Planning for Success

August 8, 2003 - 08:43

The final word

With the hectic spring season behind us and the summer
doldrums well established, it's the perfect time to assess your business and
life. Now, you may want to talk only about your business at this time, but I
think the two are interwoven and need to be addressed jointly. Most growers
have family operations meaning life and work are the same. We seem to work long
hours in the pursuit of success, yet many times, we fail to weigh out what
those long hours are doing for our personal well-being, as well as our
family's.

BUSINESS PLANNING

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

I know most growers hate to dump and will sell for whatever
price they can. Hopefully, those crops are still decent when they get to the
stores, 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 who
are finding out exactly how hard it is to assign reasons for dump as they set
up systems to measure dump and allocate its costs to the proper departments for
them to deal with.

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

I encourage all sides to plan together and take
responsibility for their part of the plan. At the same time, you need some
flexibility in the plan to account for poor weather or changing sales
environments. If you are responsible for both sales and production, which side
do you prefer? Most growers produce first, then hope to sell later. But you
really need to look at both sides to put a good business plan in place. The big
question is: Are you producing what you can sell or selling what you can
produce? Your profit margin and dump report will change dramatically depending
on which side you're on.

Putting together a business plan calls for a lot of
forecasting. It depends on good current and historical information, as well as
best guesses. How good your information is and how realistic your guesses are
will determine whether your business plan succeeds. I know a few growers who
bet big on some crops based on their estimates and threw away most of the crop
when the sales don't come through! How did that ever get into the business plan
in the first place? And who should be held accountable? If you are going to try
new 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 mean
you will be successful selling 10,000 strawberry jars.

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

LIFE PLANNING

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

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

I can speak about this topic personally. I love my work, but
I 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 to
improve my physical health while traveling extensively. Eating better and
walking more are on the program, both at home and on the road. Third, I plan to
spend as much time with my teenage daughter as my schedule will allow. She is
actively 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 as
possible. So, feel free to introduce yourself if we happen to bump into each
other somewhere down the road.

About The Author

Dr. Roger C. Styer is the industry's leading production consultant and president of Styer's Horticultural Consulting, Inc., Batavia, Ill. He can be reached by phone at (630) 208-0542 and E-mail at carleton@voyager.net.

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