Whether you’re a first-time entrepreneur or expanding your existing business, starting a Christmas light business can be very profitable. For seasonal businesses, installing lights provides you and your employees with consistent work during the off-season. This, in turn, reduces turnover and allows you to keep great employees. If you’re still wondering how to start a Christmas light installation business, you will get all the information you need below.
Create a Business Plan
Installing Christmas lights is extremely profitable during the holiday season. Christmas light installers can earn over $15,000 in profit in just two months. To achieve the same level of success, you’ll need to develop a business plan that includes the following elements:
- A comparison of other local holiday lighting companies.
- Marketing strategy for attracting ideal clients and acquiring new lighting contracts.
- Services list indicating which holiday lighting services you will offer (e.g., commercial or residential Christmas light installation).
- A pricing strategy that includes rates for each of your residential or commercial services.
- A market analysis demonstrating where you will work, what customer demographics exist, and how much demand exists.
- Employee planning, including any new roles required and a hiring timeline.
- Income, expenses, and salary projections, as well as a cash flow strategy, for the first year of business
Even if a business plan isn’t required for a loan, creating one is still a good idea.
Learn How to Install Holiday Lights
If you want to comprehend how to start a Christmas light installation business, you must first learn how to install Christmas lights. Although training is not legally required to become a holiday light installer, it will help you get your business off to a good start. It not only improves your professional installation process, but it also makes your workplace safer. Begin by putting up lights on your own house, then ask family and friends if you can decorate their homes for the holidays.
Then learn the fundamentals of lighting systems. If you know an electrician, inquire about circuits, timing, wattage, and other factors that go into creating a spectacular light show. You should consider becoming a member of the Christmas Light Installer Professional Association (CLIPA). You’ll receive classroom and hands-on training in areas such as installation best practices, health and safety, and more.
As an added benefit, CLIPA membership provides you with greater purchasing power through member pricing on lights and decorations.
Create a Legal Entity and Register Your Business
If you’re starting a new business from scratch, ensure you have all the necessary legal documentation before installing lights. What you’ll need is the following:
- Name: Choose a professional name for your company. Check to see if it’s memorable, unique in your city, and hasn’t already been registered or trademarked.
- Registration entails registering your company name with your local registry, trademarking your company name, and registering your domain name. You don’t have to update your business license if you have an existing registered business name and can offer holiday lighting under your current name.
- Business structure: In the United States, you can register your company as a sole proprietorship, partnership, or limited liability company (LLC). The LLC structure is popular for small service businesses because it limits your personal liability if you are ever sued.
- EIN: If you intend to have partners or employees, you must obtain an employer identification number from the Internal Revenue Service in order to file taxes properly.
The requirements for registration vary depending on where you live. Check with your local, regional, or federal government’s business registration division to see what is required.
Open a Bank Account for Your Business
By setting up a business bank account, you can keep your personal finances separate from the income and expenses of your holiday lighting business. This will be extremely useful during tax season. Consider getting a business credit card to help with cash flow during the startup period. Choose a credit card with a low-interest rate and a rewards program for dollars spent, and pay it off every month.
Lastly, hire an accountant to assist you in managing your finances. You can always do it yourself using accounting software, but outsourcing allows you to concentrate on light installations rather than worrying about finances. You should also create a reserve fund that can help your business in case you have cash flow problems.
Obtain a Business License
When learning how to start a Christmas light installation business, you must ensure you have a license. A business license may be required depending on where you intend to operate your business. An electrical contractor’s license or another type of permit may also be required. You may face hefty fines or be forced to close your business without the proper licensing and permits.
Before scheduling any jobs, check with your local Chamber of Commerce or business development department to ensure you have the necessary local, state, and federal permits and licenses. If you already have a successful business and a license, you must update or reapply for your license to include your new services. A renewal fee will almost certainly accompany this change.
Purchase Business Insurance
The risks of working as a lighting contractor range from falls and electrical shocks to property damage and equipment theft. Small business insurance protects you in these circumstances. Get a business owner’s policy that includes the following provisions:
- General liability insurance to cover property damage and bodily harm.
- Commercial property insurance for office and equipment damage
- Business income insurance allows a company to continue operating after an incident or disaster.
These are only the fundamentals. You can also obtain commercial auto insurance, workers’ compensation insurance, crime insurance, and any other type of coverage that you deem necessary.
Purchase Holiday Lighting Equipment
Holiday lighting contractors provide the lights, not the client, so you’ll need to stock up. The majority of your startup costs will be equipment—at least $900, but most likely much more. Find a reputable online or in-person wholesaler to purchase commercial-grade lighting. It will help you save money in the long run while providing the best product possible to your customers.
To get started, you’ll need the following:
- LED lighting
- Christmas Decorations
- Exterior extension cords
- Light clips
- Ladder
- Electrical tape
- Kit for fall protection
- Gloves for protection
