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Many people get ahead financially in life because they purposely choose an expanding career field which offers exceptional opportunity. I have always known that my choice of a business in ornamental horticulture was a lucky one—but only a few days ago this fact was demonstrated more forcefully than ever. The financial segment of network news listed some of the most dynamic and profitable industries of the 1980’s and 90’s—as expected, computer technology, pharmaceuticals, and marquee industries were high on the list. But guess which field was expanding more quickly than any other? Yes, it was gardening—over 59% in the past 5 years! It might seem that even a fool could make good money in such a booming field. However, I can guarantee that making a super income has not been a cakewalk for me. Even with a good deal of luck, there are many things a person must learn before they can expect to receive $100,000 or more per year. Yes, you may make a few thousand quite easily—but no one I know in this industry really prospers financially unless they operate in a businesslike and knowledgeable manner. That’s what Profits from Plants is all about. It gives you a detailed list of general business, marketing, and growing pointers which can help you make a generous income. These pointers may even be used by persons who are not quite so ambitious. If you only want to make $20,000 per year in extra income—why not do it more easily and surely by learning where the opportunities and pitfalls lie? I can save you a lot of time, money, and heartache, but you must be willing to give freely of your energy and attention. This guide will not only get you started quickly in the right direction, it will show you how to find further information about specific details. Ornamental horticulture is a booming industry—and changes are taking place quickly. There are more opportunities in this business than ever before, but you must have a realistic strategy for accomplishing your goals. Nothing is more important when developing a valid business strategy than to realize that no “one-size-fits-all” plan is applicable to every business operation. You must have some idea of how the ornamental plant industry is structured in order to develop a business plan. At the present time, about one half of the plant merchandise is supplied by relatively large growers and is sold through mass market retail outlets (supermarkets, discount stores, hardware chains, etc.). Another one half of crops are produced by small to medium size growers who sell primarily through their own retail outlet or other independent garden stores. Although there are many possible intermediate situations, the industry is generally divided into big operators and small operators. This is not to say that the big boys are the ones who make the best money—in fact (from my experience), they often receive the lowest profits. The point I want to emphasize is that there is good money to be made whether you choose to run a large volume operation or a more moderate-sized business. But choose you must—because the same business plan and operational methods cannot be used for both situations. I generally counsel people who ask my advice that they should begin growing plants in a step-wise fashion. That is, to devise a business plan which allows them to complete one stage in a profitable fashion before beginning the next step. And I usually point out that the great majority of successful businesses in this field are smaller or medium sized operations which are carefully and knowledgeably managed by their owners. Many of the larger operations are inefficiently managed and simply trade dollars from one hand to the other. My suggestion for you is to initially aim towards starting a rather small plant business, and carefully expand as circumstances warrant until you reach an income range which satisfies your appetite. In no case should you leap into a large scale enterprise with the hope of making millions of dollars within a short time. Millions can be made, but only if you acquire the necessary knowledge and develop a realistic plan of action to reach that goal. And only if you are willing to endure all the sacrifices necessary for such lofty success. Great success usually entails great risk. My personal business philosophy has always been to pursue a generous income level, but one which requires only a slight amount of financial risk. After all, this is what business is all about—making money surely and reliably, not gambling with wild schemes! The following discussion will emphasize those points which I have found most important in operating a successful family-owned plant business. Please interpret the information presented in that light. Most of the points are equally applicable, with some modification, to larger businesses. A big question which you should begin considering right now is: “Am I really inclined towards and capable of being a business person?” This section may help you find the answer, or at least come closer. Many people never resolve this question fully, and, as a result, cause themselves untold heartache. A committed businessperson who enters the field after serious soul searching and technical preparation seldom fails. But if your main objective is to simply spend time enjoying plants, you should forget about making money and pursue your interests only as a hobby. We should consider one final topic. Exactly what do I mean when I say “Make $100,000 And More Growing Plants, Trees, And Flowers.” Does this figure represent salary, sales, or profit? For the present