Preparing a Business Plan
The success of a small business
often hinges on the decisions that were made well before the first
product was ever sold. Having a business plan is a recognized management
tool to document objectives and outline how they will be attained
(1). A builder would not start out to erect a new structure, nor
would a traveler begin a journey, without a plan. A business plan
helps create realistic goals, make logical decisions, allocates
resources, and measures the results of actions (2).
Business plans help protect against failure
For many small farm businesses however, writing a business plan
does not happen unless a prospective financial loan officer requires
one (3). After many years of running a business, owners often state
they had not started their new operation with a plan or a mission
statement. While it's true that this spirit of entrepreneurial and
individual fortitude has propelled many small businesses to grow
and prosper in the United States, for many new owners this is not
the case. The U.S. Small Business Administration (4) estimates 80%
of new businesses fail after just 5 years,
This large West Coast herbaceous perennial
producer has extensive holdings including this large gutter
Without careful planning and attention to detail this operation
would never have achieved the success it is known for.
and that more than 80% that survived the first 5 years fail during
the second five. The reasons for lack of business success can be
varied. Business owners can have problems making decisions, or lack
sufficient experience needed in order to succeed. Owners can have
problems relating to people, or have difficulty with organization
or maintaining focus.
To help avoid this fatalistic statistic, small business owners
need to develop a carefully designed plan. Management strategists
theorize that there is a high degree of correlation between the
extent of initial planning and the long term success of the small
During the initial phases of preparing a business plan entrepreneurs
can review (6) of a wide variety of American enterprises, as provided
by the U.S. Small Business Administration. In addition, the private
firm, Palo Alto Software, Inc. (7), maintains a web page called
Bplans.com that is provided as a free resource to help entrepreneurs
plan better businesses. This site is updated daily with all sorts
of tips for those exploring the possibility of developing their
First develop a mission statement
A mission statement should be prepared the before the business plan.
Simply stated a mission statement is a written statement that outlines
the vision, direction, and future goals of your proposed nursery
or garden center. The mail-order nursery owner and book author Tony
Avent (8) states that the mission for his company is to: "
the way America gardens by offering the best, the newest, and the
strangest in fun, garden-worthy perennials to gardeners around the
world." This statement allows customers to understand the aim
of his company, as well as helps inspire customers to do business
with him. A mission statement will help keep the new business on
track as it grows. While some owners will state that they never
took the time to actually write down a mission statement, the grounding
factors that lead their business to success remained the same. While
the business direction may have changed over time, the mission statement
remained as leadership tool providing focus for the organization,
direction for employees, and essentially a commitment to meet the
Managers should visualize a mission statement much like a rallying
cheer rather than a mandate (5). The statement should be short and
easily remembered. A well written mission statement can appear on
plant labels, signs, brochures, tee shirts, web sites, and billing
statements. Business owners should circulate drafts of their mission
statements to their employees. The wording should be acceptable
to the majority. It should be challenging, but clearly worded so
as to be clear of jargon or empty phrases (9). It should inspire
employees to feel a part of the company team. If some thought is
put into its wording, it may well last for many years and serve
as a true sense of pride of business ownership.
Assessing your business plans
A successful horticultural enterprise owner will have conducted
a thorough analysis of the present business climate for the proposed
type of operation being planned. A prospective wholesaler will have
attended trade fairs such as the FarWest Show (10) show in Portland,
Oregon, which is hosted by the Oregon Association of Nurseries,
and is held each August at the Oregon Convention Center. It is one
of the leading nursery and greenhouse industry trade shows in the
United States. The show typically attracts 13,000-15,000 wholesale
growers, retailers, landscape contractors, designers, architects,
industry suppliers, educators and others from virtually every U.S.
state and several foreign countries. In 2003 there were more than
850 exhibitors occupying 1,365 booth spaces (11). The FarWest Show
highlights the type of plants and goods that wholesalers are featuring
to re-wholesalers, landscapers, and owners of garden centers. By
visiting with exhibitors from not only the Pacific Northwest, but
also from other parts of the United States, a prospective business
owner can gain an excellent snapshot of the ornamental industry
and where the future my lead.
