Jacks of All Trades, Part 2
24 Feb, 2009 By: Brian Albright LDB SolutionsEditor’s note: This is the second part of a two-part article. Read the first part here.
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Franchise Businesses |
Landscape design-build firms looking to diversify in a down economy need to do so carefully. The right move could even out seasonal cash flows and become a thriving side business. The wrong move could take your eyes off your core business, which could be disastrous.
During the winter, many landscape companies turn to snow removal to keep at least some of their employees busy. But that business is unpredictable and can be costly, particularly with the volatility of the salt market. That's why holiday lighting has taken off in the past few years. Demand for the service is fairly steady among higher-end commercial and residential clients, and landscapers already have the ladders and trucks needed to do the work. Some firms rent a bucket truck during the winter to hang lights for commercial clients, but most residential installations can be done from a ladder or from the roof (plus, nobody wants a boom lift sinking into their lawn in the middle of November).
Most of the major light suppliers provide training and design help, and the majority of jobs won't require any special electrical expertise—although you do need a basic understanding of how many lights a given circuit can support. Some companies also offer greenery, like wreaths or garland.
Jobs can be priced from a few hundred to several thousand dollars, depending on the location, and many clients will usually sign up for repeat business every year. Scheduling is the trickiest part of successfully managing a holiday lighting business. Most lights are hung in October and November, with take downs in January and February. You have to accurately estimate how long it will take to complete each job, and factor in cushion time if the weather turns bad. If you also provide snow services, make sure you can staff both services during a harsh winter.
Two of the major holiday lighting companies, Christmas Décor and Brite Ideas, offer franchises. A Christmas Décor franchise costs $9,000 plus a territory fee, and 5% of gross sales. Holiday Bright Lights provides a membership program that includes training, marketing and support with no ongoing license fees. The advantage to a franchise is that you can get discounts on material, have access to on-site training and marketing materials, and, in some cases, job referrals through a national call center. The downside: franchise fees can be high ‑ $20,000 or more is typical ‑ and you have to pay a royalty from 3% to 10% of gross sales.
Ivan Katz, founder of Michigan-based Great Lakes Landscape Design Inc., had a Christmas Décor franchise for four years that he sold because it wasn't working out as well as he'd hoped. "There was no natural shut off time for me. I was still landscaping when you were supposed to be putting up lights," Katz says. "If the lights were frozen to the roof, you couldn't get them down and complete the work. The Christmas Décor system, however, was excellent. The training was fast, and we were doing $30,000 or $40,000 in a short time frame."
Other possible holiday add ons include selling firewood or Christmas trees. For nurseries with the space to grow their own, Christmas tree sales can be highly lucrative. For landscapers with a lot space at a good location, there is more risk. If you price the trees wrong, or if you're competing with 12 other lots, you could wind up losing money and find yourself stuck with a bunch of dead spruces on your hands. In any case, a tree bailer (available from $200 to $500) is a must.
Stay Focused
Don't get so sidetracked with add on business that you lose control of your core business. Many landscapers start adding services because they're bored, or they're looking for a fast buck. Focus on making the main business profitable first. If you don't have time to ramp up a new business and manage it effectively, add staff or drop the idea altogether.
"Determine how much volume you can bring in from it, and what it will do for you," says Ed Laflamme, CLP, a consultant with The Harvest Group. "Compare that to the equipment and training involved, and the potential liability. A lot of people get involved in these things and don't really know what their risk is."
But as long as you plan carefully and keep an eye on the landscaping business, it's OK to experiment with different services. One way to dip your toe in the water is to try out new services at home. Decorate your own house for Christmas or power wash your mother-in-law's driveway. That way you've got some basic data to use when you come up with estimates while getting some hands-on experience.
"The one thing I'm still in search of is a way to exit the snow removal business, and find an add-on that can really level out the business," says Katz, who despite the wide variety of services his company offers, still hasn't found the perfect mix of businesses. "There's a four-month period when we're not doing a lot of work. I want to even that out."
Another way to build your business during this down economy is to focus on training and developing new skills. The American Society of Landscape Architects has compiled a list of resources to you do just that. It includes everything from learning new software packages to applying for grants to polishing up business administration skills. Check it out here.
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