Transcription
Congratulations, you've made it to part three of the "How to Start and Scale a Christmas Light Business from Zero to $800+ Thousand in a Two-Month Period." That's my business. We're out of Phoenix, Arizona. Last year, we did a little bit over $800,000 in topline revenue. That means sales at a decent margin.
So, if this is the first video you're watching in the series, the first video that we actually filmed, you can see it two videos ago in the series. We talked about everything you need to start the business from scratch: everything from your website to your EIN number with the feds, all that jazz. The second video was about marketing, how to actually get your phone to ring, how to get clicks on your website, all that jazz. This video is going to be about how to sell the jobs.
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We know at this point that we're installing commercial-grade product. We are not going to Home Depot and Walmart and doing all of that jazz. We are doing commercial-grade product. Now, if you're starting out from zero, this is basically the only things you need to do. And then you can work up to more of the intricate stuff. You need to do roof lines. You need to do ground stakes if you're in an area that doesn't snow a lot. Some guys that are in areas that snow don't like to do ground stakes. So, depending on where you're watching, you can decide to do that or not. You're going to do bushes. You're going to do trees. So, whether it's big evergreens or it's these little like Arizona type of trees where you're like branch wrapping them, you're going to want to do trees. And then eventually you're going to work your way up to either doing wreaths on the front of the houses, wrapping pillars with mini lights, all that jazz.
So for this video, we're going to talk about the basics of where to start. So the main thing that everybody's going to call you for is a roof line. Everything else that I mentioned before is additional services. Very few people will call you and be like, "Hey man, can you install some lights on my bushes?" So most of these people are going to call you for a roof line. So, if you're doing a roof line installation, go on Christmas light contractor's website. I've linked it in the description here. And you can buy a 100-foot starter pack, which as I'm looking right now, it's $249. So, you can buy a 100-foot starter pack. And it has every single thing you need to install a roof line. It's got the socket wire. It's got the bulbs that you screw into the socket wire. It's got all of your clips, all of your male and female plugs that you have to have, all the little blank extension wire that you have to have. Outside of that, the only thing you'll need to buy is you need to buy like a $5, $10 pair of wire cutters to cut the wire. That sounds scary. It is so easy a fifth grader could do it. And that's what you need to start doing a roof line.
Outside of roof lines, you're going to need just the basics, the string lights. If you want to do ground stakes, you'll buy the ground stakes, but then everything else in that will be just from the starter pack. You'll need wreaths if you're going to do wreaths, but you can buy all those separately. For the sake of this video, we're going to focus primarily on roof lines and bushes and trees because all of that are either string lights. So, the little ones that you would see like wrapping around a Christmas tree in your house where there's a bulb every like, I don't know, four to six inches. And then the roof line lights are the big ones. They're usually called C7 or C9 bulbs. Most of you guys will be using C9 bulbs. That's going to be what you're selling to homeowners.
Now, depending on what time of the year you're buying product, your cost per foot for a roof line is going to change. Christmas light contractors might be running a promo and you can buy more in bulk and you can get that cost to between, I don't know, $1.50 and $2 a foot. At this 100-foot starter pack, it's going to be, if it's $249 for 100 ft, it's going to be $2.50 a foot. Now when you buy in more bulk, so if you bought a 500-foot pack or a 1000-foot pack or bigger, your cost per foot is going to be cheaper. So, you can make that decision on what you want to buy right away, depending on how much capital you have access to.
