10 Oct The challenges of operating a successful landscape lighting business
By Mike Gambino
I don’t have to tell you that it’s getting tougher and tougher to be in business. Especially the landscape lighting business where for the most part you are not competing on a level playing field.
Competition
More times than not the company you are bidding against is not a specialist and does landscape lighting as a sideline to their primary business which typically is landscaping or electrical contracting. They do not need to make the same profit that you do to grow their business because they are making it elsewhere on the project. In fact they can lose money on that segment of the project (and some do) and still be ok. You as the dedicated specialist do not have that luxury. They also do not have the same overhead expenses as you do as a specialist- A dedicated fully stocked truck, specialized tools, stock of lighting products, continuing education etc. just to name a few.
I can also say there is a high probability that a non specialized competitor will be specifying much cheaper materials for the project likely made from aluminum or composite or other low grade products. If they do offer brass and copper it is usually of a much thinner less heavy duty composition than what you must supply if it is to last. Therefore they can come in much lower in project cost than you. To them it doesn’t matter if the products don’t last because they are not planning on revisiting that system once the check clears anyway. Landscape lighting is also not a primary source of income so they do not have to be at their best.
You as the specialist cannot do this as every system you sell must satisfy the client not only upon completion but long afterwards if you want to have any future doing this. That means you must do a first class installation that is built to last using first class materials and must offer follow up maintenance and support services.
Product Suppliers
Some suppliers who sell products to the trade professional also offer the same products at the same or close in cost direct to the clients of these trade professionals and they do not see this as a conflict of interest. It’s hard enough to sell a project for a reasonable profit and then have to deal with transparent component pricing makes it even tougher. Whether you make a profit or not on the components that go into building a landscape lighting system the property owner is going to make you responsible for them. No matter what they say to the contrary I can tell you that after 25 years in this business this is the universal truth. So that being the case you need to make money on the products you are installing. Current market conditions make this more difficult.
You are on your own
That’s why owners of landscape lighting companies need to become serious about producing income. They must come to the realization that they are the only person who cares if they make a profit. That’s right. Their customers don’t care. Their industry doesn’t care. The product manufacturers and distributors don’t support them or care. For the most part, as long as they are receiving a paycheck, even their employees don’t care.
| “Until a decent profit is made, you simply cannot afford to do a great job for your client” |
But the business owner/manager must care. It’s his or her job to care. Some seem to think there is something mutually exclusive about making a fair profit and doing a good job for their customer.
Actually, the opposite is true. Until you do make a decent profit, including a fair return on the time and dollar investment to the business owner, you simply cannot afford to do a decent job for your client.
It costs a lot of money to offer excellent service to landscape lighting clients. Like every other business in America, the client must somehow pay the cost of that service to the landscape lighting company. The business owner must figure out how to provide a lower cost method of paying for that service while delivering a substantial and worthwhile benefit to the customer.
Bad Advice in the Public Realm
Recently I read a blog article from a specialized landscape lighting person that really set off a negative impulse in me. I feel it completely undercuts the pro and offers some really poor advice. The thing that really annoys me is how this person is more concerned with putting others down to try to make himself and his methods seem superior. Even calling others unethical while bragging about how he has rock stars and “normal people” as clients. I guess this is his unusual way of distinguishing the wealthy from the not so while attempting to put a feather in his own cap and look good in the eyes of potential clients.
He starts off by saying how he feels bad for, as he calls them, “rich people”? I ask does he think that they feel bad for him? He clearly has no connection to wealthy people and how they think, what their values, concerns, beliefs and requirements for working with them are. This blogger states he comes from a family that received welfare payments from the state in his youth which obviously tainted his views of the world in regards to finances and how money works.
This “depression era” mentality makes him one of the worst candidates to offer advice in a business that must market and sell services to the wealthy in order to prosper or to even survive. The sad fact is that this same individual time and time again, in the industry leadership position he held (mostly by default because no one else wanted it), failed to take any position that would have positive results in regards for the designer/installer to the manufacturer and distributor problem previously mentioned with the direct supply of products to the end user.
He feels it’s ethically wrong to charge different (read higher) prices for “rich” people when working for them than “middle class” or less financial successful ones.
First of all, this guy has no right to impose his beliefs on others and state that whoever feels differently violates ethics. He also states how happy he is to be “middle class”. He is certainly entitled to that but that doesn’t mean others should place artificial ceilings on what they can earn in the landscape lighting business because he says so.
In the US we operate in a free market system, meaning there are no set industry standard prices across the board, the individual business is free to set his selling price as he sees fit.
His idea of charging the same price for everyone is a good one in regards to a commodity product. However when it comes to a custom service like designing and installing a landscape lighting system his advice is terrible.
The costs are always higher when working for wealthy clients. Wealthy clients own expensive properties which bring greater risk to the business owner working on them which means increased insurance coverage and premiums. Projects are also larger, more complex and challenging and require more time consumed consulting with the client throughout the process. Wealthy clients also typically have very high standards and are more demanding which will require the business owner to spend more time and supervision to meet these requirements. Logistics of parking close to where the work space is always a tangible consideration on larger projects than smaller ones. This will obviously have an impact on production time. And in business and everyday life Time is Money.
I hope for a day where other worthy specialized landscape lighting companies can have the kind of success that I have had in this business. I think this, more than anything else will benefit the industry as a whole and raise it to a higher level. Once the power shift moves from the product manufacturer and distributor and more to the designer/builder to level the playing field many of these industry issues that exist right now will go away.
It is not going to happen by listening and following advice from small thinkers such as this particular blogger. Place the focus on doing the best job for the client while making the highest profit for yourself and your company. That is your number one responsibility not worrying about “the rich” as this guy calls them and how much they must pay for it. These people didn’t get “rich” by making unsound decisions. Let them make their own choice and use their own value system to determine if something is worthwhile or not. And ” the rich” are not suddenly going to become poor after investing in one of your lighting systems. Enough with the depression era mentality.
It would be great when these specialist companies could finally operate their businesses the way they always wanted: with first class, highly paid people and customized service vehicles so they can work more efficiently and their clients can get the finest results. And finally being able to draw the kind of salary any other business owner who puts in a 70 hour week does. They are already doing the work anyway so they might as well be compensated properly for it.
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Mark Carlson
Posted at 15:13h, 11 OctoberMike,
Another excellent blog and especially so because it addresses a primary problem/issue within our trade. Our industry, as a whole is really out of whack and there is a definite lack of professional leadership, if any!
You have been a mentor of mine for many years now and you are always on top of your game, as it shows daily through your business practices, your work ethic, your first-class high standards, and your commitment to provide the best. I and the entire trade are lucky to have access to your insights.
With that said, it’s a crying shame that most of the trade professionals and non-professionals have no idea of how to run an effective business in this specialty. This other guy (I know who you are speaking of), and so many others like him are nothing more than “hype” and self-promotion. They have never proven themselves within this discipline to be a leader and never will.
I, for one, see and understand the value and professionalism that you offer. You have done it right over all these years and you continue to lead the industry. Thank you for these insights and I agree with what you are saying. Business is business, and you must operate your company just as any professional business would run them–it’s no different.
Thanks again.
Mike Gambino
Posted at 18:21h, 12 OctoberI am flattered and honored Mark, Thank you for the very kind words. Indeed you are correct with your assessment. In order to succeed you must have business savvy and technical trade expertise. Lack in either value and it will be difficult if not impossible to succeed. Too many approach the business of landscape lighting as a hobby and that’s fine if they don’t plan on practicing commercially and only care to tinker in their own yard. Problem is , as we both know, there are too many treating their business like a hobby.