purposes, this amount represents the combined salary and profit which one hard working and knowledgeable person might expect from a successful plant growing and selling business. If your spouse helps out, you might expect more. Some businesses may yield $100,000 profit after a reasonable owner’s salary is deducted, but this is harder to achieve. My statement about $100,000 has nothing to do with gross sales—it is possible to sell a million dollars worth of plants and still wind up losing money! The following pointers are meant to be brief—a long elaboration of each would prevent you from getting a quick overview of business principles. If you wish to study particular topics in more detail, look through these books: “How to Make Money Growing Plants, Trees, and Flowers” and “The Greenhouse and Nursery Handbook”. Details are available in the resource section at the end of this guide. BUSINESS PLAN ESSENTIAL After deciding to start a horticultural business, you need to construct a blueprint of how this feat will be accomplished. This may seem quite obvious, but it is surprising how many people simply jump in and start without any firm idea about how they will proceed and where they are going. Even fewer develop their plans in detail or formally record them for future reference. Writing down a detailed business strategy forces you to organize and evaluate all the preliminary thoughts which have popped into mind. During this process, you will most likely find that some ideas, when considered more carefully, do not look so good or conflict with other goals. This is the purpose of a business plan—to organize, clarify, and formalize the process which you will use to become successful. The final plan should provide a logical, step-by-step road map which helps you navigate through all the decisions which will have to be made in the future. A business plan should not be too brief or exceedingly detailed. A very general plan is too vague to be of much use while complex plans are too rigid and will need to be constantly modified when unforeseen situations arise. Try to strike a happy medium when the business strategy is formally written down for future reference. The following points will help you get a better idea of how to construct a business plan. Certain categories may be added or deleted, depending upon special circumstances. What are your goals? • Exactly what kind of business do you want to create? Retail? Wholesale? Combination? Service Business?, etc. • Are certain values more important than profit in your business philosophy? • How do you want the community to envision you and your company? • Can you write a clear statement of your business goals in 25 words or less? Factors influencing your business: • List the three main positive strengths your firm will possess. • List the three main weaknesses which may hinder your firm’s progress. • What will make your business special in terms of competitive advantages? • Where can you get reliable information upon which to base business decisions? • What financial resources do you have now? Are there future possibilities of access to capital? • What other concrete resources do you possess (land, education, health, buildings, vehicles, etc.)? • List the specific group or groups of customers you expect to have as a clientele. • How is the general business climate in your location? Do you have serious competition for your chosen customer base? • Who will staff your new business? Are the people available for primary positions capable and well-versed for their responsibilities? • Is your family behind you? • Are there any serious risk factors which may endanger your venture? Strategy: • How do you plan to capitalize upon the strengths and de emphasize the weaknesses of your firm? • What is the time frame allowed for accomplishing your overall goals? • List the three fundamental aspects of your business which must guide every decision you make (examples might be: customer service, product quality, profit, risk). • Define how much capital and work you are willing to put forth. Have you set limits on the amount of risk to be tolerated? • What percentage of monetary return is acceptable to you as reward for your investment in work and capital? Be sure to arrive at a numeric value. • Do you have a formalized long range marketing plan? Does it include specific numerical projections? • Do you have a formalized long range production plan? Does it include specific numerical projections? • What is your overall plan for fulfilling labor needs? • Do your personal expectations and aspirations coincide with business goals? Getting things done: • How is each particular goal or strategic objective to be reached? Write a short synopsis for future reference. • When will each specific goal be accomplished? • Who will be responsible for specific goals’? • How much will each objective cost? Set up a budget for every major business category. • How will you know when each objective is achieved? Assessment of progress • Have you reached each objective? • If not, what is the status? • Is the direction properly set’? • Should the course of action be changed? • Should you continue with this project? • Have conditions changed enough to warrant updating the business plan or completely revising it? SUCCESS TAKES TIME Many people start a business with the unrealistic hope of becoming rich overnight. I want to caution that, even in a booming industry like ornamental horticulture, it will generally take 2-5 years before the business becomes truly profitable. You may find that the seed money used to start up and a reasonable owner’s wage