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williamslawn
12-10-2002, 06:46 PM
I have an chance to buy an established wholesale nursery business. It comes with (4) 32X100 Greenhouses and all of the accesories. The owner will assist in the transition period to help retain current customes. Is there anything I should consider before purchasing?

Lanelle
12-10-2002, 08:15 PM
A tight non-compete clause. I presume you have a background in greenhouse growing. If not, there are some risks that need to be considered. You will need to have a pesticide license to spray inside.

J&R
12-10-2002, 08:17 PM
You need to see his last 5 years C tax returns to what his profit or lost was or 5 years sells tax records to what kind of sells record he has. that will be the proof you need to see if it's worth buying.

williamslawn
12-10-2002, 09:40 PM
I do have my pesticide lic. I am also meeting with the current owner to review his books and tax records. They are going to keep two greenhouses to do some retail sales and I will be doing mostly wholesale so I will not get the no compete contract. Thanks for the information please feel free to give some more advice.

devildog
12-11-2002, 04:01 AM
this one is interesting. we operate a house and have done so for 3 seasons. has been a flustrating experience i would most likely do again. its a lond learning curve. the first question i would ask, why is he selling the houses? are they on his/her property? will you be forced to move them at some point in the future. take a close look at the chart of accts, if they have any. find out what the cost of sales per unit is. make sure expenses have not been moved to cost of sales.

what are you buying, besides the houses; trays/fert/buckets/mix, employees/accts/supplys & so forth. 2-3000 ft houses sound to the aver person like alot of space to grow, you'll be amazed how fast the space gets used up with benching (i presume your buying these as well). i question, if two houses can provide enough sales to cover expenses (your going to become married to these houses/products 24x7 - 365), let alone cost of sales issues. its become very difficult to compete with the Baucoms and the like who are peddling the product to anyone who gets their phone number a buys the rack minimun, in terms of their volume. your thread did not mention, woody, perennials, annuals (they each have their unique issues)?

as you most likely know, we bring in alot from fld into SC. the cost of sales alone for these houses will be making the profit % very slim, when compared to the price of these product coming from fld and baucoms.... bottom line, why is he selling????? has he discovered the profit % has slipped to the point he can no longer justify their operation??? send me email or a pm if you have specific questions. with regards... devildog

BigJim
12-11-2002, 04:15 AM
We ran a wholesale and retail nursery operation and found the wholesale side was not profitable,it was cheaper to buy the plants off other wholesalers and retail them.It was easier to pick up the phone and order 100 plants,and have them delivered than try to grow them on ourselves.Specailising in one particular plant type can be a good earner,but wholesale/retail is hard work.A friendly bank manager and a large overdraft help too.

kris
12-11-2002, 07:53 AM
Originally posted by williamslawn
They are going to keep two greenhouses to do some retail sales

This doesn't sound good.

aquaturf
12-11-2002, 08:52 AM
I have always wanted to get into the greenhouse business, but when I do the numbers, it becomes clear that you need a big operation to really make money. How big? Depending on crop mix and market channel, you'd be looking at at least 25,000 sq ft. And you'd have to employ a lot of automation to cut labor. $$$

It will be hard to run a wholesale operation with only 12k sq ft. Are these houses gutter connected or free standing. Most wholesalers operate as efficiently as possible, in gutter-connected houses with automated production and handling systems. You can't really do that in single hoop houses. I would be really curious as to why they want to remain in retail but dump wholesale. Buyer beware!

devildog
12-11-2002, 09:07 AM
no doubt, he's (the seller) most likely too a close look at the #'s and has come to realize the profits are shrinking and cost/expenses are increasing... profit can be made with two houses depending on the product produced and the market competition in the area. We do have an extended season here. With Regards... devildog

williamslawn
12-11-2002, 06:20 PM
It is a situation where the wife is doing most of the work and the husband wants out. There profit for last year was $26,000. They did not max out there greenhouses. They only grew a spring and fall crop. They are closed (retail) 7 months of the year. I think the business has alot of potential. Theyare keeping the 2 greenhouses for retail until their inventory is gone
They have all the supplies and should make some good profits based on their projections. They said they will be willing to sell the other 2 after the inventory is gone.

devildog
12-11-2002, 06:27 PM
What is the gross and net sales? What are the cost of sales and expense percents? with regards... devildog

williamslawn
12-11-2002, 06:39 PM
Gross $125,000.00 profit $26,000.00 after all expenses, including payments on 2000 F250 and New 8X16 enclosed trailer.

They are selling wholesale 1801 flats for $7.00. I think that is too cheap.

