Top 10 Mistakes Greenhouse Growers Make When Planning An Expansion
There are many pitfalls to avoid when planning an expansion of your greenhouse. Your business relies on many factors such as crop deadlines and financing – make sure you are planning your new builds accordingly and make the proper considerations. Here are some common mistakes:
1. Not giving yourself enough time to execute your greenhouse expansion.
No matter how good your greenhouse manufacturer is or how fast your greenhouse construction company is, no one can deliver a turnkey greenhouse yesterday when you are placing your order today. Proper planning takes time, and crop deadlines are important.
Discuss this early with your greenhouse manufacturer and the company will be able to assist you in putting together a proper timeline. Decision on details like greenhouse structure, heating, irrigation and environmental controls can be scheduled to give you the finished greenhouse when you need it.
2. Focusing only on price when deciding who will supply all the components of your greenhouses.
We all know that the greenhouse industry, like most industries in North America, has suffered from tough economic times, and it is easy to focus on costs when times are tough. But no one ever saved themselves rich. Cost cutting will only take a business owner so far.
Capital investment decisions like building a new greenhouse, investing in hot water heating or putting in rolling benches and energy curtains requires more than getting the lowest price. It requires a value assessment. Price combined with quality, delivery, after sales service and ROI make an intelligent investment decision. Don’t be the one to buy something cheap only to find out that you got what you paid for!
3. Forgetting the importance of your crop sales and marketing.
If you build it they will come! This is certainly one of those great movie lines that does not stand in the real world. Expand your greenhouse production to double your size, and you need to double your sales to pay for it. Some extra capacity makes good sense, but you need to make a business case for greenhouse expansion, and that starts with the top line of your income statement. Revenue!
4. Using your operating line of credit to finance greenhouse capital projects.
This is another classic mistake that has gotten more than a few greenhouse growers in hot water with their banks, suppliers, and sometimes their employees. Operating lines are for operating costs, something you will also likely need to increase if adding substantially to your greenhouse business. Adding a new greenhouse is a capital purchase, and should be approached like one if you intend to have the money to pay for your new greenhouse irrigation system, boiler and environmental controls.
5. Asking your banker only for the money needed to pay for what greenhouse equipment you have been quoted.
It doesn’t matter how detailed you are in your planning; major construction projects almost always have cost overruns. At GGS we recommend our customers approach their lending institutions and request 10 percent more than what they budget. This shows people financing your greenhouse that you build in contingencies, which actually makes you look less risky than if you had asked for less.
Ten percent can go a long way to covering unexpected costs, like new building permit fees implemented by the town, realizing you forgot to get a quote for your greenhouse poly, or changing your mind and wanting to add an extra loading dock at the last minute.
6. Not verifying the quality of steel that makes up the greenhouse structure and the greenhouse heating pipes.
A few years ago, it was unheard of to see substandard steel being sold in our industry, but with cost pressures at every turn, some greenhouse manufacturers and heating companies have been purchasing steel offshore with little or no quality control. GGS is among many steel structure manufacturers who have achieved A660 certification in order to ensure our customers that every piece of steel that goes into a GGS greenhouse structure meets the quality standards of structural grade steel.
Whether the greenhouse will be used as a retail garden center, a farm code greenhouse, a shipping warehouse, or other storage facility, it is in your best interest to make sure the steel is A660 quality certified.
7. Trying to be a greenhouse grower and a greenhouse general contractor at the same time.
One of the great strengths in the greenhouse industry is that we tend to be doers rather than managers.
Greenhouse business owners in general work at their business. They get dirt under their nails. They are hands on. But, you know they say every coin has two sides, and with this great strength comes an equally great weakness in that we have a difficult time letting go. A greenhouse owner will certainly reduce the cost of an expansion by managing the entire process himself rather than hiring a company to manage all the subcontractors, but have you considered the cost of taking you away from your other jobs in order to manage a new greenhouse build?
8. Not getting all the greenhouse component suppliers together to coordinate design and construction.
There is a saying in construction: the first person in gets to go where they want. What this means is that in an uncoordinated construction site, there are always cost overruns because someone else has put their systems where the next person expected to be able to go. If you hired someone to manage the greenhouse construction, most of this worry should be taken care of. If you didn’t, then you as the greenhouse owner/manager need to ensure that everyone knows what everyone else is doing. The earlier in the planning process you can get the team together, the faster and less expensive the final greenhouse construction project will be.
9. Not calculating the ROI of your greenhouse investment options.
Often when our sales people sit down with a greenhouse owner to discuss what they want to include in a greenhouse design, the initial decisions are made based on what they have in their existing greenhouses. It is our job to educate our customers on the benefits of other options that may not otherwise be considered and may be options that provide a great return to the greenhouse operation.
In the 1990s, GGS successfully showed growers the value of natural ventilation for horticulture crops and food production. Now natural ventilation is an industry standard. Energy curtains in your greenhouse can produce a significant payback for poly greenhouses as well as glass greenhouses when you look at heat costs and the energy savings curtains provide. Higher under gutter heights of 21 and 24 feet high have shown better crop yields. Talk to your greenhouse structures sales representative for what other options may work for you.
10. Not researching what government programs may be available.
GGS and our sister company Niagrow Systems Ltd. have had tremendous success helping greenhouse operations understand where government grants may be available. In Canada and the United States, there are currently many energy savings programs that will pay a portion of investment costs in things like thermal energy curtains, biomass boilers and the use of solar energy or wind power.
There are other programs that help pay for water conservation initiatives like flood floors, and treating rain water in a closed loop system. And there are other programs designed specifically to help the family farm. It is a good idea to make yourself familiar with all the options available before you plan or as soon as you begin to plan your greenhouse expansion.