August 2003

Planning for Success By Roger C. Styer

With the hectic spring season behind us and the summerdoldrums well established, it’s the perfect time to assess your business andlife. Now, you may want to talk only about your business at this time, but Ithink the two are interwoven and need to be addressed jointly. Most growershave family operations meaning life and work are the same. We seem to work longhours in the pursuit of success, yet many times, we fail to weigh out whatthose long hours are doing for our personal well-being, as well as ourfamily’s.

BUSINESS PLANNING

This past spring season has been a little rough for manygreenhouse growers. Overly wet weather with a lot of wet weekends resulted inslow sales and more dump. An extended spring season meant longer hours and lotsof reduced prices. Regardless, many growers say they did OK this spring, butthe proof is in how much product they sold at full price. If you sell 50percent of your product at full price but reduce your price up to 50 percent tomove the rest, how much profit did you make? Don’t just look at how much money youtook in (cash flow), but exactly how much profit (margin) did the seasonprovide?

I know most growers hate to dump and will sell for whateverprice they can. Hopefully, those crops are still decent when they get to thestores, but many times, they are not. Dump is taken right off the bottom line.It’s an easy figure to total but a hard one to categorize. I have clients whoare finding out exactly how hard it is to assign reasons for dump as they setup systems to measure dump and allocate its costs to the proper departments forthem to deal with.

I hear sales departments blaming high dump on growers fornot growing the crop correctly and production blaming sales for not selling iton time. How do you address this? Start with solid sales planning by week andlabel crops in the greenhouse by ship week. Then, keep track of quality, weeklysales reports and weather conditions. Note: for most crops and locations, aquality crop can be held maybe two weeks past its assigned ship week.

I encourage all sides to plan together and takeresponsibility for their part of the plan. At the same time, you need someflexibility in the plan to account for poor weather or changing salesenvironments. If you are responsible for both sales and production, which sidedo you prefer? Most growers produce first, then hope to sell later. But youreally need to look at both sides to put a good business plan in place. The bigquestion is: Are you producing what you can sell or selling what you canproduce? Your profit margin and dump report will change dramatically dependingon which side you’re on.

Putting together a business plan calls for a lot offorecasting. It depends on good current and historical information, as well asbest guesses. How good your information is and how realistic your guesses arewill determine whether your business plan succeeds. I know a few growers whobet big on some crops based on their estimates and threw away most of the cropwhen the sales don’t come through! How did that ever get into the business planin the first place? And who should be held accountable? If you are going to trynew crops, never increase or decrease any crop by more than 10 percent a year.Just because you were successful selling 1,000 strawberry jars does not meanyou will be successful selling 10,000 strawberry jars.

Finally, take into account a product’s life cycle whenadding new crops. A new product typically has about a three-year life cyclebefore everyone is producing it or consumers get tired of it. Either way, itmeans less profit as that product nears the end of its life cycle. So, keepcoming up with new ideas and push them for all they’re worth, recognizing whenit’s time to get out of that product.

LIFE PLANNING

As I mentioned, planning for your business should include planningfor your life. After all, many of us have suffered burnout at one time oranother, and if not for the slower times…What’s that? You don’t have anoff-season anymore? Well, get ready to lose some key people!

To keep your sanity, I recommend more balance between workand personal time. That doesn’t mean you cut back to 36 hours a week duringspring, but it does mean you plan vacations and encourage your key staff to dothe same by providing the time during slower periods to get away and rechargetheir batteries. We all know people who have been under a lot of stress andlook much older and less healthy than they should. Have you looked at yourselfin the mirror lately? I mean, really looked at yourself.

I can speak about this topic personally. I love my work, butI know it has taken up a lot of my personal life. So, I am making some changes.First, I have just bought a house after living in an apartment for eight years.I really missed mowing the grass and planting flowers. Second, I am trying toimprove my physical health while traveling extensively. Eating better andwalking more are on the program, both at home and on the road. Third, I plan tospend as much time with my teenage daughter as my schedule will allow. She isactively planning what to do with my new house to make it comfortable for her.And finally, I want to continue to make as many friends in this industry aspossible. So, feel free to introduce yourself if we happen to bump into eachother somewhere down the road.