In this episode, I discuss Christmas Trees. I discuss their life cycle, what happens to unsold Christmas Trees, how Christmas tree farms make money, ideas I have for them to make money, how they lose money, and the Rockefeller Center Christmas Tree.
Building an indie business in the center of venture capital, I am Alex Edmonds, people on the internet call me supremerumham. And this is the building an indie business podcast. Okay, so today we're going to be talking about Christmas trees, I'll be going over the Christmas tree life cycle, meaning what it takes a Christmas tree farm to, to grow a Christmas tree in terms of like costs and the process of it. And then I'm going to be discussing how the Christmas trees are sold the revenue what they do with unsold Christmas trees, revenue reducers some revenue ideas that I can see that a Christmas tree farm could use, maybe the Rockefeller Center Christmas tree, which is a big thing in New York, if you're not from the US, my opinion. And this week, I'm going to be taking advantage of the fact that that what you hear on the podcast is really a rough draft of an article that I will write or blog post. So I'm going to be talking about where I can expand and you might hear a part two of this episode of the stuff that you put on part two of like, the content that I might write about. Okay, so let's get into it. Um, there are many types of Christmas trees and the there are five, the five most common Christmas trees are Frasier for scotch for ball, Sam for white pine, and Norway spruce. Okay, so the Christmas tree life cycle, okay. So a tree starts out as a seed. And that seed starts out at a nursery, and the nursery grows the tree for three or four years. And then it's a little stamp, it's maybe like two to three feet, maybe a foot, let's just say a foot. And that stamp gets sold to the Christmas tree farm. And the Christmas tree farm buys a stamp for 35 cents. And they buy 200 of them per acre. Right? So if you have five acres, you're buying 1000 stumps, and then you plant those stumps into the ground on your farm. And then you have to grow the tree you have to maintain, right? So that includes water very much so and you're going to be growing this tree for, let's say, seven, eight years. So the Christmas tree life cycle is 12 years. Okay? So do you water a Christmas tree by how old it is. The older a tree gets being more water it will need. So the first year and the second year you're gonna water Christmas tree one acre inch. Okay, then years three and four, you're gonna do four anchor inches. And then you're five, you're gonna do 10 anchor inches, then you're six and seven, you're going to do 18 acre inches. And you're eight you're going to do over 18 anchor inches. Okay. And now, this is like the standard Christmas tree life cycle right here. You'll learn in the Rockefeller section that people have Christmas trees for more than eight years in the ground. Okay, but like a standard Christmas tree farm. That's like a 10 year range. Right? And the whole cycle itself is like 12 years or so from seed to in your house. It's about 12 years. Okay. So then there's the land right? In the land, the cost of land itself is very variable. It depends on location. A farm here in Santa Cruz, California will cost more than a farm in Michigan, just because in in property, the property industry, they have the same location, location location. A lot of a lot more people want to live in Santa Cruz than in Michigan. I'm sorry, Michigan, I'm sorry, Your Ross, shout out to Ross, who is a valued member of the building and Indian business community. Okay. And he lives in Michigan. Okay, then there's the Labor Rate. In terms of money, that's variable costs as well. It depends on the skill of the person and the location of the farm, because there's different rates for different things, right. But in terms of actual like, tasks, they have to shape the tree. So when I say shape the tree, usually a tree like that leaves in pine needles, that goes down, right. But for a Christmas tree, people want to put ornaments on the tree. So the people on the farm, they have to shape it up, right, so that when you hang the ornament, it, it doesn't mean we fall off. Yeah. And then there's also harvesting the tree, you only need to do this in certain situations. If you have a arm, if you there's certain situations in terms of selling that you need to harvest the tree, but it's not always the case. Then you have to bail and transport. So they have a machine that they take the Christmas tree through, and it will bale it up and have it ready for transport. And then there's maintenance gift to trim the gas, you have to make sure there's no you have to put fertilizer to make it grow. And then you have to like watch around for animals that are living in between the trees or in the trees themselves. So that they don't ruin your trees. Right. There's tools, different tools, and this is a fixed costs on tools to plant the tree shape the tree. And then of course bale which I just said, you're going to use a tractor to plant the tree. And then there's a planter attachment that will help you actually planted in the ground. And then you have the spray that you would use to get the bugs that might eat the tree. Right. Okay, how to sell the tree. There's wholesale. And the wholesale is when a company approaches the farm and says, Hey, you have a nice number of trees that are about six or seven years old, maybe five to six years old, let's just say in three years, we would like to buy these trees for whatever for our department store, so