can be paid out earlier, but don’t count on any extra profits for a few years. This is one of the main reasons why start up businesses fail—they did not budget properly for the extended time it usually takes to get off the ground. I’m not saying success can’t come very quickly if you hit some lucky circumstances, but it is safer to expect a few bumps in the road before reaching your final destination. Most business persons find that they become successful by adding small profit centers over the years. It takes time to discover and implement money making programs—but the end result is well worth the effort. One good way to assure financial success and make it happen sooner is to develop habits of thought and action which inevitably lead toward that goal. A few individuals are naturally talented in this respect, but most people (including myself) must learn these habits through hard experience or through the counsel of others. An outline of the horticultural success factors which I have found to be most important will soon be provided— please read over this outline several times. And then repeat this process every week during the next 6 months. Hopefully, this repetitive exercise will permanently implant each success factor in your mind. You can then begin to grow and sell plants successfully, as if it were second nature—easily making the proper decisions because your brain is trained to methodically evaluate each new situation. WHAT IS NOT NECESSARY Before getting into those factors which are required for success in horticultural business, let’s consider some things which are only marginally important. Although some of these items may confer a slight advantage, they certainly are not essential in most cases. • College degree—Advanced science and business courses may help, but a sound primary education in reading, writing, and arithmetic is the only background you need for success. All the specific information necessary is readily available if you possess these basic skills. • High intelligence—Of course it helps to possess great mental ability, but this is only one of many characteristics which will determine your success. Patience, perseverance, personality, communication skills, personal health, and numerous other factors are just as important. • Computer literacy—Most small or medium size horticultural businesses have almost no real need of computer applications. If there is a specific need, it can often be performed more efficiently by hiring the work out to a specialist. • Fancy facilities—One of the most common mistakes beginners in this business make is to build larger or more sophisticated facilities than can be profitably employed at the time. Usable, efficient facilities are important, but they need not be fancy or expensive. • Special location—Choose your business location carefully, but don’t pay a fortune for characteristics which are not specifically important to your type of horticultural business. Most plant based facilities do not require a high traffic count— in fact, customers may prefer a more sedate atmosphere. Research your needs diligently and use common sense to make this important decision. Don’t rely upon a real estate sales person who probably knows little about horticulture or business to help you select the proper location. • Luck—If you stay in business over a period of years, you will get a share of bad and good luck. It will all even out over the long run. Therefore, your lasting success will be determined by sound business practices rather than the effect of random events over which you have no control. • New fangled equipment—You must have equipment capable of performing the job at hand. But this doesn’t mean it must be new, expensive, or on the cutting edge of technology. In fact, I have generally found it pays not to purchase new technology until several years after it is introduced—when all the bugs have been worked out. • Cut throat or deceptive business practices—Business owners must take advantage of every opportunity to gain an honest, competitive edge. This sometimes means your adversaries may suffer to some degree. But don’t use dishonest means to accomplish objectives, always treat customers and fellow business persons with the same degree of human respect you desire. By acting in this manner, you will gain the respect of everyone. Horticulture is a field in which trust plays a large part, don’t neglect to cultivate this virtue in your dealings. • Perpetual work—Few people get ahead in business without hard work. However, don’t go to the extreme of working to exhaustion. It is not good for your health, and it seldom leads to lasting financial success. You need time to think about and organize business programs—this cannot be done properly if you are continually dead-tired. • Space age information—Most of the information you need for success has been around for years. It must simply be gathered up, organized, and employed properly. In fact, I usually prefer not to use some of the newest information until more daring souls have tried it and shown whether or not it possesses any value. In most cases, new information has little practical application until all the kinks have been worked out. • Large operation—It is not necessary to have a big operation to be financially successful in horticulture. Sometimes it doesn’t hurt to be big. But the most consistently successful people I meet in the industry are those who concentrate upon selling a reasonable amount of product at the highest possible price. This means they are market-oriented and market wise. They grow crops which are in demand, and they set