Mountain Gardener
12-13-2002, 09:41 PM
Williamslawn,

I, along with my wife, own and operate a nursery and landscape contract business in Arkansas. From only what I can see here but with my years of experience, you should put on your track shoes and run from this deal! IT STINKS! Sorry, I don't believe it's possible to gross or net $26,000 on $125,000 gross sales growing flowers. What, if anything else is current owner doing to generate revenue. Retail? Landscaping? Trees- Shrubs? I've seen no less than 30 operations within 200 miles of us close in the last 2 years. The largest was doing over 6 million annually. Most were $250,000 or less. My nursery losses money EVERY YEAR but provides a "front door" for my landscape install and service work that does. By the way, not an annual flower on my place.

Think about this: 2 people working for $26,000 a year. Figure 80 man hrs wk x 50 wks =4000 man hrs. These are conservative numbers. 4000 hrs divided into $26,000 = $6.50 hr or $3.25 each per hour. Are you sure this is want you want? With my very limited knowledge of this paticular deal, my opinion is that the seller is looking for a sucker.

devildog
12-14-2002, 08:04 AM
Originally posted by Mountain Gardener
Williamslawn,

Sorry, I don't believe it's possible to gross or net $26,000 on $125,000 gross sales growing flowers. What, if anything else is current owner doing to generate revenue. Retail? Landscaping? Trees- Shrubs?

I concur;

My nursery losses money EVERY YEAR but provides a "front door" for my landscape install and service work that does. By the way, not an annual flower on my place.

Me too;

Think about this: 2 people working for $26,000 a year. Figure 80 man hrs wk x 50 wks =4000 man hrs. These are conservative numbers. 4000 hrs divided into $26,000 = $6.50 hr or $3.25 each per hour. Are you sure this is want you want? With my very limited knowledge of this paticular deal, my opinion is that the seller is looking for a sucker.


Something else to think about; Lets do the #'s backwords using their numbers:

125,000 gross equals 17857 flats w/ 10% crop loss, means they need to growout 22000 flats (using the $7 per flat price)

Using the spring / fall two month period, you mention = 11000 flats grown out in 12000 sf of space????; they must have one of the most inovative benching systems know to man.....

22000 flats sold over two 2 months cycles = 183 flats per day (of course your working Sat/Sun)....sorry I don't think so!!!!

$7 a flat x 22000 flats sold = 154,000 gross sales. That means 29,000 in sales shortfall, where is it?????

Something stinks: LET THE BUYER BEWARE :nono: :nono: With Regards... devildog

BigJim
12-14-2002, 01:02 PM
Last 2 posts have about hit it on the head,in a survey of Nursery Businesses done here by Accountants the average Net Profit was 2-4% of Gross Sales.Hardly worth getting out of bed for:( .Most Nurseries and Garden Centres here are getting out of plants and selling all manner of other products such as giftware,garden furniture,pet supplies,tropical fish,hardware etc and nearly every Garden Centre has a ****,infact some are more noted for there food than thier plants.One of the best "Garden" shops here has started in the premises of a failed plant nursery,they import containers of terracotta/clay pots from Asia and have the place stacked with pots,they sell only pots,plants that will grow in pots,potting mix and nothing else,they do really well.They also have just opened a **** there.Annual plants sold here are usually always sold as loss leaders,the big annual nurseries supply supermarket chains,hardware stores and the WalMart/KMart stores here,they sell the plants at cost or less.Good luck if you decide to go ahead,but its easier cutting grass than than selling plants here:) .

williamslawn
12-14-2002, 08:22 PM
I thank everyone who has responded to this post.:) You have brought up some very good points. I have a sucessful Lawn maintainence company. We do landscaping, irrigation installs, fert., low voltage lighting and contract maintainence. I will only be an investor in the Greenhouses. A friend of mine will be running them. He approached me about the finance part.

.Using the spring / fall two month period, you mention = 11000 flats grown out in 12000 sf of space????; they must have one of the most inovative benching systems know to man.....

They have 2 more 32X100 greenhouses, we are not getting at this time. They also leased (2) 24X96 Greenhouses from a company that has closed.

Sorry, I don't believe it's possible to gross or net $26,000 on $125,000 gross sales growing flowers. What, if anything else is current owner doing to generate revenue. Retail? Landscaping? Trees- Shrubs?

They do have a retail business. They sell mums in the fall. They sell perennials and veg. plants in the Spring. They have also started selling house plants to the local florist.

Mountain Gardener
12-15-2002, 12:15 AM
Williamslawn,

Your last post makes this deal sound like a done deal. (?)
If not, get your track shoes. This thing sounds more and more like a disaster with your every post.

