BUSINESS OPPORTUNITIES: Decking Out Denver

At Swingle Tree, Lawn & Christmas Décor, Denver, Colo., the holiday season means more than just trimming trees. With their holiday lighting division, the company decks the halls, too – and the decks, the eaves, the windows and the bushes if their customers request it. Eight years ago, Swingle purchased a Christmas Décor franchise and added on the service to both supplement revenue and guarantee winter work for their employees.

"We used to subcontract our lawn and plant health care technicians to a decorating company that would decorate malls and other properties from November to January," says Jeff Oxley, Swingle’s director of operations. "We called it ‘employee leasing,’ but we could tell it wasn’t working out very well. Having winter work available was a good way for us to retain our employees, but there was a lack of structure with this program. Instead, we saw an opportunity to get involved with a holiday lighting franchise and create a true add-on business for the company."

Indeed, many green industry companies are "seeing the light" when it comes to add-on services. In a recent Lawn & Landscape Online poll, 27 percent of respondents said they currently operate a holiday lighting division, and an additional 33 percent are considering the add-on option for future seasons.

In terms of Swingle’s approach to holiday lighting, rather than creating a new add-on service from scratch, Oxley explains that the company opted to start a franchise. That approach, he says, provided the company with systems and processes that were already proven effective. "We were given books and materials and videos, which saved us all the expense of trial and error," he says. "At the same time, they gave us a little more buying power and the ability to expand our region over time."

The company’s initial investment in the franchise was minimal, Oxley says – only about $12,000 for their original territory. Likewise, because Swingle has a large tree care division, the company already had much of the necessary equipment on hand, including ladders and bucket trucks, needed for holiday lighting work. Because of this, the amount of start-up capital necessary for the division to get going was quite low, though Oxley notes that other landscape contractors may have to invest in extra equipment. "If someone wanted to add holiday lighting to a landscaping company, they would have to invest in a couple of orchard ladders at about $200 each, and they may have to buy a trailer or find another facility where they can store all of the parts and materials," Oxley notes. "Because of the scope of work with the storage and staging of materials, holiday lighting isn’t something you can just start up and run out of your garage."

Recently, Swingle dealt with its own space constraints. Oxley notes that the company’s holiday lighting inventory currently resides in 15 large containers on the company’s lot. Because Swingle’s holiday operation is turnkey, customers’ decorations are stored by the company as part of the service package. As the division grows, the amount of space needed for this storage increases dramatically. Oxley also says that in order to accommodate the growth, Swingle Tree, Lawn & Christmas Décor will either add onto its own facility to add more space, or move to a new facility within the next couple of years.

In terms of investment in stock, Oxley says that for a franchise that costs $15,000, a contractor should expect to spend another $15,000 in materials and plan a marketing budget on top of that. Thankfully, because of

the franchise system, contractors aren’t individually responsible for working out the necessary budgeting formulas. Oxley says that when Swingle started its holiday lighting franchise, Christmas Décor helped Swingle determine its investment of capital, as well as the territory they should serve. "Different franchise companies work different ways, but based on the revenue we wanted to reach, the company was able to tell us what our initial inventory should be, as well as what our marketing should be like," Oxley says.

Swingle’s original territory included the better part of the Denver area and the franchise company helped Swingle get its feet wet by marketing to the right areas of the city before trying to branch out too far. "You’re selling to people who have disposable income and you obviously want people to buy your service, so you need to market to the right consumer," Oxley advises. "Someone who makes $50,000 and rents a house probably isn’t interested in holiday lighting services, but someone who makes $100,000 and owns a $500,000 home is my demographic because they’re going to want to spend the money."

To identify where the holiday lighting target demographic was located, Swingle was provided with a list of the zip codes in their territory and worked with an advertising company who helped them narrow down the number of targeted prospects in those areas. "You provide them with the criteria you’re targeting, whether it be the size of the house or the homeowner’s income and they’ll tell you how many people in that demographic are in a particular zip code," Oxley explains. "In some zip codes there might be five prospects and in others there might be 125. You have to make the decision on where you want to concentrate the core of your business."

By focusing in on the right demographic for the company, Swingle has turned holiday lighting into a solid profit center. Since the division began in 1997, revenue has steadily increased from $150,000 to $927,000 at a rate of 15 to 25 percent each year. The service has been as small as 19 percent and as large as 42 percent of the company’s business.

Additionally, Swingle benefited early on from some sales "gifts," according to Oxley. "The company to which we had been leasing our employees asked us to do all of their outdoor lighting, so we had an instant stream of revenue right there," he notes, adding that some tourist towns hired the company to decorate the entire towns for a festive holiday season.