But the way you sell this is you go out to the home that is asking you for a Christmas light quote. And it's really simple. You're going to go on Google Maps and you're going to measure the linear footage of the roof line. So, if you open Google Maps on your phone and you type in your home address and you have a roof, what you can do is there's the little measure button on the top right or top left of the Google Maps interface on your phone and there's a measure distance button. It'll let you drop the pin on the corner of a roof and you can measure how many feet of lights you need on a roof. Now, to account for pitches, typically add 15 to 20% of that number. What I mean by that is if you're looking on Zillow at the front of the house and then you're looking at the Google Maps listing where you're actually like measuring the roof and you see that there's a pitch, the pitch is going to take more linear feet because it's going up at an angle. And so you're going to measure that flat because Google Maps can't account for the pitch. And then you're going to add 15 to 20% on top of whatever you measure. So, this isn't going to be exact, but if you measure a peak and it looks like there's 25 feet, we're probably going to measure that at like 35 to 37 feet just to be safe. But that's an internal measurement. You're not showing the customer the price per foot. That is what a lot of bad installers do. You're going to get the measurement to know what your product cost is, and then you're going to give the customer a breakdown. And I'll link it right here. Like you're going to highlight the look of the house, or you're going to get Jolly Lights on an iPad or Holiday Home Concepts on an on your computer or iPad. I'll link them in there. These are programs where you can actually like put lights on a roof line to show the customer what it would look like in a photo of their actual house when the lights are done.
So, you've measured your roof. Let's say it's 100 linear feet of lights. You just bought this starter pack. And for easy math, let's say you were buying product for $2 a foot. You can probably get it cheaper. For easy math on this video, I'm just going to use $2 a foot as your product cost. So, when you went out and bought roof line product all in with clips, the bulbs, the socket wire, the extra male and female plugs, you're at $2 a foot. You are going to want to sell this for as high as possible within reason. I do not think that you should sell it for any less than $6.50 a foot. We sell it for a lot more in my market: $9.97, $10.50, $11 a foot, everything else. I want to be clear here. We have name recognition. We are a brand. We're going into our sixth season. So, if you're new and you just want to get some at-bats, do not sell $2 of product cost for $4 a foot. You will go out of business. That is what broke business owners do. You need to be somewhere between like the absolute lowest, like I'm talking you're in Dallas, like the most competitive market out there, like Dallas-Fort Worth area, like you need to be doing it at $6.50 a foot or more. I don't think anybody should be doing it less than $8 a foot. But every time I talk about price per foot, people get in the comments saying, "I can't get that in my market." They get all upset. So, I'm trying to give you guys the range, but you need to charge more than you think because there's so many other costs associated to running this business.
So you measure it at $2 a foot. There's 100 feet. That means cost to you for product is going to be $200. You need to sell that at like, in an ideal world, $8 a foot. So your product cost is $200. You're selling it for $800 because it's 100 ft. You now have $200 of your profit gone to product. You have $600 profit before you incur any other expenses in your business. So, other expenses in your business: how much are you spending on Facebook ads? How much are you spending on your yard signs? Are you paying a buddy something an hour to help you? Did you get insurance? How much does that insurance cost? In the beginning, you're going to have more expenses than you think. So, you have to charge enough to make it worth it. We have some jobs that are extreme level of difficulty in Arizona that we're at $134 a foot.
We hear "no" a lot. So, when we're talking about sales in Christmas lights, you have to understand that the reason I put so much emphasis on the marketing is for every 10 leads you get, probably five won't even make it past the phone screening where you tell them that your minimum is $700 or $900, whatever it is, a job, whatever you decide to do. But after that, you have to realize that this is a luxury service. You are doing the most dangerous home service trade on planet Earth, which is hanging Christmas lights. You need to be paid for the dangerous thing that you're doing and you need to be compensated appropriately for doing a luxury service. You're not selling this to the customer based on what you would pay for this. Because most of you, if you're starting a Christmas light business, just like me, you're probably not rich. So, you're thinking that $800 for a roof line or $1,000 for a roof line is egregious. But the customer that's probably 20, 30, 40 years older than you, has an extra couple digits in their bank account, maybe three or four more digits in their bank account than you do. They buy off of different things. They buy for convenience. They buy to buy back their time. They buy for the feel-good thing. They buy for all that jazz. Do not sell out of your own pocket. You're building a business that serves someone in a different tax bracket than you. So, you are not your customer. If you grab one thing from this video, that is it. Just because you would not pay for this doesn't mean that there isn't a massive market that will pay for this. I don't think that Chanel purses are very valuable. I don't like the idea of spending a couple thousand dollars on a bag. Chanel sells an ungodly amount of Chanel purses every year because Chanel has a market for that. That's the same concept with Christmas lights.