Sorry, but your friend is looking for someone to buy him a job. Are you also a banker? Let your friend get his own financing - at the bank. Your only involvement should be to encourage him IF he can get HIS OWN financing. If you want to do some investing, find a company listed on the NYSE or NASQ and buy some stock.

You are doing the smart thing by providing services to your customer base with low overhead and with excellent profit potential. If you want to grow your business - grow what you are successful at and knowledgeable about.

Once again, The numbers just don't add up. This deal smells like a camp ground crapper on Monday following a busy summer holiday weekend.

Best Regards, Mountain Gardener

devildog
12-15-2002, 05:08 AM
Originally posted by Mountain Gardener
Williamslawn.........This thing sounds more and more like a disaster with your every post........Sorry, but your friend is looking for someone to buy him a job. Are you also a banker? Let your friend get his own financing - at the bank. Your only involvement should be to encourage him IF he can get HIS OWN financing........ If you want to grow your business - grow what you are successful at and knowledgeable about.......Once again, The numbers just don't add up. This deal smells like a camp ground crapper on Monday following a busy summer holiday weekend...... Best Regards, Mountain Gardener

And not only that, with your every post, the whole deal changes:

FIRST POST: It comes with (4) 32X100 Greenhouses and all of the accesories. FORTH POST:They are going to keep two greenhouses to do some retail sales and I will be doing mostly wholesale They also leased (2) 24X96 Greenhouses from a company that has closed. LAST POST: They also leased (2) 24X96 Greenhouses from a company that has closed.

FIRST POST: I have an chance to buy an established wholesale nursery business. FOURTH POST: They are going to keep two greenhouses to do some retail sales and I will be doing mostly wholesale YOUR LAST POST: I will only be an investor in the Greenhouses.

FOURTH POST: They are selling wholesale 1801 flats. FIFTH POST:
They do have a retail business. They sell mums in the fall. They sell perennials and veg. plants in the Spring. They have also started selling house plants to the local florist.

And how many others changes will you be adding to this deal. Look, most of us do not mind helping you with the thought process of this deal. BUT, you need to put all the elements of this scenairo on the table. You keep adding more and more new elements to the original post. Please, if you want more advise put all the cards on the table. Let me sumarize:

lanelle: there are some risks that need to be considered....
J&R: you need to see if it's worth buying....
BigJim: A friendly bank manager and a large overdraft help too...
Kris: This doesn't sound good....
aquaturf: they want to remain in retail but dump wholesale ?....
Mountain Gardner: the seller is looking for a sucker....

Something stinks: LET THE BUYER BEWARE With Regards... devildog:nono:

williamslawn
12-15-2002, 08:28 AM
OK:

Here is/was my thought process:

If I invest in my friends business I will benifit alot. We will be able to cross train employees (Laborers). This will cut my payroll, when I have employees that are getting over 40 hrs I can let them work for him and He can let me work some of his laborers. It will be a benefit for me to have a retail outlet to help sell landscaping, irrigation, and all of my services offered. It will benefit him because I will purchase my bedding supplies direct from him. When I have landscaping jobs that require specific perennials that are not available he can grow them with the right lead time. I will be able to pick my annuals ahead of time instead of having to take what you can get from our local wholesale/retail markets. I am located in a small market area and do not have the fortune of having a wholeseller on every cornner as some of you do.

I will also benefit because I/We will be able to retain quality employees year round. I keep 5 employees year round and 10-12 during the Spring and Summer I would like to be able to let him use some of my laborers during the non peak months. My laborers want/need to work 60/80 hours a week! Payroll is a major problem for me. I am trying to keep my cost down. I was able to reduce my labor cost by 10% this year by subing out my employees and working more people to reduce labor cost. I also have a spray tech that only works part time. He is a fire fighter so it works for both of us.

My friend is going to do the deal with or without me. He has the resources $$ and also has a very good work ethic. He just approached me because he lacks some business knowledge and business contacts. He thought I could bring some of that to the table.

We will be able to get the (4) greenhouses for less than the cost of just one greenhouse.

I am still open for comments and suggestions. And I really am greatful for the advice. No deal is until you have signed on the dotted line..

Thanks
Blake

AztlanLC
12-15-2002, 01:24 PM
If you posted in order to get advice then open up your eardrums, if you think your friend lack business knowledge than that makes two.

Everybody knows that the time that a nursery is busy so is a landscape company, sharing employees? yeah good luck,

I do have my pesticide lic. I am also meeting with the current owner to review his books and tax records. They are going to keep two greenhouses to do some retail sales and I will be doing mostly wholesale so I will not get the no compete contract. Thanks for the information please feel free to give some more advice.

