How to Get Into the Billboard Business – $1,000 of Lumber and These Steps

Although it’s been around for a couple thousand years, the billboard business in the U.S. has entered a renaissance over the past decade. The internet has crippled or ruined most of the forms of media in our country – from TV to radio to newspapers. People now entertain themselves, and get their news, from their computer or iPhone, and these advertising vehicles are left with giant amounts of vacant ad space.

However, billboards actually have had rent and occupancy increases since the internet was introduced. Why? Because billboards are the only form of media that does not “ask” you to look at it – it forces you to.

A radio station has to offer content to get you to listen, and then it has to compete with the alternative forms of content out there. Billboards don’t have to compete for your attention. When you are stuck in traffic, they are the only source of amusement you can get – and in the case of travel, the only source of local information. Billboards have increased in advertising rates at an average of 10% per year over the past decade, because of this monopoly.

So how do you get into the billboard business? It’s physically a lot easier than you think. Normally, all you need is a state license (which costs about $200) and you’re ready to go. But then what? That’s when it gets harder. You see, billboards are a game of strategy, like chess. There are certain rules for billboard placement, such as zoning, spacing, etc. These rules are part of the federal Highway Beautification Act, which was passed in the 1960s. It was this limitation of supply of billboards that brought about all the value in owning them.

So going back to that pile of lumber sitting around: how do you make money with it? Well a pile of around $1,000 in lumber, coupled with a couple guys and a post-hole digger, equals one wooden billboard sign. And this type of retro-style sign is one of the most profitable in the industry. Here’s how it works.

You build a two-sided wooden billboard of around 12’ x 32’ in size, on about four wooden telephone poles. It has no lights to break. It rents for $3,000 per year per side, paid in advance. This is a very attractive rate for an advertiser, as a single ad in the local paper costs around the same $250 that the billboard costs per month. The total revenue for the sign is $6,000 per year. Meanwhile, the costs are only $1,000 in land rent, about $500 to install the vinyl advertisements, and $500 spread among insurance, taxes and maintenance. So the net cash flow is $4,000 per year.

$4,000 may not sound like much, until you think about this. That billboard only has to be rented one time per year. After that, you might only have to visit that sign four times per year to make sure it’s O.K. So you can operate a huge number of billboards on very little time.

In my town in Missouri, there’s a guy who owns 12 billboards on the main road into town – and they’re all rented. So he’s making about $48,000 per year from that hobby. Across the river in Illinois, there’s a guy who has 100 signs, that he built up after retiring from the military. He’s got around $400,000 per year in cash flow. And he runs that entire empire by himself.

So if you are interested in making money, and creating a lifetime of cash flow that you can pass down to future generations, then look into the billboard business. It is not capital intensive. It does not require massive amounts of borrowing. It is not chock full of risk. It’s a very simple business with attractive returns. And all you need is about $1,000 of lumber.