their prices at a level which will yield a good profit—then they work hard at devising programs to effectively sell at their established price. • Good-Old-Boy network—Many people think that success can be achieved only through the established network which exists in any field of endeavor. This method of operation leads generally to mediocrity. How can you consistently come up with new programs and new ideas if you are burdened with old taboos and established methods handed down by generation after generation of old fogies? You should gather the best ideas from all sources, then try them without regard to whether or not some supposed authority says they will work. LIST OF SUCCESS POINTERS The success factors listed below are based primarily upon my personal experience in horticultural business. Other persons might add a few points or delete some—but most growers who have been successful would likely give you the same basic advice. Many of the success pointers relate to almost any business field, while certain ones apply specifically to horticulture. Some of the pointers are more important than others because they cover a greater variety of applications. Be sure to keep an eye out for the ones you feel are most useful for your circumstances. See if you can think of any that may be accidentally left out. Every success factor is not easily categorized. In other words, it is not always readily distinguished from others that are closely related. Don’t worry about this; it doesn’t matter whether a point is listed in one category or the other, as long as you understand the meaning. A lot more could he said now about each topic, but doing so would defeat the main purpose of providing an easily remembered basic out line. Much more will be provided later. Consult the ending resource guides for more detailed knowledge about specific topics. General business pointers: • Make sure you definitely want to own a business. Some people are not cut out to work for themselves—always remember, there is a financial risk involved. Then make sure you possess both the capabilities and resources to become successful. Look at several different business fields in which you have an interest, make a final choice based upon both interest and financial regards. • Don’t count on getting rich fast. Most businesses take several years to become profitable. • Construct a formal business plan. Write down the main points for future reference. • Be sure your interest in the field chosen is likely to be enduring. Don’t make up your mind too quickly, wait a few months before committing to any important steps. If you can’t be enthusiastic about getting into business, even when serious obstacles arise, then it may be the wrong choice for you. • Be realistic. Go over your plans carefully to make sure you are not being overly optimistic. See if there are any parts of your plan which can be confirmed with actual data. Ask persons (other than friends or relatives) to evaluate your plans, then listen carefully to what they tell you. • Knowledge is the key to success. Make sure you learn everything possible about the chosen business. Don’t skimp on resources which will increase your knowledge. One $30 guide may contain information which eventually is worth thousands of dollars. You never know when or where you will discover important concepts which can transform your financial life, so be serious about pursuing an educational program. Take field trips, investigate the competition, read books, browse topical online forums, ask questions—this is the way you become truly successful. • Set goals you expect to attain within definite time frames, and then give yourself predetermined rewards for reaching each important step. This process allows you to enjoy the fruits of success rather than falling into a mind-numbing routine of more and more work which has no visible purpose. • Take time to think through and plan your business programs. A little advance planning can eliminate a lot of unnecessary work. • Planning and action must be carefully balanced. Too much or too little of either can be bad. • Place a realistic value upon your time. Then evaluate all business programs upon the basis of how much of your time they require. This process will help you allocate more time to the most productive programs and less to those which are not so efficient. • Every business program must make sense. Periodically evaluate everything you do to make sure it makes a profit or has other redeeming characteristics. Discard those programs which no longer or never did have any substantial basis for existence. • Periodically make sure you are on the right track. Sometimes it is easy to become distracted by unimportant things and lose sight of major goals. Stand back and take an overall look at your business at least once a year—see if it is headed in the right direction. Prioritize your time and major projects to make certain they agree with the direction you want the company to take. • Learn to tackle one project or problem at a time. Sticking religiously to this rule may not be practical in many cases, but try to follow it as much as possible. Juggling several projects at once usually dilutes your attention and may lead to shoddy work or poor decisions. It can also make you a nervous wreck. List projects or problems in order of priority and work on each in sequence: you will be surprised how fast the list dwindles as you efficiently finish each task. Work goes quickly when you can concentrate on one thing at a time. • Quantify whenever possible. Try to express yourself in numerical form; this is usually a more precise means of communication than are words—especially in business applications. Examine every aspect of your information and then devise means of assigning numbers to it when possible.