For those interested in a retail operation, the FarWest Show could
be supplemented by attending The Yard, Garden & Patio Show (12),
which is also hosted by the Oregon Association of Nurseries. This
February convention is designed for the gardening public. The leading
Pacific Northwest retailing garden centers and suppliers will staff
the trade show booths at this fair.
By attending both of these trade conventions, and by visiting wholesale
nurseries and garden centers throughout Oregon and Washington and
British Columbia, a well-rounded overview of the Pacific Northwest's
horticultural industries can be gained. Making assumptions about
market size and potential is a valuable factor in any business plan
(3). Nonetheless having a firm grasp of the market potential is
one of the keys to working with lenders, as well as providing the
basics of writing a business plan.
Components of a business plan
A complete business plan, as recognized by lending institutions,
should include several components (see Table 1). Business plans
that are too long generally reflect a business owner who is unsure
of future plans. It's better to be concise. Use charts, tables,
resumes, and studies if they contribute to the direction of the
Components of a business plan
profile and summary
Title page and table of contents
The title plan should include the proposed title of the new business,
the time frame covered by the plan, the name of the owner, the date
the plan was prepared, the mailing address of the owner, an e-mail
address, and a phone number. This page should look very professional
when it's completed as first impressions will make all the difference
to reviewers who look at many proposals.
Though the executive summary comes at the beginning of the business
plan, it's the last document to be prepared. As the name implies
the summary is quick overview of the business plan that can be read
in less than five minutes. It should be written in non-technical
jargon so that a reviewer, who may have no understanding of horticultural
enterprises, can readily understand it. Table 2 outlines what should
Components of the executive summary
and objectives of the proposed business
and services that will be for sale for the first 3 years
of the amount of loan money being sought
advantage the business will offer
Basics of the marketing strategy
of personnel plan
If the plan is written by someone who has not had a plant-based
business in the past, the focus should be on previous business experience,
public service applicable to horticulture, or community involvement
that has sparked the interest to start a new business. The tone
of the executive summary should be to inspire the reader (13). Often
times the executive summary may be the only part of the entire business
plan that is looked at.
Table of Contents
As it implies the table of contents will provide the reader with
a guide to the individual sections of the plan. It should include
all headings and subheadings within the body of the text.
Business Profile and Summary
This section represents an overview of the planned horticultural
enterprise including. Review Table 3 for the statements that should
be included for the profile and summary.
|Table 3. Business profile and
of the planned business, including partners
for starting the planned business
of owners experience
goals and objectives, both professional and personal
assets, loans, and investments
return on investment
start date for the company
measure the success of the business: gross return, hiring new
employees expansion plans
In this section the owner will describe in detail the proposed product
or services that will be sold, and how these will be unique. Refer
to Table 4 for the details.
|Table 4. Business description
Products or services which will be
where the products or supplies will be procured
how the proposed products or services will be different from
Describe whether the products will
be sold whoesale, retail, mail-order, or a combination
where the business will be located
Describe new products or services that
will be introduced in the future
Market Analysis and Strategy
Any prospective nursery or garden center owner needs to be well
aware of the current market opportunities for both wholesale and
retail trade of plant stock and services. In this part of the business
plan there should be a description of where the products or services
will be sold, i.e. nationally, regionally, or locally. The American
Nursery and Landscape Association (14) has an excellent summary
page showing this data. The U. S. Department of Agriculture's Economic
Research Service (15) released a report in 2003 which details the
historical trade in bedding plants, cut flowers, herbaceous perennials,
and nursery crops. This report lists the number of growers in each
state, the size of greenhouse operations, acreage figures, and gross
receipts. In the Pacific Northwest the state agricultural statistic
departments of in both Oregon (16) and Washington (17) also have
detailed summaries of sales data. The Oregon Association of Nurseries
(18) as well as the Washington State Nursery and Landscape Association
(19) also have relevant state data.
