A B Nursery Sample Business Plan

A. & B. NURSERY

February 2005

John A. Smith 724 Nursery Rd. Anytown, PA 10000 (555) 555-5555

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ........................................................3 MISSION, GOALS, AND OBJECTIVES .................................6 General Description of the Business...........................................6 Mission Statement.......................................................................7 Goals and Objectives ..................................................................7 BACKGROUND INFORMATION .........................................10 ORGANIZATIONAL MATTERS ...........................................12 Business Structure.....................................................................12 Management, Personnel, and Outside Services ........................13 Risk Management Strategies.....................................................13 MARKETING PLAN ...............................................................14 Mission Statement.....................................................................14 Objectives..................................................................................15 Situation Analysis .....................................................................16 Marketing Strategies .................................................................18 FINANCIAL PLAN..................................................................21 Cash Flow Assumptions ...........................................................22 Cash Flow Projection ................................................................24 Break-Even Analysis.................................................................25

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EXECUTIVE SUMMARY

L. F. Kime Nursery will be a small part-time ornamental nursery producing four species of quality ornamental trees. The nursery's target market will be landscape contractors and garden centers. By producing trees for the wholesale market, the owner will be able to operate the business on a part-time basis, enabling him to remain at his current employment.

Currently, landscapers require quality ornamental trees to use for their businesses. The nursery will furnish these trees. The nursery is located in an area of high population growth in the Commonwealth of Pennsylvania. The nursery plans to offer services to area businesses that nurseries outside the area of Adams and Cumberland Counties cannot offer. Since the nursery will be geographically located in the northern portion of Adams County near the boarder with Cumberland County, the nursery has the advantage of being able to have trees to any portion of the two counties within two business days of an order.

L.F. Kime Nursery plans to produce only four species of trees to enable the owner to concentrate on producing quality trees. The owner has not previously produced ornamental trees, however; the owner was previously engaged in the commercial fruit business. The land used for the nursery was previously part of his fruit growing operation. Because of off-farm employment and depressed apple prices the owner only desires to operate the nursery as a part-time operation.

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Since the nursery will be small, the owner does not anticipate the need to hire any additional labor. This will eliminate any employee taxes and benefits, as well as, any workmen's compensation insurance. This will reduce or eliminate expenses and overhead costs associated with employees.

In reviewing the business plan concerning the financial statements, the success of a business like L. F. Kime Nursery depends on offering trees of consistent quality and providing exceptional service. The success will also depend on developing close relationships with customers to determine future needs in regards to size, species, and production method. There are several small nurseries within a fifty-mile radius of the nursery's location, however; these nurseries do not supply the needs of all customers in the area. The owner believes there is a market for the trees he will produce. By catering to smaller businesses, the owner believes that he can market all of the trees he will produce.

L. F. Kime Nursery will face several challenges. These include: (1) the owner has no experience producing ornamental trees, (2) wholesale sales will not net as much profit as retail sales, (3) The owner will need to purchase some equipment, (4) weather conditions, such as drought, can affect the production of trees, (5) the nursery will be located in an area, currently under quarantine for Prunus tree species, (6) according to a survey conducted by the owner, businesses surveyed preferred to receive trees balled-andburlapped.

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Penn State University currently employs the owner who will have the resources of the University easily available. The owner also has a close friend who was previously involved in the nursery and landscape business. The owner can consult with this friend for advice concerning the business. To overcome the other challenges, A. & B. Nursery will need to borrow start-up capital for an irrigation system and needed equipment. The nursery may try to establish a retail market for a portion of the trees produced. Expanding the initial size of the operation will spread the investment in the irrigation system and equipment over a larger number of trees, reducing the overhead per tree sold. Because of the quarantine, the nursery will not be able to produce Prunus species of trees, which the research shows is one of the top four species of trees sold by landscapers and garden centers in the area. To overcome the challenge of customers preferring balled-andburlapped trees, the owner will either need to purchase a tree spade or contract with a company to harvest the trees or educate the customers about the value of the pot-in-pot system.

The owner has doubts about borrowing money to begin the business at this time. However, this business plan shows that if the owner installs an irrigation system the return on the investment will take approximately four years. If the business does not install an irrigation system, the business plan shows the return on investment will be in five years, if the nursery can begin marketing trees at four years after business start-up. The break-even analysis performed on a five-year basis, supports this theory. The author

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