If you think hard, it may be surprising how much information expressed as words can be converted to a numerical representation. It gets easier to do each time you practice. For example, instead of saying “we intend to grow a lot of Maple trees and less of Oak and Ash”, say “we intend to grow 50% Maple trees, 30% Oak and 20% Ash”. • Be versatile: react quickly to new circumstances. One of the chief advantages small businesses have over larger competitors is the ability to adapt more quickly to changing or newly emerging conditions. This capacity should be built into your various business programs. • Learn from others. Observe how your competitors and other types of businesses operate. Copy their successful programs. Even those who are failures probably have one or two good points you can use to your advantage. • Pay attention to hunches. Intuitive flashes usually occur after a long build up of information in your mind reaches a critical stage. At this point, answers to previously baffling problems may surface instantaneously without conscious effort. Most business decisions should be made through logical thought processes, but there are times when intuition helps you make a final choice. • Don’t confuse gambling with business. Eliminating risk is one of the major objectives in business; this is how you build a solid predictable income flow over which you possess a good deal of control. Gambling is subject to the laws of chance over which you have absolutely no control. Evaluate every business program from the standpoint of how much risk it involves; when the risk becomes too great, then you are entering the realm of gambling, rather than practicing sound business principles. • Be aware of your financial condition. Know at all times how profitable your business is, how much ready cash is available, and what financial obligations exist. This doesn’t mean you must keep track of every penny, but you should constantly have valid approximations of these facts in mind. A more accurate accounting should he made at least twice a year. • Don’t overextend yourself financially. Many people fail at business because they don’t know what their financial condition is, or because they know but have never learned to live within a realistic budget. Long term business success requires that you be reasonably conservative with expenses. Maintain a sufficient emergency fund: some businesses thrive during good times but go under at the first hint of adversity because no back up funds are available for the lean times which arise from time to time. Evaluate the major needs of your business and make sure they are adequately funded before spending money on less important aspects. Don’t skimp or be cheap on essential long term facilities, machinery, or services—if you must economize, do it on less critical needs or ones that do not have long term implications. If the budget plan shows you cannot afford to take care of the major needs adequately, develop an alternate business strategy which is more in line with available funds. • Businesses have different needs at different stages of development. So do the people who own them. Evaluate your company and personal life periodically to make sure policies and programs are meeting current requirements. • Some small businesses are highly profitable but don’t do so well when they are expanded. This may be because the business simply isn’t adaptable to a larger scene or perhaps the wrong methods are used during and on completion of the expansion. • Be certain to collect all the money that is due to you. This seems like an obvious necessity but many businesses fail simply because they neglect to make sure customers pay on time in full. I find that customers often cease to do business with me when I let them get behind. They become embarrassed at their situation and try to avoid contact. Marketing pointers: • Every business owner must be market and customer oriented—this is the first priority. No business can succeed without a profitable market for products or services. Production must he dictated by marketing efforts, not vice versa. Persons who grow plants often get the sequence backwards, they produce crops and then try to market them. This is all wrong! It leads to more failures and low profit situations amongst horticulturists than any other cause. Listen to the customer. Allow customers to show by their purchases which plants, trees, and flowers they like best. Devise marketing programs by which you can test customer preferences before full scale production is started. Don’t risk extensive crop production until market testing has shown that consumers will purchase your plants at a price which provides an acceptable profit. Market testing is basically simple—it means that you offer plants for sale at particular prices and then determine how well they sold at each test price. • Know your customers. This doesn’t mean you need to know them personally, but you do need to understand what types of plants and flowers they prefer, how much they are willing to pay, when they are likely to buy, and a number of other basic customer characteristics which will vitally affect business decisions. • Repeat business is critical to a successful business operation. Customers will not return if your trees, plants, and flowers do not perform acceptably. And they will not return unless you provide good, courteous service. It costs money to find customers; in order to recover