So, if you think you're going to go out to every lead and close every job, sorry to break it to you, you are not. In reality, in our business, for every 10 inbound leads we get, we actually sell and get deposits from somewhere between two and three of them. That means for every "yes," we get somewhere between four and five "nos." That is really realistic. That is absolutely the math for a successful Christmas light company. So, what that means is you need your phone to ring enough that you're going out to four, five, six, seven quotes a day and actually selling maybe one or two of them if you're lucky. That's the model. The guys that go out of business are the ones that are like, "Oh, I gave a quote to somebody for $700 on the roof line and they said the neighborhood kid quoted them $150 to hang Home Depot lights." That's not your customer. So, you need to not change your entire model because a few people made you feel sad when they said "no." And that's very easy to be sitting on your phone or sitting on your computer watching this video and be like, "Oh, I can handle that." It's a whole different ballgame when you actually go out and you give six or seven quotes in a day and every single one of them says "no." But in order to have a business that hangs Christmas lights, actually makes money, pays their employees a fair wage, and actually pays taxes, and does everything legally, you have to charge way more than you think is it is worth because you are not in the tax bracket that would value these things.
So, pricing, pricing, pricing. Then if we go into trees, so for a strand, the string lights, if you're buying your strands for anywhere from $10 to $15 a strand, you need to be marking those up three and a half to six times what you pay for them per strand. So for us, when we go wrap a tree, our product cost, because we buy in crazy bulk, so it's a little bit different than your situation, we buy strands for somewhere between, just rough ballpark, let's say $8 to $12 a strand. My guys will not hang a strand for less than $49 on a tree. Some people say that we're expensive, and that's fantastic, but there is so much labor going into actually installing these strands on top of how expensive the product cost is that if you're going to do it, you need to charge a lot because in your first year, your product cost is going to be your biggest expense. But this is where Christmas light businesses get really fun is you can reuse those strands in year two and year three and year four if you take care of them. And so you might incur the product cost in year one, you need to charge enough to not go out of business, but then in year two, when you go hang that again, you make a lot more profit on that install. And so that's why these Christmas light businesses all fizzle out at $100K because when they try to grow past $100K a season, but they've been buying strands for $15 a strand and installing them for $25 a strand, they're never going to grow because their payroll as they grow is going to get more expensive. Their insurance as they grow is going to get more expensive. Their customer acquisition cost and the money they put into marketing is going to get bigger. You're going to incur so many other expenses that you have to account for it on the front end. Take it from the guy who almost went out of business in year three. Now we're in going into year six. I'm not saying this to brag. I'm saying this because I have never seen another residential Christmas light business that does temporary Christmas lights have an average ticket of $3,800. That's what my business has. I've documented it everywhere. I know there's bigger Christmas light businesses out there than mine. I know there's operators, there's owners that are way better entrepreneurs than I am. There's guys in Omaha that do one and a half million a year. There's guys in Houston that are doing $10 million a year. I don't think I'm the best. I'm just sharing it from my experience. I've grown this in a different era. I've grown this in the 2020s. A lot of these businesses that are bidding cheap and stacking deep have books of business because they've been around for 15, 20 years. And so the stuff that they did 15, 20 years ago, like just growing off of word of mouth and all that jazz doesn't work when you're starting from scratch. So the advice I'm giving isn't to pump myself up. The advice I'm giving is it's current and it's recent. And within Home Service Accelerator, we've helped like 400-something home service businesses grow their marketing, their sales, all that jazz. Probably close to 50 of them have added on or started Christmas light businesses from in within that program. And not a single one of them has gone out of business. So, I'm not just saying this because my business does this. I'm saying this, I've implemented this process and advised a lot of other Christmas light businesses on how to start from scratch and they've done the exact same thing. So, it's super important to price accordingly.