we can sell your trees. And so they'll pay you $20 a tree. And then you'll be able to fund your farm and fund the growth of that. So yeah, that's wholesale. And then there's picking cut. And what picking cut is, is when you have people come to the farm and cut the tree down themselves. The catch with the pickin cut, is that you really have to maintain the farm so that people can walk through you've to mow the lawn, just make sure the grass is cut, right. And then and then you have to assist these people because there's going to be like, some guy like my size, trying to cut this eight foot tree by himself. Like that's not going to work out. So you have to have extra people to help customers cut things down. Right? And then there's gonna be people that want their kids to be cutting the tree and you want to just keep an eye on that. Right? And then finally, the Third Way is retail, which is starting your own lot selling full grown trees. And I think this is the risk is. And I will get into that later. Okay, then there's revenue, because this is the podcast for revenue research, right? So the price of a tree depends on the size and the type. The larger tree is, the more money it can be sold for. But the problem is that different trees have different needs. So if you're putting a lot of water into this tree, and it's 10 feet tall, you've spent more money on the tree. So your profit margin will be a little. It'll be about even Right. Yeah. And then also, in terms of revenue, the Christmas tree farm might also make reads our e a t, h, e s, like the like the little circle things that you put on your door. On they take, like, chunks and scraps of trees, and they put on a wire, they put them on a wire, and then they sell those, right. I saw a house with like five of them this year. Yeah. All right. So the Christmas season is over. It's January, no one wants a Christmas tree. You are, you're done with them, that the side of the road waiting to be picked up by the trash man. What can you do with the ones that are leftover that you didn't sell? Alright, so some Christmas tree farms, they turn them into mulch, and then they literally feed them to the other trees to help them grow. Another option is to sell the on sold trees to zoos. And the zoo. Well give the Christmas tree cut up, of course, to the animals for food. I thought those were the two most interesting ones. Um, revenue reducers artificial trees, sales of although artificial trees cut into the revenue of a Christmas tree farm because people who buy artificial trees aren't continuing to go back to the farm. The sales of artificial Christmas trees has been going down since 2007. Right? And then another revenue reducer is pests animals. So like when a pest eats up a Christmas tree and it can't be sold. That's money that you've lost, right? Because you've put time and effort in to growing that tree and then it gets cut and eaten. Right? You can't sell it. And then there's also animals, like if a bird makes a nest in the tree, and then like is pecking at the tree for food. You can't sell that tree. Right. Okay, revenue ideas. So when I'm when I started, I started looking up Christmas trees and like the life cycle, what first came up is like how to maintain the Christmas tree through the season, the Christmas season. So if you like bite in November, how to make it last till December 25. And that gave me the idea to like sell a Christmas tree maintenance kit. So a form could sell like a little kit, or like at the very least instructions about how to maintain the Christmas tree while it's cut in the house. And maybe like give some fertilizer or something in the kit. So that the Christmas tree will last right because some people killed their Christmas trees. Yeah. And then, um, for the picking cut options. I thought about like, turning it into an experience right? A whole experience besides like getting the tree cut. You can add some things like, maybe sell hot chocolate, add some cardboard cutouts to take pictures with, just get people to like, stay at the farm. Because as long as they're at the farm, they will get hungry or thirsty, or they will need things that you can provide for them to spend their money besides the Christmas tree, right. And then I thought about building and work, like a Christmas tree farm could start an email list, start a blog, and just document their work for the year. So that would help them stay top of mind, collect emails, and then they could offer discounts to a man or like a potential customer for next year. And by documenting the work, they get an email every, every month being like, Hey, we're now clearing out the farm. We're now planting new trees, right? And so that way, it creates loyalty. Since people bought that Christmas tree, and they see it grow, they'll get a sense of attachment. And they'll get attached to that form, right? Yeah. And then some simple things like sell t shirts and stickers on T shirts and stickers are cheap, easy, they don't expire. And they help the Christmas tree farm stay top of mind like the blog. So if they get a sticker or shirt, then they'll think of the farm every, every time they see that shirt sticker. Like every time they're going through the closet. They'll be like, Oh, yeah, we bought the Christmas tree there. Maybe we'll buy it from them next year. Right? It's something very simple. And then finally, my last revenue idea is to sell ornaments and other Christmas tree stuff like lights. Right, maybe sell the Christmas tree ornament. So like on revenue, revenue research, Christmas tree farm ornament, right? And