your investment in them it is important they return in the future. Satisfied customers are like money in the bank. The primary marketing advantage an informed horticulturist has over mass merchant outlets is in helping customers choose proper plant varieties for climatic conditions and specific uses. Providing detailed instructions for care after the purchase is also an important component of long term success. • Guarantee all plants, trees, and flowers. This doesn’t mean you must guarantee them under all conditions, but they must meet your customers’ expectations of a fair deal. Trust is a very important ingredient in the success of any horticultural business. Don’t argue with customers about the details of a guarantee—no guarantee at all is better than one that is honored grudgingly. Price your plants so that they reflect the cost of a guarantee. • Believe in yourself, your products and services. It is impossible to present a positive image to customers if you can’t even convince yourself that plants, trees, and flowers are worth the asking price. You must believe that horticultural products are an important aspect of our cultural and biological life. It is much easier to have pride in your work if you aim at the high end of the market which appreciates beautiful plants, rather than the low end where price is the main consideration. Know the competition, but don’t let it dictate your policies. Many producers of ornamental plants fail to realize good profits because they consistently base decisions upon what the competition is doing. Price your merchandise on the basis of what is needed for a decent profit rather than upon how much everyone else is charging. I always check out major competitors for prices, quality, and new items, but then I try to see how I can put my company in a position of leadership rather than following everyone else. Know how the selling price of merchandise affects profits and other aspects of your business. You can sell a mountain of merchandise and still lose money. Many plant producers fail to understand the tremendous impact a few cents difference in price can have on profits. This is especially noticeable if you operate near the break-even point. It is easy to construct numerical charts for each product which graphically illustrate how profits are affected at different levels of price and volume. Analyzing your business in this manner can often lead to thousands of dollars in increased profits very quickly. Numerous factors such as competition, product availability and cost, demand and quality, must enter into price calculations. Although price is important, it may not be the main factor which determines business success. In horticulture, such things as quality, availability and selection are often more critical. Don’t advertise commercially more than necessary. Advertising is generally very costly, and it doesn’t add one bit to the quality or usefulness of your plants, trees, and flowers. Most horticultural operations derive the majority of sales from word of mouth referrals—therefore, it makes good sense to he sure every customer who comes in is well-satisfied with the service and products. This satisfied customer will then recommend you to a relative or friend —-the process goes on and on. While a certain amount of conventional advertising may be productive, the majority of effort and expense should be aimed at offering superior plants and service which will produce enthusiastic recommendations from people who purchase them. • Develop all possible profit centers. By this, I mean that you should look for and actively develop all the means of making money that exist within your business. If you think carefully, there may be several good money making projects that have been neglected. Scarcely a year passes in which I don’t discover a new profit program that has escaped my previous attention. As the years pass, numerous small profit centers can add up to a very significant income. • Integrate your horticultural business vertically. A vertically integrated business is one in which the company participates in several activities which could be handled separately by different companies. In horticultural business, it normally means that you both grow and sell your own plants. The extra activities included allow your company to make more profit while handling the same amount of merchandise. Even more activities than growing and selling can be easily included— such as manufacturing your own soil, or producing your own small starter plants. Plant Growing Pointers • Growing plants, trees, and flowers is profitable only if you have a carefully constructed production plan. This plan should contain a logical program for each major aspect of the growing operation. Examples of the programs which might be included are: A) facilities, B) labor, C) machinery, D) environmental factors such as soil, water, fertilizer, temperature, light, etc., E) crop and variety selection, F) insect and disease control, 0) marketing and economic analysis, H) crop scheduling. Every individual program which is developed must integrate successfully with all other programs contained in the overall production plan. Each program and the overall plan should he systematized so that commercial crops can he reliably and profitably produced on a regular basis. • There must be a profitable market available for every crop you grow. Don’t produce plants on a speculative basis—you should have a definite marketing plan in place before any crop is started. More profit is possible if you identify major marketing trends, and then produce crops which fit in with