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Saturday, December 20, 2014 Vol. 78 No. 8


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01 |Front Lines
02 |Product Profiles
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05 |Request Product Info
06 |Young Retailer Award
07 |Article Archive
08 |BuZZ!
09 |Facebook© - Buzz Cuts
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14 |Trade Show Calendar
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16 |Media Kit 2015
17 |Subscriptions


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FLORIDA NURSERY GROWERS & LANDSCAPE ASSOC.
POLY-TEX INC.
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HORTICA
THE CONARD-PYLE CO.
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Cover Story
The Hunt For Money
| Ellen C. Wells
  
>> Published Date: 4/28/2014
 
The horticulture industry can attest to the fact that money doesn’t grow on trees. It’s attained through hard work, a shrewd business sense and yes, a little luck now and again. It’s also found through a game of hide and seek, where caches of cash hide in potential sales, personnel adjustments, keen timing and, frankly, having the courage to ask for it.

Here we gathered some tips from some of the industry’s best hunters on where “free money” can be found eluding us. As you’ll see, this stash is never far away, but just occurring in unrecognizable forms.

Zero Overtime
Sid Raisch of Horticultural Advantage is the kind of business consultant who sees $50 and $100 bills lying all over the place in garden centers. He also sees money escaping through the business door in the form of overtime hours. His No. 1 tip for finding and saving money is to eliminate overtime altogether. Here’s Sid’s take on overtime:

“Most employers in this business have convinced themselves that overtime is necessary and good when in reality it is bad. The origin of overtime was that it was to protect the worker from abuse by employers. The labor laws instituted during the industrialization of America were established to make employers pay workers a premium over the regular wage (plus a premium on taxes) for asking them to work overtime. That was good at the time but over time our culture has gotten it all wrong. Most American employers and employees believe that overtime is better for them. In most cases both are wrong.

“Employers believe they can hire fewer workers and pay less in benefits. Most of them believe that they can’t hire enough good people and they’re right because they never really try to, or they fail to stick with it and figure out how they can. It is actually counterproductive to work overtime based on lower productivity, injuries caused by fatigue and job burnout. When people work overtime they become less productive all of the time they work. This is especially true toward the end of the week when they are being paid 50% more to do even less than they did earlier in the week after a day off.

“Employees believe they will earn more money and have a better lifestyle. (This also applies to owners who work in their businesses.) What’s really true is that they spend more money in less time they have available to consume conveniences and luxuries with nothing extra left to reward the extra work they did. Most of us would be as well or better off if we had more after-work time to build relationships with our families, friends and within our community.
“Companies that adopt zero overtime policies get greater productivity from their people at a lower current and future cost. These companies plan their staffing budget carefully and invest in their people. They tend to hire and train better-quality employees and pay them slightly more than their competitors.”

Labor and Wage Benefits
Along the same lines as Sid, Steve Bailey, a financial analysis consultant for garden centers across the U.S. and Canada, also sees labor as a place to seek out lost money. Steve indicates we are generally in a situation in the industry overall where revenues are increasing. “People tend to lose grasp of their labor and wage benefits ratio to sales when revenues are on the rise because they tend to overstaff,” Steve explains. “When the end of the spring sales season comes in June, [employers] tend to keep too many people on afterward. It’s tough to control expenses on the way down when revenues are declining and it’s just as difficult to control them on the way back up. Labor is the big one.” This means limiting employees’ hours or reducing the number of staff at that time.

Be Accountable to Sales Goals
While revenues are increasing overall, the last half-dozen years have indeed been hard, and Steve feels that many garden retailers are sitting back and waiting for folks to come in the door to buy whatever it is they have. It’s a learned behavior, Steve says, that comes as a result of hard times.

“They have to learn a different behavior,” Steve says. His top suggestion is to set monthly sales goals and hold the staff accountable to these goals on a daily basis. Also key is for the staff to understand how these daily sales goals relate to the end of the month sales goals.

“In order to reach the end of the month sales goal, you have to reach the daily goal or at least up to that point of the month,” Steve explains. “Let the staff know, we’re running ahead, we’re running behind. The only way that you’re going to reach your destination at the end of the month is if you work on it every day.” Again, sticking with the plan long enough is the best way to search out and find that hidden money.

Sell More to Those Who Buy
You already have people coming into your store. Maybe a good place to start finding money is in the pockets of the folks already in your store.

Adding to the shopping basket is garden center consultant Ian Baldwin’s No. 1 suggestion year in and year out, and he says it’s the practice that is done least consistently. Here is how Ian explains the concept and its practice: 

“A $1 million garden center with an average sale per customer of around $50 has about 40,000 checkouts a year. Adding $3 to that average sale adds around $120,000 to sales or $60,000 to the gross margin, which is almost all net profit and goes to the bottom line as there are no more overheads (labor, rent, benches etc.) associated with that extra sale. I have seen places where this gain equals last year’s entire net profit.

“The thing is to train employees not to ask for extra at each customer like McDonald’s suggesting fries. Simply put, an extra $3 per customer average means an extra $12 (one Osmocote, for example) every fourth customer, $30 (or one decent shrub) every tenth customer, or an extra $100 (three shrubs or 15 bags of mulch and a pair of pruners) every 33rd customer. That makes staff more comfortable and leads to the training line, “Listen to your customers and suggest products that will address what you hear.”

This technique, Ian says, can be that much more effective when coupled with cross merchandising. “Owners and managers can instruct—not ask—department managers to add hard goods tie-ins to their displays, tell buyers to order more of a selected tie-in and pile it high (none of this onesy-twosey stuff),  and train salespeople in their daily huddles about that one specific tie-in.”