Does your friend have a pesticide license? Does your friend know about the non compete clause?

A friend of mine will be running them. He approached me about the finance part.

$$My friend is going to do the deal with or without me. He has the resources $$ and also has a very good work ethic

Does he or doesn't he have the financials $$?

I think your are the one buying this business, dreaming that after you buy it there would be a chance for growing your company to a 5 year around employees and 10-12 full time in summer, then add fertilizer, sprinkle, and all the other stuff you said you have.

I have a company half the size that you mentioned (cause I don't think you own) and I don't see the need of open a wholesale place, $25,000 profit a year c'mon, you should be in the $200,000 profit range with that many employees, he wont be able to pay for any loans with that profit.



This is the best deal on earth, I wish someday I can find something familiar for myself, go ahed don't hesitate buy it you'll be making a killing. I think this is what you wanted to hear from us cause every single thing we find wrong you came up with an excuse.

don't ask for advice unless you really listen

kris
12-15-2002, 06:30 PM
You know the details ... much more than anyone else. If I could just add a comment.

We have over 4 acres of greenhouses ... I am not involved but we are connected. In the winter staff is at a minimum. Things will pick up once annuals are to be planted but still not that much labour... once spring picks up, that's when all the work is. For 2 months it is full tilt and when the majority of help is hired ... out of the 50-75 part timers one or two of the best are kept on.
The point I am trying to make is that you won't have the work for workers in the winter. They will be busy when you are...spring.

COUNTRYSCAPE
12-23-2002, 03:40 PM
The reason they call it a greenhouse is that the plants inside are green, not the money part if you know what i mean. I have 1 30 x 96 greenhouse and a small starter. walmart is going to stomp you in the dirt like a bug no matter what you do. The places that supply walmart are so huge that you couldn't keep up if you won the powerball lottery. Know matter how cool it sounds to own your own greenhouse don't do it. Money pit , lp gas pots soil seed cuttingsand on top of that the heater goes out and all your work freezes great deal,not. If i could get out now i would a lot of work . have you or your friend done this work before. Grab your dibble and stand at a transplanting table for a twelve hour day and see if you like it then. You stick to what you do best. jarrett

kris
12-26-2002, 09:55 AM
Originally posted by COUNTRYSCAPE
walmart is going to stomp you in the dirt like a bug no matter what you do. The places that supply walmart are so huge that you couldn't keep up if you won the powerball lottery.

Not to beat a dead horse, but.... Walmart is less than a mile away from us and we do quite well. Customers come to us instead for many reasons ... specialty products, expert advise ...etc etc...
I wouldn't be so quick to discourage this fellow. If it is not going to be his bread and butter and has had the deal looked over by a professional than it may be alright.

BigJim
12-27-2002, 04:36 AM
We have a chain like WalMart here too,they have "Garden Centres" attached to there stores,they are a total joke,its not unusual to see 99% of the plants dead,no one there knows anthing about plants.I've even seen them watering trays of dead plants,plants are labelled wrong,supplied in the wrong seasons,what doesn't sell or die each week gets thrown out or sent back to the supplier,there appears to be no stock control,they buy 100's of the same plant,whether it sells or not.Personally I don't know why they even bother with plants,they must loose money hand over fist and they don't even attract people because everyone knows their plants and service is so bad.The Garden Centres in town still do the most plant business,but they are are all diversifying away from plants only,they all have ****'s,gift shops and some sell tropical fish,Christmas decorations,hardware etc.I was talking with a Garden Centre owner recently,he said best way to make the Garden business more profitable was to get rid of the stuff that wasn't making any money..........the PLANTS!!.

kris
12-27-2002, 10:15 AM
Originally posted by BigJim
they all have ****'s,gift shops and some sell tropical fish,Christmas decorations,hardware etc.I was talking with a Garden Centre owner recently,he said best way to make the Garden business more profitable was to get rid of the stuff that wasn't making any money..........the PLANTS!!.

BigJim,

We sell all the things you mentioned except we don't have the ****. It sounds like a great idea.

BigJim
12-27-2002, 01:38 PM
You need a **** Kris,the best Garden Centre here is wall to wall BMW's in the car park all day,and when you go in theres hardly anyone in the plant section,everyones at the ****.

Lanelle
12-27-2002, 07:32 PM
I agree that the ****' is a great idea. There are times during the winter that I will go to a garden center greenhouse or a nearby wholesaler's greenhouses. I go not to buy but for the pschological lift that the warmth, aroma and lush greenery brings. Even if it was only a 'Starbucks' type operation, it might do very well.