Financing the Industry

While visiting a Wisconsin greenhouse last week, I had an interesting conversation about financial management that started me thinking...who's really financing our industry? Who really owns the buildings we work in and the plants we produce? What happens to unpaid bills in a slow season? And how do you determine what everything's worth to even be able to answer any of these questions?

The whole subject came up because the grower I was talking to was owed money on a crop grown for another greenhouse. It was November, and they were still owed almost $100,000 on a crop delivered in the first quarter. This customer was not under bankruptcy protection; it did not have a disreputable owner; and no one was trying to disavow the debt. The bill was simply not being paid. When the two owners finally spoke in person, my friend learned the reason for the late payment: "We haven't been paid." That operation had not been paid for their deliveries and, in turn, had not paid for anything delivered to them. I kept thinking why is this anyone's problem but their own? I certainly wouldn't get many more hours of cell coverage if I told my mobile company that I would have to delay my payment until I received some more working capital.

Financing ourselves

The grower I was visiting described the problem accurately: Our industry finances itself. Many greenhouse operations do not have a line of credit with their bank, and most don't even work with a bank enough to consider it "their bank." They go into the local branch every few years when their business needs a major capital investment for new greenhouses or environmental controls or whatever else they need that costs more money than is in the account. And that's too bad because a good banking relationship is the cornerstone of any successful business. A line of credit allows you to pay bills on time and without penalty; it allows you to order supplies during early order for maximum discount; and most importantly, it keeps the business running smoothly during rough periods.

I've heard the arguments before about how banks don't understand our industry, about how we get lumped in with agriculture as high risk. And it might be true that some banks are initially skeptical of horticultural lending, but remember the purpose of the bank is to make money. If you come to them with a solid business, if you keep them informed of current operations, if you can demonstrate to them that you are not high risk, the relationship will develop. And when one green business falls on lean times, the ripple will stop being felt throughout the industry.

News Flash

Back in my October column, I wrote about the start of GPN's weekly e-newsletter, "GPN Weekly." Well, as I write this, we have over a month's worth of issues under our belt and are already getting some great input from readers about additional things they'd like included in next year's redesign.

I don't want to rehash everything that was said about the newsletter only two months ago, so I won't go into detail about it's contents. For those of you who read about the newsletter with best intentions to sign up but still have not, get online and do it. For those of you who are reading about the newsletter for the first time, you can go to www.gpnmag.com to sign up for our free weekly news alerts. This is a whole new approach to the industry, and you don't want to miss it.