Last month, I promised I would share a few ideas on how to avoid or repair the damage when the bottom drops out of your business.
I am writing this as 2009 draws to a close. You are reading it in February, when you are in the midst of your spring season. All of us are wondering what the future of our industry will be. Unfortunately, none of us has a crystal ball so we can know for sure what will happen.
In March 2000, I wrote: “To survive in this industry, you must find the stars, milk the cows, look carefully at the question marks, dump the dogs and keep squintin’.” That’s probably good advice today. (If you want to read the rest of what I had to say, get a copy of my book, “One To Grow On,” from Meister Media Worldwide and check out the column titled “Will Floriculture Continue To Grow?” on page 41.)
What are the options you can consider when faced with an economic crisis? You can downsize your business or declare bankruptcy; you can attempt to sell your business; or you can reinvent or refocus it by finding other products and uses for your facilities.
I recently spoke with Dennis Crum of Four Star Greenhouse in Carleton, Mich., and together we came up with examples of friends and colleagues in floriculture who have chosen each of these options.
Downsizing Or Closing Your Doors
Dennis recalled what happened to a rose grower. Prices dropped because imports entered the market in very good condition. The grower’s overhead costs continued to rise. Heating costs increased dramatically. The rose grower tried to maintain business as is. His profits and cash reserves disappeared. When he made no improvements, stopped planting new plants, reduced chemical applications and lost key employees, he was forced out of business within two years.
Growers producing any type of crop who have maintained a business-as-usual plan have either already suffered the same fate as this rose grower or are approaching that fate at an alarming rate.
Another rose grower faced basically the same situation as the one I just mentioned, but he was fortunate to sell his property at a very good price to a real estate developer.
Forty years ago, when the majority of our business was still in cut flowers and potted plants, a colleague of mine worked for the largest greenhouse operation east of the Rocky Mountains. He figured he was set for life. Then, someone offered the owner a ton of money for the property, and that was that. If you are as lucky as these two operators, then selling may be an option. But don’t count on it in these turbulent economic times.
Ten years ago, I read a book titled “The Power of Focus” by Jack Canfield, Mark Victor Hansen and Les Hewitt. After reading it, I defined “focus” as I relate it to floriculture.
F Is For Future. Thirty years ago, some cut flower, pot plant and bedding plant growers saw the changes taking place and anticipated the direction of the future. They modernized their operations to be more efficient, adjusted their crop mixes, partnered with either independent or chain store retailers, and in some cases, opened their own retail outlets. Today, it is even more important to have a vision, to differentiate fads from trends and plan accordingly.
O Is For Opportunity. Once you have that vision of the future, you must constantly relate it to your business. Many growers have tried to copy the success of others. Seed plug producers, vegetative plug producers, plant branders, retailing outlets, box stores and novelty crops have all come and gone.
True there is only room for so many players in any niche, but the first truth is there is soon only room for those who can do it right and do it at the right time.
C Is For Customer. It is as important to cultivate new customers as it is to cultivate new plants. We all know the story of General Motors’ difficulties. Well, in November a friend went to a GM dealership intending to purchase a new car. She was told they didn’t need to make deals on their most popular models and that she wouldn’t be able to get her new car for at least three months. So, she bought a Subaru!
Growers who will survive when the bottom falls out have developed cost-efficient methods for both pulling and delivering orders and are focused on servicing their customers. They know consistent quality at a fair price is very important to retailers but customer service with good attention to detail is the key.
U Is For Utilize. This is the key word in “focus.” Many companies write business plans and talk about strategies but fail to achieve their goals because they can’t pull it together. Some growers had a good business plan and produced a very good crop for the independent or chain store retailers they had partnered with only to have these outlets go out of business and take the grower down with them. The old business adage of never committing more than 25 percent of your business to one customer in many cases is a true rule to follow.
S Is For Science. Knowledge is power. Information is available now more than ever and at speeds we couldn’t imagine even 10 years ago. Those who can keep abreast of new developments in production and marketing and implement them quickly will stay in business.
And finally, we have to remember in today’s marketplace, change is constant. Just when we think we have found the answer, we find the question has changed.
In just a few years, we have been forced to change from being specialized farmers who followed simple rules of supply and demand to highly specialized business people who grow plants. If we haven’t been able to refocus, we need to begin planning our next career.
Cost analysis, pricing based on costing, budgeting, improved efficiency, cost effective transportation methods and detailed customer service are now every bit as important to growers as plant selection, timing, temperatures and pH.
Each person is responsible for his or her own destiny. Whether or not you survive in business will depend on how you handle your responsibility and authority. Only you can make it happen. As I have said many times: “If it is to be, it’s up to me.” It definitely is time to lead, follow or get out of the way.
I hope this spring season will be all you hoped it would be!