Lighting up profits

Published August 13, 2010

Photos: Preferred Holiday DecorKeeping cash flow steady in the off season is a common challenge many contractors face. As a result, many have tried to launch a holiday décor segment to supplement their income. But without the right implementation and management of this seasonal service, the attempt can fall short. Like any other segment of the business, a holiday décor service requires dedication and has to be cared for more than just a “job on the side.”

Mark Metzger, owner of Preferred Landscape and Lighting, has found that the extra effort pays off. The business’ annual revenue is $5 million, with holiday décor accounting for $1 million of that total. His holiday décor business – Preferred Holiday Décor – serves mostly commercial clientele in San Antonio and the surrounding areas.

Holiday décor tends to mean a lot of repeat business, so making initial customer contact is key. “A great way to pick up new customers is to leverage your existing relationships,” says Metzger, who started the segment of his business doing 95 percent residential work, but has now flip-flopped to 95 percent commercial. “Approach your landscape customers with your new holiday décor services. From there, word of mouth spreads fast.” Metzger adds that it also works the other way around – once you start picking up new holiday décor clients, you can also market your landscape services to them. “Starting with the holiday décor relationship, we’ve had the opportunity to provide landscape services to new residential and commercial customers.”

When first starting out in the holiday décor business, it’s important to get to know your product. It makes selling easier, says Metzger. Then, one of the first decisions to make is whether to lease or sell the product. “Before LED, exterior lights with a one- to two-year life span were predominantly used,” Metzger says. “Some decorators may choose to take down the lights, refurbish and reuse. This takes labor during the year and needs to be factored into your price. Others would save on the labor by cutting lights out of the trees and selling new ones each year. But the life span of LED is six to seven years and they are much more expensive than incandescent, so decorators will not be able to sacrifice these lights. However, the good thing is they won’t have to replace them, and if you lease them to your customers, you’ll make money off the same lights for several years.”

Once a job is sold, it needs to be scheduled. “The time for customers to enjoy their display is only about four to eight weeks, so they are not tolerant of delays,” says Metzger. “Good project management and communication is essential. Weather can cause problems since you can’t work with electricity in the rain, so it is important to build some cushion into your scheduling.”

To ensure the job goes smoothly, Metzger also recommends doing your homework before you start. “Know where the power is coming from and make sure there is enough to run the display. Nothing is worse than installing lights that draw more power than is available.”

Safety is another consideration as Metzger says with holiday décor installation the crews will often be working high above the ground. “Make sure your crew has safe ladders and harnesses if necessary,” he says.

Learning how to price the labor is also important. “The rate you charge for your core services will be different for holiday décor installation,” says Metzger. “When estimating, don’t forget the labor on the take down in January. We do time studies to confirm how long it takes to wrap a tree trunk with lights or install garland on an archway. We then put the information into a bid template that has labor and product components.”

For Metzger, the dedication to this segment of his business has paid off and compared to the company’s other services, the profit margins are actually much healthier. “The economic situation in 2009 took its toll on our other lines of business,” he says. “Commercial and residential install slowed, but our holiday décor installation business actually grew 50 percent. Our commercial clients rely on sales during the holiday season to make or break their year. Even with the economic downturn, they had to invest in the holiday season to put their customers in the buying mood.”

Metzger says the revenue generated from this business segment helps pay for fixed expenses. “In the early years of our business, our landscape maintenance trucks had downtime during the holiday décor season so putting them to full use during the slow times has helped spread out costs over all 12 months,” he says. “An added benefit was that since we kept our assets working, we were able to price our landscape services more competitively. Getting into the holiday décor business was a win-win for us.”