How to Start a Christmas Light Installation Business
Are you the person on the block that always has the best Christmas light decorations and is envied by your neighbors? Opening a Christmas light installation business could be a great way for you to make some extra money during the holidays.
A Christmas light installation business puts up and takes down Christmas lights for people who don’t want to do it themselves or are unable to do it. For a fee, the installer will hang holiday lights and set up other decorations as requested by the customer to help spread the holiday spirit.
Owning a Christmas light installation company can be a great seasonal business for landscapers, window cleaners, painters, gutter cleaners, etc. Some businesses are very busy during the spring and summer months but are not busy during the holiday season that typically runs from November through January. Some Christmas light businesses strive to stay open the rest of the year by also installing party, backyard, and wedding lights.
According to IBIS World, the seasonal decorations industry is $26 billion as of 2021 and has grown 2.3% for the last 5 years. There is little information about the Christmas light installation industry available because it comprises small, private companies.
Disposable income is expected to increase, which is expected to increase the seasonal decorations industry. Elderly people are an excellent customer segment of the Christmas light installation service, and the rising aging population could be an opportunity to increase the market size.
Your target market will generally be homeowners who enjoy Christmas lights and holiday decorations but don’t want to deal with climbing ladders and light-stringing.
A secondary market includes commercial clients.
Skills, Experience, and Education Useful in Running a Christmas Light Installation Business
There are several specific skills that you will need to open a Christmas light installation business.
- Experience. You just need experience installing Christmas lights so that you’re good at it!
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Christmas light installation business
Starting a Christmas light installation business can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your Christmas light installation business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect Christmas light installation business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a Christmas light installation business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: 3 steps to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Since a Christmas light installation business is very seasonal and doesn’t require a storefront, it is typically run from the owner’s home. Be sure to have enough dry and secure storage for the lights after the season.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
In some locations, an electrician’s license may be required in addition to general requirements such as a sales tax permit, Employer Identification Number, and others.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a Christmas light installation business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.
Step 8: Get your Marketing Plan in Place
A Christmas light installation business will need to set aside a budget to cover marketing costs prior to the holiday season. Common marketing techniques for a holiday lighting installation business include social media marketing and online advertising, as well as brochures and flyers. Developing a website can be a significant expense, but it can also give your Christmas light installation business greater visibility online.
Step 9: Get Insurance
A Christmas light installation business needs several types of insurance for full coverage:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hiring Employees
You may need employees to help you run your Christmas light installation business, or you may choose to be a one-person show. Make sure that you select a crew with appropriate experience.
With the extreme seasonality that most Christmas light installation services encounter, often it is friends and family or temporary help to complete jobs. Searching for people who work in landscaping is a good source of employees as they are often out of work or are on unemployment due to the cold weather.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your holiday lighting business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a Christmas light installation business?
Here are the typical costs you will face when you open a Christmas light installation business.
– Ladders and small tools $1,000
– Insurance $200 – $600
How profitable is a Christmas light installation business?
The price for installation will vary depending on the home size and the extent of the desired lights. Prices can vary from $250 – $5,000, but the average tends to be around $500.
Assuming you install lights on 50 homes during a season, you would make $25,000.
A Christmas light installation business can also offer decoration services for other holidays to increase sales as well.
Are there grants to start a Christmas light installation business?
It’s extremely rare to find a grant to start a Christmas light installation business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a Christmas light installation business?
The NAICS code for a Christmas light installation business is 453998.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.