lucrative opportunity.
Tanner, walk me through the typical steps involved in installing Christmas lights.
Well, the first thing is obviously finding a prospect. Once someone calls you or you find them, they’re interested in doing a job, you come out and you give them a bid on their property based on what they want or what you think would look good, and you kind of talk them through the different things. Then the next step would be to come out and actually do the install on whatever date they choose. This is where the professionals and the amateurs are really sorted out because professionals use a pro-temp method which is a professional, yet temporary and a very non-intrusive, non-invasive installation technique for almost all their installs, that basically leaves the property looking the way it was when you started. Throughout the season you can barely see the lights until they’re on. They’re not an eyesore, it’s very clean, neat, and tidy. There aren’t cords running everywhere. Just a very tight, professional install. And then after the installation, depending on how your business runs, you may go into a service contract where you may service the lights during the season. So if a bulb goes out, you come out and fix it, and then typically at the end of the season you also come back and take down the lights and either store them for the customer or package them up and box them so the customer can store them themselves.
Can you run a holiday light installation business like this by yourself without employees?
Yes, you can. You’re just limited by how much you can grow at that point. On average, a one-person crew can do maybe two small jobs a day or one average-sized job a day, which is still good. The average Christmas light installation job is about $1,200-$1,300, the industry average is $1,386, I think. But even if you say $1,200 or a thousand dollars a day, if you worked six days then you made six grand that week by yourself. It is easy to run by yourself and if you want to keep to more of a small-scale — just extra money at Christmas time — that’s a great thing to do. However, if you want to tackle bigger jobs you’re probably going to need to put a crew together. But you know, a crew could be no more than four, but as little as just one extra person. One extra person helping you on a crew will double your output volume for the day. So if you’re making $1,000 by yourself, you could be making $2,000 or $2,500 with somebody else.
What are the best ways to get the skills you need for a holiday lighting installation? Are there courses or training programs that you know of, and do you even need any formal training?
You know, it’s a service business that’s based on basic skills. You don’t need a degree, you don’t need any fancy high-tech training. The most complicated stuff you’ll have to deal with is the bidding aspect, and that’s not even complicated once you learn or have someone train you on how to do that. Because there is a wrong way to bid a job, and if you do it wrong you’re going to put yourself out of business. And the other thing would be the electrical calculations, because you are dealing with electricity and you need to make sure you’re not overloading circuits or blowing bulbs or fuses or causing a fire hazard to your customer’s property. But again these are all very, very basic skills that anybody can learn. I don’t recommend people just going out there, picking up some lights, and start installing them. I think you do need some kind of training, because the learning curve while not super-complicated, is rather steep, and if you don’t know what’s going on and you don’t have a good grasp of how the business works before you get into it, you’re going to cost yourself money. You might have a lawsuit. It’s just not worth the risk. Yet there’s all kinds of opportunities out there to start a business like this. There’s franchises, there’s licensee programs, there’s even business training courses for $7,000-$8,000 that you can do, and then there’s also home-study courses and kits and business guides that you can buy. My Cashing in on Christmas program is a prime example of that. It’s basically a home-study course but it’s also a turn-key business at the same time. It provides you everything you need to start your own Christmas light business from A-to-Z. There are a lot of pros and cons of each thing depending on what you want to do. A franchise is great, but you have to pay out a lot of money for them. Licensees might be good, too, but you get limited by zip code just like with a franchise. It just depends on what you’re doing, but there are many different ways you could start a business. But the biggest piece of advice I can give is definitely get some form of information and educate yourself before diving into a business.
Outline for us the kind of equipment you will need to hang Christmas lights safely. I mean, is it as easy as just going down to the local Wal-Mart or Target and buying a ladder and a few strands of lights?
For your basic tools, ladders and such, you can get by with that kind of stuff, but with your light strands, your light bulbs, your actual installation materials that you’re going to be doing to decorate a property, there’s a specific kind of light you want to use. The lights that are available at most retail stores are a low-grade residential use light, they use very, very low-grade wire, very poor insulation, and they’re very high fire risk. These are not the kind of lights you ever want to use on a commercial installation or residential installation job that you are being paid to install. The liability is huge. If you’re insured by an insurance company for your liability insurance and they know you’re installing lights like this they won’t cover you. There’s a complete difference between commercial-grade quality lights and the lights you can buy at a retail store. You’ll find a lot of fly-by-night installers and handymen who say, “I’ll buy you the lights, and then you come and install them” and they’re buying these really cheap lights that don’t last and they have a very low bulb life, and they’re a very, very high fire risk. That’s why you never find a professional installer that buys lights like that. They all get commercial grade from a distributor, or either someone who manufactures them themselves or a distributor who specialized in that kind of light. As far as equipment goes, you really don’t need anything really that fancy. Step ladders, A-frame ladders, extension ladders, hand tools, electrical tape, pliers, screwdrivers, cordless drills, wire drills, but the most high-tech thing you might want to get would be a Christmas light or mini-light tester. It’s a commercial Christmas light tool that will help you fix many light strands when they don’t work or help you identify the problems with the strand. And then you could want a volt meter or something along those lines. But really most of the tools you need are fairly basic, and you probably have most of them already sitting around in your garage, so there’s not a whole lot of real high-tech tools. The average cost to start up a Christmas light business I like to say is around $2,500, but in actuality it could be a little bit less, especially if you already have tools or a couple ladders, or stuff like that. Most of your cost is going to be buying the lights themselves.