that way, they'll they'll put it on their tree. Right? And that that creates a sense of brand loyalty because it's like, we don't want to have this ornament. And only you only buy the tree from this farm once we want to keep coming back because we have this ultimate. I don't know. It's just an idea. I have like, that would be me. I don't know if anyone else would be like that. Okay. Then there's Rockefeller Christmas tree. So every year in New York, they put up this huge tree. Right. Um, and it's a whole thing. And 2020 wasn't that great. So I wrote about, I wrote about the 2019 tree. Yeah, just forget about 2020 if you asked me, um, so people submit these trees to be donated for the Rockefeller Christmas tree. And so they'll submit it, like 10 years in advance, like the 2019 tree. They had literally been Washington for 10 years. It came from Florida. The tree was 77 feet tall. The woman started to grow in it back in 1959. On the Christmas tree was donated, and then at the end of it, they turn it into a home for Habitat for Humanity. Habitat for Humanity house. So, you know, she donates it, she spends all this time watering it. Probably not like, as professional as a Christmas tree farm. But it's still a lot of work, I bet. Yeah. And so she donated it. It was a Norway spruce. And so that's why I mentioned the types of Christmas trees because I checked all of them at the Rockefeller Center. And a lot of them were Norway, spruces. So that must be one tree that can grow a lot higher. Okay. So my opinion for this industry, you need patience. You can't just start it up. Unless what you do is you buy it wholesale. So you can buy like a bunch of trees that are seven years old from a wholesale form. And then, like right now, you could do that right now in January. Just say hey, I want to buy some of your stuff. seven year old trees for next year. And that way, you get a discount. And then if you want to come in and December 2021, and start a Christmas tree farm, you have your trees, and you have the ability to make a profit right away. Right. But if you want to start a Christmas tree farm from scratch, you need patience. So that's one thing. So I mentioned that I think retail is the riskiest option. And this is because for all the other options, you're not cutting the trees right away. So a Christmas, a retail store is starting your own lawn. So you take you cut the trees from the farm, and then you have like your little plot of land, and you're selling fully grown trees. So with the other options, you arm, you're giving the opportunity for the trees to grow. Like the why like the pic and cut option is because no one's taking anything that you can't grow still, right? So with the pick and cut option, the customers choose the inventory, and then nothing uncut. gets sold. Right? You can still grow that tree. You can sell it next year. With the retail you're cutting them, you're pre cutting them. And if no one wants to trees in general. You have to get rid of it. Right? Yeah. And the reason why I think the sales of artificial crease trees have been going down is because you only need one arm. My family has an artificial tree. There's no like style to it. Right? You still put the ornaments on it. So there's no reason to get multiple Christmas artificial Christmas trees. And so the people who want their artificial Christmas tree, they have it. They don't need to go out and buy another one. Right. So yeah. Okay, where I can expand. So yeah, that's what I have right now. This actually a lot. This is 22 minutes right now. Okay. So I need to expand on the type of trees on why these specific trees are chosen as Christmas trees. What's the difference between them? I don't know. Arm tools? What are the tools that my Christmas tree farms use? I need to get into specifics. Yeah. And then talk about what tools are used for. Then I talk about maintenance a little bit. In this episode. I could talk about what the maintenance is I know it's greening, which is like making the Christmas tree look green because it loses color. So they like spray paints on it. Then this trimming, I could go into more detail about how it's trimmed some other maintenance stuff, and then talk about the money that's involved with that. Of course. Same with the tools how much tools costs. arm, I was told to talk about Rockefeller a little more on how they get it in, like what's the cost of it? What's the cost to get it out? They put lights on it. So how much does it cost to put the lights on? How much Google actual lights cost? I need to go a little bit more into my opinion, maybe expand on it get more opinions about the industry. It's kind of hard because it's like Christmas trees. It's not like other things I I don't know. It's just weird. I have to develop it more. And then I also thought about the lifetime value of a customer what is the lifetime value of a customer for farm? Like I'm talking about people coming back? Do they come back? Or is it common to have like churn in a in the Christmas tree industry? Like are you seeing families grow up? like coming to one farm or you know, do you have options? Because it depends on how big the area is like I know here in the Bay Area. You can't like there are multiple Christmas tree like picking cuts, right? So if you don't like the tree for The year you go. So like, if you don't like your 2020 tree, you're probably gonna go to a different place next year. But are you actually gonna remember that you didn't like the Christmas tree from last year? So I don't know. Okay. Thank you for listening. Have a nice day. Bye