Finding Money in Free Promotions
There may be no such thing as a free lunch, but there certainly is something in free press—if you work at it early enough, says Katie Dubow of Garden Media Group, a public relations firm representing many horticulture-related businesses. Here are four ideas Katie suggests for getting the word out and building momentum for your business for free (or nearly so):

Giveaways: Hold a contest with either your own social media #hashtag or the one belonging to the event. It will drive online promotion.

People love food: Partner with local food trucks or catering companies in exchange for free space and event flyer space.

Samples: Send new products to your local media prior to an event and invite them to stop by your event or booth.

Promote yourself: Write a press release about a product or event and send it to local media. More and more local newspapers are looking for truly local content, and who better to provide it than you, a local business.

Go After Grants
Cole Gardens in Concord, New Hampshire, have been holding a Winter Farmers Market in their retail operation for five years now. That in itself is finding money in the way of extra visitors to their business during a slower time of year. But, the real “finding money” concept here comes in the form of grants to help promote the market. “We did very well last year by getting a grant to help our Winter Farmers Market vendors,” says Doug Cole. The money didn’t go directly to Cole Gardens, but was used to help the market’s participating vendors succeed in a number of ways. “It did help us promote the market, which in turn helps get more buyers to our location.”

Working With Radio
Cole Gardens has also worked successfully with radio stations to, if not find money, then to get their money’s worth in trade agreements. “We trade poinsettias with radio stations at the retail price which are then given to their clients with our logo attached, in exchange for premium radio ad space,” says Charlie Cole. He explains that some radio stations like to give you ‘free’ spots to offset your paid spots—and those spots typically fall between 8:00 p.m. and 12:00 a.m., which are slot when not many people are listening. “In the past the station would run their ‘trade’ airtime as they would free spots. We don’t give them a lower-quality poinsettia, so why should we get lower-quality airtime? We now we ask that the ‘trade’ time runs no differently than our paid spots.”

Use What You’re Given
Who has the time (and the money) to reinvent the wheel? That’s why Charlie Cole takes advantage of the promotional materials supplied by vendors. “Companies like Botanical Interests feed us promotional material that we can use regularly so we don’t need to work hard at coming up with new information,” says Charlie. “It’s not really ‘found money,’ but it helps save time, and that is money.”

Negotiate Your Rate
There is a mad amount of money to be found in paying a lower rate on your credit card services, and Tiger Palafox makes it a point to find the best rate for his family’s business, Mission Hills Nursery. “It’s competitive out there for these companies,” Tiger says. “Don’t pay more than 1.8% and with no service fees, no matter how small you are.”

Tiger says Mission Hills is constantly getting calls from credit service companies saying they could offer them a better rate then their current provider, yet they all presented their “deals” in such very different ways. “It’s hard to compare apple to apples with these companies,” Tiger says. “So the best thing to do is to study your current company first, see what their fees and rates are. And when you go to a different company that is trying to get your business, say to them, ‘I don’t care what you’re offering me. Break it down into this for me.’ You understand what’s on your bill, you understand what you’re paying this current company. So when a new company comes to you, have them give you an apples-to-apples comparison. That way you’re able to make a better decision.”

On-Site Consult Fees
Speaking of rates, Tiger is also a big proponent of understanding the value of the experience and knowledge you have to offer customers. And understanding that value fully means charging for on-site consultations. Mission Hills Nursery charges $85 per hour to visit a customer and offer design ideas, to problem solve or just do some garden coaching.

“If they are will to pay a plumber $85 to fix a leaky faucet, your knowledge is much more valuable than you think,” Tiger says. “Why is our profession so different? If I come out to a customer’s house to evaluate what’s going on, why do I have to do it for free? Put value behind what you’re doing and in your education and experience.”

Reimburse Your Travel
Renae Bobbett of Beaver Bark Garden Center in Richland, Washington, decided to find money by following the adage, “It never hurts to ask.” As Renae was making plans for her annual trek to the January gift shows, she decided to seek travel assistance. “I called marketing in both the Las Vegas and Dallas shows, requesting travel expense help,” Renae explains. “Between the two shows they were able to give us $1,000 in Amex gift cards to help with show expense because we mentioned we were members of GCA.”

Don’t Miss the Show Deals
Speaking of shows, taking some time to speak with vendors and distributors can help garden retailers find money in all sorts of nooks and crannies. Jim Haber and the team at Arett Sales have these suggestions for where retailers can find savings in their businesses:

Attend trade shows with a plan. This will help garden centers order wisely and allows enough time to see the savings on staple and new items and to make informative buying decisions. For example, Arett offers some saving options that are only available at their shows and showroom. These include Wild Cards—show-only bonus dollars and discounts; N5%, where customers earn an extra 5% off thousands of new items at the show only; Power Alley—power deals and deep discounts on pallets, end caps, and displays; and Passport to Profits, where customers can earn show money for visiting and buying items from selected manufacturers at the show.

Advertising. Garden centers need to take a look at their advertising pieces and campaigns and ask the question: Am I utilizing my advertising to its full advantage? Many don’t use their accrued co-op dollars from manufacturers who have co-op programs. This results in thousands of unused co-op dollars being left on the table. These dollars help to offset the cost of advertising. For garden centers who utilize their advertising budget successfully, it allows them to stretch those advertising dollars into another promotion that will generate more sales. Greensmith Graphics, the advertising division of Arett Sales, works closely with customers to make sure they are utilizing their co-op to their full advantage.

Promotions. Another great way to increase sales is to have a special promotion such as: Bring in your old garden tools and receive a percentage off the purchase of new garden tools. Bring in your old pottery and receive a percentage off your new pottery purchase. GP



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