Filling the gaps in your company’s profit margins

0

Although most decisions and planning for the next year take place during the summer months, it’s always a good idea to think about areas of your business where you can make improvements.

How successful this process is depends on a number of factors, including:

  • Notes we have kept over the past year on what needs to be improved, changed or discussed.
  • Meaningful and effective planning sessions that depend on our degree of contact with the daily activities of the business.
  • Involve and consider the opinions of the people doing the work.
  • Make a good effort to find out how other operations have fixed the same issues and if you can apply it to your operation. Or consult as many resources as possible to get a clearer idea of ​​the situation. There’s nothing wrong with copying and improving if you’re willing to share your knowledge with others. Cooperation only works if it is mutually beneficial.

Some decisions require no capital outlay, such as hiring or firing an employee, or adjusting workstations. However, many decisions require a capital investment, and they fall into the following categories:

  • Necessary/no choice – such as a new boiler, a change of plastic, a proper water source, or a broken pot/flat filler that cannot be repaired.
  • Upgrade for efficiency.
  • Install a new system that will reduce costs.
  • New technology that will improve the quality of plants.

When reviewing your greenhouse operation each year, it can be helpful to look at the different parts that make up the greenhouse operation, namely: infrastructure, sales and marketing, production, labor and overhead.

For a small operation it is likely that one or two people will handle all of these areas, while in larger operations more than one person might be responsible. Regardless of size, when reviewing and planning for the next year or five, it would be helpful to consider these operations one by one.

Infrastructure

Even if a greenhouse has been built for a long time, the expansion can sometimes be an opportunity to move the receiving and shipping area, modify the aisles or bring the toilets closer to the place of action. The point is to always think outside the box and many new ideas will surface.

In terms of energy, certain circumstances could present opportunities for cogeneration, wood boilers or extending that gas line to your operation. These are major projects, but if the return on investment is three to five years, the expansion is justifiable.

Sales and Marketing

Always evaluate your clientele. Identify the most needy and least profitable, but at the same time, be sure to show your appreciation to those who have served your business and are part of your success.

Evaluate your product line by calculating costs and profit margins. Eliminate low or negative profit margin items if there is no room to increase the selling price or reduce costs.

Keep your options open for different clients, but never turn around for no reason or because of minor disagreements.

Involve your customer in product selection and, in turn, your customer will involve you in their product selection.

The costs of running a greenhouse keep going up, especially over the last two or three years. This is mainly due to labor and shipping costs. In addition, the price of supplies will increase significantly next year, and this includes planting material, seeds, containers and growing media. Expect an 11-25% increase in production costs this season! Share these cost increases with your customers now so that you can at least recoup them.

Conveyor belts can help save time on routine tasks.

Production

With all the costs imposed on us, we should always be looking for more efficient ways to be efficient. Here are some suggestions:

Offer less: Streamline the products you offer. This is the only way to reduce shrinkage and to be able to mechanize. This will reduce inventory, reduce downtime at planting and speed up shipping.

Don’t jump into new varieties without first trying them on your own farm. Then, if all goes well and they have commercial appeal, incorporate them into your production. Growing new varieties without trying them out has been proven to be a major profit stealer.

Time it right: Mum growers and poinsettia growers understand photoperiod very well. As far as bedding plants are concerned, the photoperiod has not been well adopted for the right timing of crops. An example is the African marigold, which is planted in short days to initiate flowering. This adds three weeks to harvest time and therefore the crop is too old at the time of shipment. The alternative is to obscure the clods for three weeks, which will trigger flowering and take another four weeks to complete. A lack of knowledge about photoperiods turns a seven-week harvest into 10 weeks, and the flowers get too old by the time of shipment due to the production schedule.

Scheduling harvests to meet shipping goals without additional treatments or extra labor, such as pinching, is a very inexpensive way to save money and end up with a fresh product that will do the consumer good. Aged product will dry out faster and be much more difficult to acclimate to the garden setting, in addition to additional production costs.