In terms of strategy prospective business owners will need to identify
the segment of the plant industry that they plan to target. Options
include wholesale bare-root stock, container stock, balled &
burlapped ornamentals, turf, retail garden center, flowering pot
plants, Christmas trees and greenery, landscape services, and many
others. In Oregon the Oregon Association of Nurseries maintains
a list of private consultants that can be hired to help develop
a marketing strategy. Once a marketing strategy has been determined
the business plan needs to describe the level of competition, and
state whether the market is increasing or decreasing.
A market promotion description will have to be included. The wholesale
ornamentals industry advertises in a variety of different fashions
including trade shows (FarWest Show), newspapers such as the Capital
Press (20), catalog sales, web pages, direct mailing, tours, and
through the use of regional sales staff.
As accurately as possible a list of all the startup costs for the
proposed business, including fixed assets such as machinery, buildings,
and land rent or purchase will need to be listed. There will also
be the need for a list of inventory, supplies, and advertising and
promotion costs. A projection of income, termed the cash flow statement,
will need to be developed based on current prices for similar goods
and services. From the cash flow statement a balance sheet can be
generated showing projected assets and liabilities as the business
develops. A certified public accountant (CPA) can help the fledgling
business entrepreneur to setup the accounting system.
Human Resources Plan
The human resources plan describes the expected labor requirement
over the first three years of the business. It should show the areas
of responsibilities, previous experience, relevant training for
each of the proposed managerial and key staff positions. In startup
business plans list the proposed number of workers that will be
hired over the first three years. If these workers will require
advanced training, list that as well.
The final section of the human resources plan should show an organizational
chart showing the line of responsibility for all managers, staff
and workers. Reviewers of the plan will need to be convinced that
a thorough analysis has gone into preparing for a well staffed company.
Later, employees will have this data to review how the firm is organized.
Loan officers will need to see the proposed compensation levels
for the staff members. They will also need to review resumes for
Preparing business plans. 1999. Rob Gamble. Finance and Business
Structures Program Lead, Ontario Ministry of Agriculture and Food.
Publication order number: 99-011.
a business plan. 1994. William Owen and Greg Passewitz. Ohio
State University. Community Development Fact Sheet 1101-94.
your marketing- The most challenging part of a business plan.
2001. Charles Schlough, Department of Applied Economics and Management,
States Small Business Administration, Washington DC.
5. Mission possible. Tanya Singley, Director of Operations at Blue
Spruce Landscape, San Jose, CA. In: American
Nurseryman, February 15, 1999.
business plans. 2003. U.S. Small Business Administration, in
conjunction with Palto Alto Software.
7. Palo Alto Software,
Inc., Eugene, OR.
8. So You Want to Start a Nursery. 2003. Tony Avent. Timber
Press, Portland, OR.
9. The Complete Guide to Garden Center Management. 2002. John Stanley.
Ball Publishing, Batavia,
10. FarWest Show, sponsored
by the Oregon Association
11. Oregon Association
of Nurseries, December, 2004, Wilsonville, OR.
12. The Yard, Garden &
Patio Show, sponsored by the Oregon
Association of Nurseries, held in February each year, and the
Portland Convention Center.
Building a Sustainable Business- A Guide to Developing a Business
Plan for Farms and Rural Businesses. 2003. Gig DiGiacomo, Robert
King, Dale Nordquist. Developed by the Minnesota Institute for Sustainable
Agriculture, St. Paul, Minnesota.
14. American Nursery and
Landscape Association, Washington, D.C.
and Nursery Crops Situation and Outlook Yearbook. September
2004, Market and Trade Economics Division, Economic Research Service,
U.S. Department of Agriculture, Washington, D.C..
16. Oregon nursery
and greenhouse survey. September 2003. Oregon
Agricultural Statistics Service, Portland, OR.
17. Top 40 agricultural commodities in Washington state. 2003.
Washington Agricultural State
Statistics Service. Olympia, WA.
18. Oregon nursery
& greenhouse industry statistics. 2003. Oregon
Association of Nurseries, Wilsonville, OR.
State Nursery and Landscape Association, 2004. Sumner, WA.
20. Capital Press Agricultural
Newspaper, Salem, OR.