A B Nursery Sample Business Plan

[Pages:28]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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uses a 6% interest rate for the cash-flow analysis of the business. The business should still be viable with moderate interest rates.

After completing this business plan, the owner determines that the business will be viable. The owner will undertake this business opportunity in some form.

MISSION, GOALS, AND OBJECTIVES General Description of the Business

L. F. Kime Nursery is a small nursery, which will specialize in producing deciduous ornamental trees. The business will be a sole proprietorship formed to provide additional income to the owner. The nursery will specialize in four species of trees including; Red Maple, Flowering Dogwoods, Japanese Maple, and Callery Pear trees. This specialization will allow the owner to concentrate on producing quality trees to local landscape contractors and garden centers.

The business plans to produce trees in both the pot-in-pot and balled-and-burlapped method. Originally, by offering both methods of marketing, the business will offer customers the option of purchasing trees as they are accustomed and point them toward the newer method of pot-in-pot. Potential customers are now purchasing more trees produced by the balled-and-burlapped method. The pot-in-pot method is a newer, more efficient method of producing trees. The owner plans to offer a small percentage of the

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inventory of trees balled-and burlapped the first marketing year then only offer trees produced by the pot-in-pot method.

The nursery plans to sell all trees on the wholesale market to help alleviate the need for sales personnel and the requirement of having to be at the business during the weekends and evenings. The nursery plans to market trees within a two-county area in south central Pennsylvania. The business will offer customers the option of purchasing trees at the farm of the business will offer delivery for a fee within the local area.

Mission Statement

The mission of L. F. Kime Nursery is to produce and market quality deciduous ornamental tree at a competitive price for distribution within the local area.

Goals and Objectives

As a business in the development stages, L.F. Kime Nursery has several goals relating to quality, growth of the business, and survival of the business. These goals and objectives are as follows: Goal 1: To produce quality trees for market within four years.

? To plant two hundred trees each year over the life of the business. ? To produce trees which meet the customer's specifications. ? To have a survival rate above ninety percent for the years the trees are in the

nursery.

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Goal 2: To produce trees using the Integrated Pest Management (IPM) system. ? By using the IPM system, the business will use fewer pesticides to reduce pollution. ? The IPM system will help reduce the cost of production for the nursery. ? The IPM system will produce healthier trees to help ensure long-term survival of trees.

Goal 3: To ensure repeat customers throughout the life of the business. ? By constantly surveying customer needs and industry trends, the business will adapt to these needs and trends. ? By offering a one-season warranty, customers will develop trust in the business. ? By developing the customer's trust, the business will help ensure repeat business.

Goal 4: To expand the business after five years. ? To establish customer loyalty and develop new customers after breaking into the market. ? To expand the number of species produced to stay current with changing markets. ? To expand the use of available land and use this land to its best economical use.

Goal 5: To produce trees at a profit for the business. ? To produce quality trees at the lowest possible cost.

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