So, now you know how much to charge per foot, all that jazz. How you present it to the customer is you need to do the mockup on Jolly Lights or Holiday Home Concepts on the iPad, whatever. And then you're going to try to close them in person in the beginning. Eventually, you might get good enough that you want to do remote quoting. There's a lot of successful businesses that do remote quoting because they have trouble finding in-person sales reps. My business is super aggressive on the sales side. We have last year we had two in-person salespeople. This year we're going to have four. You can also sell this virtually. You can send quotes via email and text. It doesn't matter. But in the beginning you need to try to close in person because when you're just trying to get it off the ground, you're going to have a way higher chance of closing them in person.
So when you get to the house, so let's say Tim Smith asks you for a quote. You get Tim Smith's address to show up to the quote. You need to measure his house, Zillow or Redfin on one screen, measure the roof line on Google Maps on the other, and you need to come to that visit with the roof line already measured, and you need to mock up Jolly Lights, whatever on the iPad, Jolly Lights, Holiday Home Concepts, where you actually superimpose what Tim Smith's house will look like with the Christmas lights on them. You're going to walk Tim Smith through: "This is what we could do on the front. This is what we're going to do on the sides." But you're going to have all of that stuff already pre-measured out so that when Tim has questions, you came prepared. And so when Tim and you go through it all, you're going to say, "Cool. If you want to do the front of the roof line, it's going to be $785. If you want to go down the sides, this side's 50 ft. This side's 50 ft. If you want to go down the sides of your house, it's going to be an additional, I don't know, $700, $800, whatever it is." And you're going to give Tim the options. And you say, "Tim, do you want to do these bushes? If you do these bushes, they're going to be, you know, five strands on this bush, three strands on that bush, whatever else." You're going to deliver the quote there. Some people will just want the roof line. Some people are going to want the bushes, all that jazz. You're going to mock it up in Jobber, have it prepared, or whatever CRM you use. You're going to present him the Jolly Lights thing where you can see, get the little emotional driver of this is what the house is going to look like with lights on it. And then you're going to have the pricing right there. And you're going to say, "Cool, here's where we're at. Blah blah blah blah blah." He's either going to say, "Yes, let's do it." Or he's going to say, "Let me talk to my wife." Which anyone in sales knows, which means the chances of him talking to his wife and actually closing on that are probably less than 10%.
And so, one thing that we like to do is we like to drive demand. So, we say, "Hey, Tim, this is a really seasonal business. I've got myself doing some quotes, then I've got the back office doing some quotes, everything like that. Right now, my ideal install date is November 15th. So, I can give you that spot right now and I can take a deposit on site. The second I leave here, I can't promise spots because we're seasonal. Everything's blah blah blah." You know, you can make whatever excuse you want for why he might not get the slot. And so, what we like to do is we like to give them, we actually will give you a $100 off if you let us give you an install date on site here so I can go back to my office and say, "Cool, schedule Tim Smith for November 15th." That is how you somewhat create demand and actually make the customer take action. So that's just like a little sales tip. Otherwise, you're just going to fire out a bunch of quotes. Bunch of people aren't going to open them. Bunch of people are going to say, "Let me talk to my wife." Few people are going to say, "You're egregiously expensive." That's great. You're doing custom commercial-grade product. It's completely different business model. You're going to run it that way.