Talk about commercial grade Christmas lights. Who are some reputable retailers or distributors?
We’re talking about strictly incandescent bulbs here, I’m not really going to get into the LED lights, because that’s a whole other can of worms. But with incandescent lights you have your low-grade retail available ones, and you have a high-grade commercial ones. The bulb life from the commercial ones are almost two times or three times longer. They use high quality materials with a heavy duty insulation. They’re well manufactured and they pose a very low fire risk. And a commercial light, especially in the C7’s and C9’s, there’s a lot more leeway with what you can do with them than you can with a retail brand light. Now as far as where to get them. That’s kind of a trick. You need to find a reputable distributor that actually can provide the lights on time. Many distributors have lights early in the season, but you need to find a distributor that can have you lights when you need them on demand. You want to have some in inventory, but you’re going to have to order throughout the season, and many distributors aren’t up to the level of where they can supply a professional installer on a daily basis or on a weekly basis with what they need throughout the season. Holiday Light Source in Lubbock, Texas is one of the best. They don’t always deal straight with public, though. You may have to go through some intermediaries first to get in with them. Christmas Lights Etc. is another great retailer of lights. And there’s a few more of them out there, but those two are fairly easy ones to get a hold of and they’re the two that I usually work with the most.
Who provides the lights, you or your customer?
Well this again depends on your business model, but most professional installers will not hang lights that the customer already owns because again these lights that the customer has bought have probably come from a Wal-Mart or a Target or somewhere like that, and they’re not the lights that a professional installer is covered to install. Most professional installers, myself included, we require the customer to buy the lights from us or rent the lights or lease the lights from us the first year. They have to use our lights, otherwise we won’t do the install. And you may think that may turn away some customers and you might lose a few, which is true, but there’s such a huge demand for service that for everyone you lose you probably gain ten that are more than willing to pay for quality lights. And by doing this you’re able to do a custom installation specifically tailored to that customer’s job or home or business.
Talk about the kind of competition out there in the Christmas lighting industry. Are there a lot of seasonal contractors like landscapers who will be out competing with you?
There’s more every year, obviously. It’s been a fairly small industry for a while in terms of who knew about it. Your main competition will come from window cleaners and landscapers for the most part. Maybe a few pest control guys as well. But honestly, the demand is so high for these services, that there’s probably ten other installers right in my area, and every one of us calls the other one asking if they can take over jobs for us that we can’t finish because we have too much work going. It’s a constant battle just trying to keep up with the demand. There’s way more demand than there is supply. There’s just not enough installers out there. And even if there are, a lot of these installers are just doing a dismal job of supplying their customers. They don’t know what they’re doing, they’re kind of a hack, they’re installing lights on your home with duct tape, you know, things like that, or they’re doing some pretty dismal installs and they are charging you a price that they don’t even know where that price came from, they just kind of pulled it out of thin air. It’s very easy to dominate companies like that.
Speaking of that, talk about bidding and estimating. How do you come up with a quote for a specific Christmas light installation job?
This is the tricky part. This is the place where most Christmas light installers have trouble or it takes them several years to figure out what works for their company. A lot of amateur companies and fly-by-night companies will just assign an hourly rate and say, hey, here’s the lights, we’re going to install them for you at $50 an hour. But they have no idea if $50 an hour is actually going to make them profit or cost them money. How many employees they have working , their overhead, their fixed costs, variable costs, everything isn’t factored in. They just kind of assign a generic rate. Most companies like this, they last one year and then the next year you never hear from them again. The proper way to bid a job is to bid each component individually and then come up with a total bid price based on the different aspects of the installation. To do that you actually have to know your break-even. Your company’s break-even. You have to know all your fixed costs, all your costs that are associated with Christmas lights. That’s everything from insurance to gas to truck maintenance to tires to your employees wages, which is a pretty big chunk. Taxes, insurance, everything is factored in, and you have to figure out your per minute, per hour, per month, per week break even. And then you use that as your base multiplier to calculate out your estimates. 90% of the Christmas light businesses do not use a break-even bidding method, and are not doing it right. I do a lot of consulting for both window cleaning and Christmas light businesses, and one of the first things I ask them to do is teach me how they bid a job, and there’s so many leaky holes and if it was a ship they’d sink. They’re losing money in so many areas, or charging too high and scaring off customers. The bidding is a very distinct process that has to be broken down correctly. There’s a proper way to bid a roof line versus an artificial Christmas tree from www.balsamhill.com or versus a shrub or versus ground lighting, or a commercial job. A huge five or six story building is definitely going to have a different difficulty multiplier as compared to a one story residential that you can reach with a step ladder. It all depends on the job, the difficulty level, the amount of lights, the type of installations, and again, I’m going to stress again that this is the one thing that you as an installer need to figure out before you start your business. Before you jump out there, and if you don’t do this right it’s going to cost you money and you may not be in business the next year.
