| Six months before the weather outside gets truly frightful, Ray Reed of R&R Lawn Care in Tampa, Fla., is busy getting ready for the holiday lighting season by developing promotional materials, ordering supplies and contacting clients. By the time the colder weather arrives, he’s ready to install his custom-fabricated lighting displays. Then, a few months before the holiday season begins, the dreaded ads begin to appear. “We hang holiday lights,” the ads cry. These claims are something that Reed, who has been in the holiday lighting business for 10 years, finds truly frightful. “There are a ton of guys that hang lights, but there’s a big difference between your average lighting company and ours,” he says. “We get calls from customers that want us to troubleshoot things like melted plugs, burned out lights and house damage – that’s because they hired a company that didn’t know what they were doing.” Holiday lighting is a big business these days. Many upper-income households don’t want the hassle of installing lights and are seeking a professional look. The key to success in the holiday lighting business is to understand the product, identify a customer base that can afford your services and distinguish yourself from competitors. Breaking into holiday lighting can mean handsome profits. Reed, whose company started off doing landscape work before branching out into holiday lighting, says the average markup on holiday lights is 25-30 percent. His clients pay $1,800-$2,500 per year for installation, and because they’ve already purchased the lights and paid R&R to store them, he’s virtually guaranteed their business for years to come. Reed, who grew his business initially by advertising in newspapers, on TV and on the radio, now generates most of his business from his website or referrals. He closes about 15 percent of his leads. “We focus on households with an income level of at least $125,000 per year,” says Reed, who saves time by pre-qualifying his clients over the phone. “Otherwise, people will waste your time and it’s more hassle than it’s worth.” Kevin McClure, manager of LKM Mowing and Landscaping in Normal, Ill., has developed his holiday lighting business through referrals and a good website. Up until a few years ago, LKM sent postcards to upper-income neighborhoods well-known for their holiday spirit, but now McClure relies on word of mouth. He also pre-qualifies his customers. “Our minimum order amount is $1,000 right now – generally if you spend below that amount, your house will look half-done,” he says. Once Reed and McClure identify possible customers, they meet with them, develop a scope of work, take pictures of their house and draw computerized renderings. “Once we close the deal, we’ll set an install date and do a schematic of the house with the lights numbered,” Reed says. “Then we set a take-down date with the client and store the lights for the season. They look at it as a multi-year investment.” About 60 percent of R&R’s business comes from existing landscape clients, while 40 percent is new business, Reed estimates. He also gets revenue from up-selling clients on holiday lighting features. “We did an animated Santa display on a house, which added $2,100 to the original cost of the lighting,” he says. “After we installed it, the customer paid $1,500 per year for us to install, take down and store the lights.” R&R’s lights also come with a 15-year warranty, which means that Reed’s customers don’t have to worry about calling their contractor about burned out bulbs. “They’re only buying the lights once, as long as they continue to use our services,” he says. LKM Mowing and Landscaping also gets much of its holiday lighting business from existing clients. McClure says that while he has seen a decrease in business because of the recession, it hasn’t been dramatic. “Our customers aren’t cutting lights from their budgets,” he says. “They may switch their budgets around to accommodate doing the lights, but it’s something that’s important to them, especially if they have small children.” The author is a freelance writer based in Cleveland. |
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