these trends—in other words, “go with the flow”. • Each new crop of plants, trees, or flowers should be grown first on a test basis (preferably, more than one time). Full production runs often cost a good deal of money; there is no sense in risking full production until the crop has a proven market and the cultural details have been worked out. Variations in local climate from year to year can often cause unforeseen difficulties in plant growth. Even if a particular crop looks promising on paper, you will be lucky if 1 in 4 is ultimately profitable over the long run. Each new crop is a gamble and should be phased in gradually. • Be patient. The necessity to test crops and phase them in gradually requires patience, but it is the only prudent way to operate. You must also bide your time as crops are growing— there is seldom any means of speeding up normal growth appreciably without adversely affecting plant quality. You cannot hurry Mother Nature: she takes her own sweet time, and we mortals must learn to live with it. • Timing of crops for market is critical. In order to make the best profit (or any profit at all!) most ornamentals must be marketed within definite time frames. These marketing periods may be dictated by calendar holidays, seasonal factors, or climatic variations. Meticulous advance planning and crop scheduling are the most important means of assuring that crops will be ready at the opportune marketing time. However, minor manipulation of crop culture and environment may also be practiced upon occasion. Growers must be on top of the scheduling problem for every crop at all times. • Learn to deal with rush periods. Since most ornamental plants, trees, and flowers are sold within rather short time periods, you must he willing to work hard at peak seasons of planting, harvesting, and selling. Failure to do so often results in lost market share and a decline of produce quality. Plants, trees, and flowers are perishable. Every business that handles or grows them must place a good deal of emphasis upon inventory control. Careful attention should be focused upon providing the proper amounts of suitable quality at exactly the right time. This is not an easy task. Inventory control is mainly exercised through advance planning of crops and marketing. However, a small amount of control can be accomplished through minor adjustments of crop culture and marketing as the harvest period approaches or is in progress. Failure to implement strict inventory control causes excessive dumping of crops. It is not hard to see how “dumpage” can quickly lead to an unprofitable operation. Accept crop and marketing failures as part of life. Given the many variables which can affect crop culture and sales, it is inevitable that occasional failures will arise—put these unfortunate incidents on the compost pile and go on to the next task. Many people never learn this important lesson, and, as a consequence, they gradually accumulate entire fields or greenhouses full of old and useless plants that consume valuable working time just to maintain. These useless stockpiles frequently become breeding grounds for diseases and insects which infect new crops. Although you must learn to deal with failure, do not become nonchalant about it— take every reasonable step to prevent a similar occurrence in the future. Learn from your mistakes! Be aware of crop production expenses. Knowing how much a particular plant, flower, or tree will cost to produce is the initial step in understanding what the selling price must be. Accurate calculation of production costs for a crop can sometimes become complex—but it must be done if you are to have any realistic basis for profit objectives. Dependable expense and crop records are essential for determining how much it costs to produce individual crops—you cannot simply pull the figures out of the air. Although published industry expense averages may be interesting for comparison purposes, they cannot be relied upon for pricing purposes in actual practice. There is too much variation from region to region and grower to grower for these estimates to be valid. Every plant, tree, and flower large extent, upon the costs involved in providing this space and time. Each crop must be evaluated upon the basis of how long it will occupy a particular unit of space. This is the only way you can arrive at a valid pricing schedule which definitely yields a profit. The exact means of calculating these figures is completely explained in The Greenhouse and Nursery Handbook. Learn to interact with employees in a productive manner. Most business owners rate labor-related factors as their biggest problem. The production of ornamental plants, trees, and flowers is generally labor intensive—this means that labor management must be a top priority. If you are the only worker, it is even more important to work efficiently. Labor is almost always the largest expense in crop production and marketing. Therefore, it is likely to be a very important determinant of company profitability. Labor costs must be kept within a range that allows you to produce a competitive crop. Much of this objective can be met through effective labor management, but a good part of it must be accomplished through keeping a lid on wages. Poor communication between managers and workers is often a major reason why productivity is low— this problem is the manager’s responsibility, not the employee’s. You must look upon employees not only as the largest expense, but also as the company’s most valuable asset—don’t jeopardize the entire organization through haphazard, uninformed, or contentious