So, I like to itemize quotes. Some people like to do packages. I think that the best way to do it is make every single item optional in the estimate. So, roof line front is one option and it's $700. Roof line sides is a separate option, X amount of dollars. Roof line backyard, X amount of dollars. Tree one with a photo of the tree written like, "Tree one" with the number one written on a tree. You measure how many strands you think that's going to use. That tree costs $400. Tree two is the photo over here. And you itemize it out and you let them shop. That's what I think works the best. A lot of guys that have run businesses for years and years and years try to say like, "Oh, it's the good, better, best packaging that was really cool 20 years ago, 10 years ago." We have the highest average ticket on the residential side that I've ever seen. I'm sure there's guys out there that are higher, but we firmly believe that giving the customers the option item by item makes people that would have picked the basic package maybe grab an extra thing or two because they have the illusion of choice like they're going through like an Amazon shopping cart or something like that.
And so then what you do is you take a 50% deposit to get them to book a spot. This is the most important part. You can do this in Jobber or you can say "required deposit," whatever. You could take their credit card on site on your phone through an iPad, get your credit card reader, whatever else. You take a 50% deposit for them to actually get scheduled and then you take the other 50% at the time of installation, not at tear-down. You take the other 50% at the time of installation. So, you take 50% to get started and then you take the other 50% when the job is installed. You will very rarely get pushback on that. And if you get pushback on that, that customer is going to be a nightmare in other ways. We do well over 200 installs a season. We never get pushback on that anymore. I've seen guys come on here and say, "I can't charge 50% deposits in my market." That is complete hoie baloney nonsense. You absolutely can. It's completely industry normal. I have never met a large and successful Christmas light business that doesn't take deposits. And the reason you take deposits is because then as you grow and you start scheduling jobs, you now have capital money to go buy more product to do those installs. So instead of you coming out of pocket $2,000 of maybe money you don't have or putting it on a credit card, you can buy your product to go install in a month or two with the deposits you're taking. And that is how you don't get in a really bad spot. What I don't want for you is you go, "I'm gonna go crazy this year," and buy $10,000 worth of product and you only sell $7,000 worth of it. Now you basically lost money and you're going to need to go beg for money under the overpass and maybe do favors for the homeless man to get out of it. Not what I want for you. So take your 50% deposits, fund the business from there.
This is my last disclaimer for you. When you go out to these jobs, customers are going to ask you to do outrageous stuff. They're going to say, "Hey, we have a bunch of inflatables. Can you put these up for us or do you sell any reindeer?" Or do you sell? Don't do any of the ancillary stuff. You're not going to lose the job because you don't plug in their inflatables for them. All you have to say is like, "Hey, we're actually just the lighting guys. We just do that. Our insurance doesn't cover anything other than that. But if you want to ask like a handyman or a landscaper, I'm sure they could do it for super cheap. The way we're set up, it's actually going to be way more expensive if we do that for you just for time and everything else." Don't start doing different stuff. It will not scale. If your goal in this is to build a massive business, don't do the reindeer. Don't do the nonsense stuff because you're going to have to store it in the offseason or even worse, the customers going to store it themselves and then when you go out there next year, half the stuff's going to be broken and you're not even going to be able to install.
So, here's been the process of this mini-course so far. Video one, which is two videos ago, we talked about how to start from scratch. Video two, we talked about marketing, lead generation, all that jazz. This video covered sales. In a week or two, we're going to go out to a live install. As we're filming this right now, it's in August. We just did an install for a, like I can't give the details, but it's for a TV studio. We just did an install in August because they're filming something using our product. When we're there, we're, because it's August, we're able to get live install footage. We're going to make a "How to Install" video with Jack, my co-owner on the Valley Premier Lighting Business and my director of operations for our temporary business, Valley Christmas Lights. We're going to actually show you live how he's installing step by step, doing this, doing that, all that jazz. And so that will be in the next video. That video might come out a week or two after this video. So, make sure you click subscribe, put on the notifications for when that one comes out because these first three videos are coming out back to back to back. But I want to make sure that I give you guys some tactical install help. So that will come on the next video. So thank you so much for watching. Make sure you sub on this one and then stay tuned for the install video and all the training on that which is coming later. Thanks so much.