What are some effective ways to market and advertise your Christmas light business? I assume there’s more to being successful than just printing out a handful of fliers and distributing them.
Well, that’s a very simple method, it does actually work quite well. People are always getting blanketed with fliers nowadays, and it just doesn’t work as well as it used to. However, a well-designed flier done door-to-door in a targeted neighborhood can produce fairly decent results. For Christmas lighting, it’s really not a super-difficult thing to market. It’s a very high demand service — people are actively seeking you out. Some of the very, very common techniques that are completely simple yet blow you away with their success rate are road signs, like the little election signs you see everywhere. Same kind of thing, but with your Christmas lighting information on there. And then direct mail, postcards, mailers going out to people’s houses work extremely well. A customer letter with a brochure works really well. However, with any kind of direct mail, people think if they just print out 5,000 postcards, mail them all out, they’re going to become rich because they’re going to get all this business. The actual design of a postcard or your direct mail piece, is 10 times as important as any other aspect of that marketing campaign. And then once you’ve designed your piece, you have to tailor your sales copy on that piece to match the people you’re going to be mailing to. This is a very, very complicated thing to do right, it’s not something you want to do half-way or jury-rig. You want to do it right. Take some time, figure out your market. Maybe break up your mailing into smaller segments so that you can target specific neighborhoods in each different mailing so you can really target your sales copy to fit that neighborhood. Even use their neighborhood name in your copy, the more you do that the higher your response rate. Some other advertising methods that are very, very effective, probably the number one most effective is a referral program. But again, a referral program can be done wrong. Word of mouth is very strong in this business, and with a referral program you can really leverage that word of mouth to new heights and really get some really great conversions out of it. But there’s a right way and a wrong way to do that. Radio advertising and TV spots, they work okay. A TV spot early in the season just to help get your name out there, is okay, but it’s something that I don’t usually recommend until you’re a largely established company and actually have the money to blow on that kind of stuff, because it’s not cheap. Radio is decent. And then one thing that has worked well for us in the past, if you negotiate about a year in advance, you can get a billboard for a decent price by the freeway or something. I don’t know if it’s any more effective than a direct mail campaign, but we did have some great conversions from people calling based on the billboard that we had up. Basically we can install your Christmas lights with your phone number, a little bit of information, cool pictures, and they call us. It doesn’t have to be complicated to market your business, but marketing your business is the most important part of running a Christmas light business. Because if you don’t market you don’t have any customers, and without customers you don’t make any money.
Tanner, in your opinion, what are the biggest mistakes people make when they start a Christmas lighting business?
The biggest mistake people make is just like with any business. They rush in without any planning, they’re so excited about the concept and the idea that they just go out, spend a bunch of money, don’t know what they’re doing, and then they wind up deeper in debt or completely over their head and not sure what to do. They also don’t have a solid business plan, or a marketing plan, and they don’t have a growth strategy. Again, in the consulting that I do I see solid companies that are doing well, making money. None of them have a growth strategy. They don’t know where they’re going to be next week, next month, next year, or where they really want to be, other than that they want more money in their pocket. Simply wanting something isn’t enough. You have to formulate a plan of action on how to get that. So growth strategy is very, very important. The other thing that I’ve stressed already is improper bidding and estimating of jobs, using poor or low quality lights that could cause problems. We actually had a couple fires here and lawsuits last year from sub-par lights being installed by fly-by-night installers, handymen who want to just throw up some lights that they don’t know really what they’re doing. And sub-par installation methods that either damage people’s property and they get a lawsuit or a fine because of that. Or sub-par installation on the commercial front where the business owner’s insurance company will come after both the business owner and the installers because they had a power cord running across the sidewalk, or something like that which is completely a no-no. Those are the basics of what people do wrong. But the biggest thing is not knowing what they’re doing, rushing in, not educating yourself. This is a great business where you can earn a hundred thousand dollars in sixty days or less. My company pulls in twice that much in about that much time. It took us a long time to get there, but we did. And if I had known what I know now, it could have been a lot shorter timeframe, but at the same time people get so excited about the concept of making $100,000 in 60 days or $50,000 in 60 days that they just want to go out there and start the business. If you want to make the money you have to invest in the time and the education first. If you’re not willing to invest in education, to teach yourself the right way to run the business that’s going to make you 50 or 100 thousand dollars, you have no right to be in business. You’re just shooting yourself in the foot. So invest in education and learn what you need to learn before you go out there and get in over your head.
Tanner Larsson is the author of Cashing in on Christmas — How to Have Your Very Own Christmas Light Installation Business.