labor management. Provide workers with proper facilities, tools, and instruction for the job. Since labor will likely be the biggest expense of growing plants, trees, and flowers, you should get the most out of every hour. This doesn’t mean all the facilities or tools must be new or expensive—simply adequate. Proper instruction about tasks is even more important—and this doesn’t cost a dime. One well-trained employee can do the work of 3 or 4 who are poorly prepared. Written work orders arc a good way to ensure that jobs are done correctly and completely. • Horticultural businesses are often highly seasonal. Your labor management plan should carefully take this variable work load into account. It can become a major problem if it is not given advance consideration. Try to make seasonal workers reasonably permanent from year to year by hiring people who can accept and may even prefer this type of work. Neighborhood homemakers and retired persons are perhaps the most dependable and productive help in this regard. Some high school and college students may also be used if they display a mature work attitude. Don’t over invest in facilities or machines which are marginally useful to your business. Many people go machine “crazy” and purchase more than can be profitably used. Unless a machine or facility is utilized consistently, it often makes more sense to handle the task by temporarily increasing the labor force. Remember, a worker can be laid off or dismissed when the job ends—a machine costs money whether it is working or not. And machines sometimes become obsolete quickly. Machines are also generally rather restricted in what they can do—people are much more flexible. Consider your purchases of facilities and equipment carefully; be sure they make sense from a profit standpoint. Visit other growing establishments and copy their best ideas. At least once a year you should spend a few days checking out new possibilities for your business. Only one good idea could be worth thousands of dollars in increased production, sales, or expenses saved. Don’t adopt every new thing you see. Check it out carefully first to make sure it fits into your organization and will actually turn a profit. You should easily be able to find one good new plant or money saving method each year that will increase profits by $500.00. In the course of 30 years in business, this would add $15,000.00 net income per year. The majority of crops should generally consist of proven “bread and butter” items which have substantial demand. You can make more money by slightly improving a popular high volume crop than by introducing a new crop for which there is limited demand. Developing new methods of using popular plants, trees, and flowers is also a good means of increasing profits dramatically. Several economic characteristics of each crop should he analyzed on a regular basis. In addition to space, time and total growing expenses mentioned above, you must keep track of how well crops sell under “real time” situations, what the sales trends indicate (up, down, or sideways), and how crop profitability compares with existing or potential competing crops. You need to perform a comprehensive evaluation of which plants will provide your operation with the greatest profit. After all, there are thousands of varieties you could be growing—your job is to concentrate upon those which will make the most money under the existing circumstances. Insects, diseases, and other pests are a major and continuing problem in any horticultural business. They must be effectively and economically controlled if you expect to run a profitable operation. Pest control should be dealt with in a thorough, logical, and continuing manner if it is to be successful. Haphazard methods will not work. Whatever means you choose to employ should be carefully evaluated for human and environmental safety as well as for effectiveness and economy. There are numerous federal and state laws which regulate the use of pesticides—be sure you are aware of the ones which apply to your operation. All businesses that grow plants, trees, and flowers are affected by weather and climate. Although you can’t do anything about the weather, you can prepare for its ramifications through advance planning. Weather also greatly influences the marketing of horticultural crops. Therefore, it is absolutely essential that you carefully consider weather factors whenever any business program is being planned or evaluated. The weather can sometimes control every aspect of a horticultural business. You must know the climate as well as possible, plan for it and, in the end, accept it. Plant growing businesses exhibit several general methods of operation. The different methods often grade into one another in actual practice so that most businesses are hybrid combinations. 1) Specialist grower—tends to restrict activities to a particular crop (such as bedding plants), or to a specific step in crop production (such as propagation). 2) Diversified grower—grows several different crops and often performs at least several critical steps in the growing process. 3) Vertically integrated grower strives to perform as many operations and grow as many crops as is practically possible within a single organization. Somewhat different than the diversified grower in that the emphasis is upon self-contained operation rather than total crop diversification. 4) Wholesale grower— serves as a wholesale source for retail outlets. May or may not participate in retail activities themselves. 5) Retail grower—grows plants for and sells plants directly to the retail consumer. |