April 2003

Now or Later? By Sara Grosser

The day the first seed was planted was the first day yourbusiness began to grow. Whether it is a first- or fifth-generation growingfacility, business growth is the goal. Sure, for a short time production willincrease with tighter aisles, closer plant spacing and tiers of hangingbaskets, but the realization will surface that growing flats under the benchesjust isn’t practical, and the quality is suffering.

Indications of needed expansion

Product is sold out before the season is over. If you are out of product before the season isover, you aren’t maximizing your potential. While surplus is not desirable, tellingyour customers you are sold out is an open invitation for your customers towork with the competition. What if your customers like them better? What ifthey deliver faster? What if they always have what you do not? Don’t let it getto this stage.

You have little competition. If your customers are loyal and you dominate the market, capitalize.Chances are, your customers will follow your lead. When you offer more product,they will buy more product. Whether it be a new product line or expansion of currentproducts, your customers will not only sell more but word will get out that youcan deliver. Now you can be the fear of your competition since customers willlike you better. You will deliver faster and always have what the competitiondoes not. Once you have won market share, be sure to keep it.

The competition you do have is expanding. If the competition is expanding, should you? Theyare taking the opportunity to better serve their, and maybe your, customers.Don’t give them the chance; persuade your clients to move.

Increased demand for your product. Your name is out! Since you always have what thecustomer needs and do not grow flats under the benches, your product is highquality, and customers are willing to pay for it. The better the quality, thehigher the demand.

Growing methods are affecting your plant quality. You have tried to place plants on tighter spacing,add one more tier to the hanging basket run, and yes, you have tried to growflats under the benches. You also learned that this results in leggy,bug-infested plants that don’t sell. This is a sign it is time to expand, spaceplant material properly and offer the quality your customers deserve.

Current space prohibits multiple turns. Multiple turns are not accomplished in your currentfacility simply because there is not enough space to plant a new crop as theprevious one moves out the door, or your staff is not available to plant.Multiple turns can make a big difference. With more space or automatedequipment, just one more turn will increase profits.

Your staff can no longer handle the daily tasks within areasonable time frame. The nature of thehorticulture business is alternating peak and slow seasons throughout the year.However if your staff is working 80 hours a week watering and pulling orders,leaving them unable to plant the next turn, expansion might be the next step.Automated pot fillers, transplanters and watering tunnels, paired withirrigation booms, hanging basket systems and automated controls allow yourstaff to make more money for you in less time. This addition may or may notrequire expansion of the current structures, but surely qualifies as anexpansion of your business.

Expansion steps

Determine what product line you will introduce or expand. Which product line will have the highest demand,highest return on investment and, therefore, greatest profitability? This mayentail the introduction of a new product line or a simple expansion of currentofferings. Remember to consider all costs, including plant material, containersand soil, as well as additional staff, increased delivery trucks and utilitiesto name a few.

Prioritize your needs for the products to be grown. Different crops have various needs. Prioritize theneeds of the crops you have considered. Revert back to the category above inthis analysis, as a glass glazed house may be required for one crop while apolycarbonate glazing may be sufficient for another. This will have an impacton the return on investment and profitability of the crop selected. Inaddition, consider automation, including irrigation booms, hanging basketsystems and automated controls. These items may or may not be priorities,depending on the crops grown.

Determine layout/design.Assess the current layout of the facility. If adding structures, determine whatstructure your facility will accommodate. Consider size, orientation and use.Consider the flow of tasks, including propagating, production, packing andloading. If adding equipment, consider the strength of the current structures.Will additional structural materials be required to install irrigation booms,hanging basket systems or other systems? If transplant machines or automationis considered, take into account the potential need for a headhouse toaccommodate any or all of these additions. Consult with others in the industryto determine structure and equipment vendors to serve you.

Costs. Consult withmanufacturers and suppliers of greenhouse structures and automated equipment.What you think you need may not fit the bill. Discuss your greenhouse orequipment expansion project with more than one supplier. You will receivedifferent viewpoints and suggestions for your expansion. You may begin withseveral potential suppliers, but will most likely end up with just one. Be sureto compare and analyze what has been offered. While structures and equipmentmay appear to be the same, features such as durability in both equipment andstructures, ease of use in equipment, and simplicity of installation of booms,etc. may differ.

In addition to the cost for structures and equipment,solicit pricing for earthwork, electrical, mechanical and plumbing as needed.Permits, taxes and other applicable charges should be considered.

Secure financing / leasing. Secure financing from your financial institution or leasing company.Leasing in the greenhouse industry is gaining popularity. Your vendor of choicecan provide the necessary information and advice on leasing.

Build. Sign thecontracts and get the structure in operation. The excitement of the newfacility or equipment will have you and your staff generating that return oninvestment with energy!

Marketing. Now thatyou have made the decision to expand and invest your time and money in theexpansion, don’t fall short — market yourself. This is another opportunity toinvite current customers (and competitors’ customers) to see what you are allabout. There is always excitement with anything new — show off the new placeor equipment with an open house or other marketing events.

Sell. With the addedspace, your high-quality plant material is nothing but the best; new and oldcustomers will be enthusiastic about the new offerings.

Although growth may induce excitement, it will likely bepaired with some element of fear. Careful analysis of your current facility,equipment and staff will guide you to make the right decision on expanding yourbusiness. Proper growth is the key to success. Expand too early, and theincreased expenses may hinder your growth. Expand too late, and your customersmay have already experienced the competition.