Overblooming begonias can be due to bad timing or the wrong variety.

Increase capacity: Increase the volume of product for which the greenhouse area allows and do not exceed it. This saves a lot of the extra work that goes into moving the product and you don’t have to sacrifice product quality. Exceeding this capacity may work for a year, but it usually won’t the following year and in the process you could be labeled as a producer with a poor quality product. It’s hard enough to maintain a reputation for good quality, and much harder still to recover from lower quality.

Consider the consumer: When filling larger pots for a product that is not intended for planting in a garden, it is particularly useful to remove some growing medium from the container to allow room for water when the consumer waters at the hand. This gives the product a better chance of surviving and by doing so you will save at least 15% of the support.

There is no need for saucers in hanging baskets, especially for outdoor use. The little buffer is a false security for the owner and does nothing to improve production in the greenhouse.

Planting healthy plugs or liners in the final container is the best way to ensure that the crop remains healthy throughout the finish, without any chemical treatment. My clients very rarely use fungicides, focusing on fixing the cause of the problem rather than treating it like insurance. Routine fungicide treatments can lead to high costs and sometimes negative side effects.

Use the pot size based on the cultivar you plan to grow. If a variety is very vigorous, it should be planted in a larger pot rather than a smaller one. Treating it three to five times to keep it short will most likely mean it won’t grow for the consumer afterwards. At the same time, don’t use very compact varieties in large pots unless you plan to put more liners or caps in each pot.

Combinations: Combinations are the most popular item among all bedding plant offerings. To be profitable, here are some guidelines:

Two cultivars in one pot are considered a combination. It is not necessary to put five to six different cultivars in one container. Vigorous cultivars will take over and crowd out others, and this will also make cultivation difficult. Breeders do a much better job of suggesting combinations where the cultivars are compatible, but there is no substitute for testing first.

Three cultivars are optimal for combinations and the best are those of the same genus, such as three different colored calibrachoas or three different petunias.

A profitable combination is one that we plant and ship in six to eight weeks with no or only one growth regulator treatment.

There is no room for combinations in hanging baskets or 10 inch pots. Coveralls are an upgraded item and belong to containers 12 inches and larger, as we always charge by pot size rather than what’s in it. The price difference between the 10″ and the 12″ is $4 to $5.

Combinations can be made from seed, which is normally less expensive than vegetative plant material, or a combination of both.

Foliage-only material combinations are becoming extremely popular and are normally fast growing, which could be good reasons to try them.

It is best to plant combinations of varieties with the same growth vigor. Second best is to know the vigor of the plant material going into the combination, then apply a growth regulator before planting the more vigorous ones to balance the growth of the combination. It will save you time later and be more cost effective.

Labor

The best way to save on labor is to minimize it by streamlining production. Reduce the time spent handling the product. Instead, write out your production schedule in detail and complete the tasks on time. Create and follow best practices.

With mechanization, make sure you have the tools you need and get the job done right the first time. Have the proper structure in place, such as concrete belts, driveways and floors, and working machinery to reduce downtime. By mechanising routine tasks, you retain qualified personnel.

Don’t be afraid to weed out the bad apples that can lead to good employees. Lead by example and most importantly, set goals for employees and reward those who achieve.

General overhead costs

This category includes all indirect costs. Regardless of whether the greenhouse is full or not, these costs remain the same and include things like accountants, consultants, mortgages and lawyers. These people are there for a reason and that is to help you, but they are only as good as your interactions with them. Ask questions you need answers to.

What has worked for me all my life is the LALA theory, which stands for: Look, Ask, Listen and Act.

For all of these tips to work, you must always believe that there is a better way to do everything you do. The minute you think you know it all is the beginning of the end


Melhem Sawaya of Focus Greenhouse Management is a consultant and research coordinator for the horticultural industry. He can be contacted at [email protected]

Share.

Comments are closed.