In order to keep up with that growth, Swingle anchored the division with a full-time supervisor who handles holiday lighting all year, rather than just in the wintertime as had been the case in the past. Additionally, the department now employs as many as 50 people during the peak season, operating up to 25 holiday installation crews.

However, at the same time that the company was seeing its sales increase, Oxley notes that the percent profit that the company now earns on holiday lighting was down in recent years. "The profit has gone down the last couple of years, but the infrastructure to support the division and the manpower that we’ve had to feed into it has gone up," he says. For example, having a full-time supervisor for the division means paying a $50,000 annual salary when the position used to require only four months of salary payment.

In order to increase productivity and profits, Oxley shares that the company is gleaning as much work as they can from their existing territory, which now extends through most of Colorado’s Front Range and surrounding suburbs, before breaking into another territory to which the company already owns the rights. Additionally, cross-utilization of vehicles and equipment has almost become a science for the company.

"We don’t want a vehicle that’s only going to work nine months out of the year," Oxley says. "We want that vehicle to be able to do holiday lighting, irrigation and maybe even tree trimming. We specify all of our vehicles, so when we start building a truck, if it’s a sprayer we consider whether it’s a skid-mount sprayer where we can pull the skid out and make it a tree-trimming truck in the winter. Or, if we buy a bucket truck that has a 50-foot working height, maybe that cost should be split with the holiday lighting department and not just the tree-trimming aspect." Spreading the cost of large equipment purchases across the two or three divisions that will be using the vehicle is an effective cost control and efficiency measure for the company because more than one revenue stream is carrying that overhead.

In operations and logistics areas like these, Oxley adds that he’s grateful for the network created by being part of a franchise system. "There are different marketplaces for this end of the business and that means we have 300 other dealers we can bounce ideas off of," he says. "Throughout the system we have an intranet that allows us to post questions for other dealers about products, sales or something as specific as how to deal with snow on roofs. I know the folks in Minnesota have to deal with that issue all the time. Having the ability to ask ‘How do you do it?’ and ‘What do you do?’ has been really nice."

However, one thing that each Christmas Décor franchise does on its own is create a pricing structure for their service. "Each individual franchisee is responsible for creating a labor burden, so what we charge here may not be what they charge in Indianapolis or Kansas City," Oxley says.

At Swingle, the pricing structure is broken down very specifically due to the parts-and-pieces nature of the business. "You have to charge for materials and you have to charge for labor, but then there are special add-ons or situations that you have to charge for," he adds. "We have different price points for each category and each project, so if you want large lights on a tree that is a certain height, and you want it done a certain way, we have a price for that. If it’s roof lighting on a tile roof that I can’t access, there’s a price for that. We can’t just go look at tree after tree and say they’ll all be 500 lights and the same price for each."

On average, Swingle Tree, Lawn & Christmas Décor’s customers spend around $900 to $1,100 annually for holiday lighting, and Oxley notes that product costs count for 10 to 12 percent of that. "The product cost may be less for some people and more for others because of what we buy and how much we buy," he explains. "We want to make sure that, from year to year, if our customers add lights that they are the same colors and quality that we used the year before. We purchase through certain channels in order to keep up that professional look throughout."

Also, Oxley notes that the company tries to reach about 30 percent profit on each job, though the amount of labor and use of certain types of equipment can cut into this.

Training is another business aspect that Swingle handles on its own. Because many technicians trade in their lawn sprayers and spreaders for holiday lights in the winter, the company holds a full day or day-and-a-half of training to refresh everyone’s holiday lighting memories before the season begins. Topics covered usually include three or four high priorities like low-voltage wiring knowledge, power rules and safety training. Then, throughout the four-month season from October to January, the team meets every morning to discuss issues they’ve seen on different sites and how to handle them. Weekly hour-long training sessions also cover any additional safety issues that need to be addressed.

Without a doubt, the holiday season is as bustling for Swingle Tree, Lawn & Christmas Décor as it is for mall shoppers and children who are out of school for the winter – they’re always on the go. But a dedicated staff and convenient network of dealers has helped the company quell the chaos and make holiday lighting a profitable add-on service that shows signs of continuing growth. Still, "this isn’t a business you can just jump into and make $1 million," Oxley notes. "You learn a lot about marketing and people’s buying habits, but you have to be ready, willing and able to handle the interest in the service as it grows. When you’re prepared, it can be very rewarding."