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Greenhouse Business Management

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Greenhouse Business ManagementObjectivesWhy do we care?Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Now for the Bad News!Slide 14Slide 15The Importance of ManagementSlide 17Slide 18Slide 19Slide 20Slide 21Size of Greenhouses SurveyedSlide 23Wholesale Greenhouse 2000 Income StatementCost of Goods Sold: WholesaleOverhead Expenses: WholesaleRetail Greenhouse 2000 Income StatementCost of Goods Sold: RetailOverhead Expenses: RetailAverage Balance SheetAverage Cash Flow StatementFirst Question- What is marketing?Slide 33Slide 34Slide 35Slide 36What Opportunities Exist?Wholesale Production-Contract ProductionService Oriented OpportunitiesWholesale Production-Specialty Items (differentiated strategy)Slide 41Name of the Game: Niche MarketingSome Examples of Current Niche Market TrendsSlide 44Where are folks selling?Developing an Enterprise BudgetSlide 47What Is Financial Management?Slide 49* Pricing Your Product* Making Business Decisions* Making Investment DecisionsSlide 53Slide 54Slide 55Slide 56Slide 57Slide 58Slide 59Slide 60Slide 61Slide 62Slide 63Slide 64Slide 65Slide 66Slide 67Slide 68Slide 69Slide 70Slide 71Slide 72Slide 73Slide 74Slide 75Slide 76Slide 77Slide 78Slide 79Slide 80Slide 81Slide 82Slide 83Greenhouse Business ManagementBen BealeExtension Educator-MCESt. Mary’s CountySome slides adapted from Wei-Fe Uva; Cornell ExtensionObjectives•Trends in Maryland Greenhouse Businesses•Marketing Strategies for Greenhouse Businesses•Financials-Enterprise BudgetingWhy do we care?•Rising population base of affluent suburbanites in reach of Maryland growersSource: Census 2000 analyzed by the Social Science Data Analysis Network (SSDAN).1953-Agricultural land19821992Why do we care?•Rising population base of affluent suburbanites in reach of Maryland growers•Growing interest in gardening, landscaping, and plants.Why do we care?•Rising population base of affluent suburbanites in reach of Maryland growers•Growing interest in gardening, landscaping, and plants.•Horticulture industry is the fastest growing sector in American Agriculture.Production trends of floriculture crops01,0002,0003,0004,0005,0006,0001994 1995 1996 1997 1998 1999 2000 2001 2002 2003Million $bedding and garden plants potted flowering plantsfoliage plantscut flowerspropagative material and cut greensFloriculture crops: Average sales per grower0200,000400,000600,000800,0001,000,0001,200,0001,400,0001,600,0001993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003DollarsWest South Midwest NortheastMaryland050,000100,000150,000200,000250,000300,000350,0001994 1995 1996 1997 1998 1999 2000 2001 2002 2003MarylandERS Data. $ in 1000. Greenhouse and Nursery CropsNow for the Bad News!•The majority of small businesses fail within the first 2 years.•Most folks starting a greenhouse do so because they enjoy growing, not the business side.The Importance of ManagementSWOT analysis:The SWOT analysis is simply a tool for organizing your thoughts and determining areas of competitive advantage.Looks internally at:•Strength •WeaknessesLooks externally at:•Threats •OpportunitiesInternal Strengths: Strong local recognition of name Excellent internal efficiency withmanagement, communication and humanrecourses Good communication skills and publicrelations Very flexible horizontal structure Ability to specialize and customize eachproduct to customer needs Close to consumers Very good financial standing, lowdebt/asset ratio Enjoys raising beef Internal production synergies throughfeeding grain products through beef Facilities used for tobacco easily converted to beefbarnsExternal Opportunities Local Population base expanding offeringmore customers Regional population base (within 4 hourdrive) represents 2/3 of total US population Disposable income very high insurrounding area Large # of specialty restaurants and shopsin area Government subsidies and grant programsfor farmers direct marketing Tobacco conversion program providesfinancial support for switching to otherenterprises Limited competition in direct sales ofdifferentiated beef products Consumer loyalty to local farm products Foreign disease scares increase value ofdomestic beefExternal Threats Local population base expanding-moreexpensive land, large farm operations notcompatible with urban settings (noise,odors) Traffic congestion prevents movement oflarge equipment Unemployment low in area Farm industry very segmented andspecialized suited to large economy ofscale-leave little room in profits for smallproducer Tobacco production not expected to last inlong term futureInternal Weaknesses: Production inefficiencies compared tolarger farms Most expertise in area of tobaccoproduction Marketing culture of farm based onwholesale, commodity markets Limited experience in marketingmanagementOverall objective-profitStrength of SMPSuccess of ExecutionSMP not goodExecution not goodFigure 1Cornell Greenhouse Cornell Greenhouse Business Summary, 2000 Business Summary, 2000 - Growing Greenbacks in Your - Growing Greenbacks in Your GreenhouseGreenhouseWen-fei Uva and Steve RichardsDepartment of Applied Economics and ManagementCornell Universityhttp://hortmgt.aem.cornell.edu/resources/presentations.htm2000 Greenhouse Businesses Profile2000 Greenhouse Businesses Profile•29 New York Greenhouses–12 Eastern NY–11 Central NY–6 Western NY•Marketing Channel: –14 mainly wholesale, 15 mainly retail •Major Crops:–21 produced mainly bedding/garden plants–5 produced mainly potted flowers–1 greenhouse vegetables & herbs–1 propagative material, 1 cut flowersSize of Greenhouses Surveyed01234567 1,440 15,580 29,720 43,860 MoreSize (sq ft)frequencyWen-fei Uva and Steve RichardsDepartment of Applied Economics and ManagementCornell UniversityScope of Greenhouse Study:Scope of Greenhouse Study:Ave Size (SqFt) Ave Sales % G.M.All Greenhouses 38,500 576,000$ 27%Wholesalers 55,500 837,500$ 26%Retailers 23,000 334,000$ 28%Wen-fei Uva and Steve RichardsDepartment of Applied Economics and ManagementCornell UniversityWholesale Greenhouse 2000 Income StatementWHOLESALE FIRMS >50% Amount Per Sq Foot % of SalesSales 843,403 14.67$ 100%Less: Cost of Goods Sold 664,711 11.10$ 74%Accrual Gross Margin 178,693 3.58$ 26%Less: Overhead Expenses 162,473 2.98$ 20%Accrual Net Income


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