Front Cover
        Front Cover
    Abstract
        Page i
    Acknowledgement
        Page i
    Table of Contents
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    Main
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ABSTRACT


Average sales, costs, returns, and efficiency measures are presented for
14 wholesale container ornamental plant nurseries in Florida for the tax year
of 1979. Average value of plant sales was $399,828. Cash costs accounted for
$327,023. Non-cash allowances including a 12 percent return on investment
amounted to another $87,403. Total costs, then, were $414,426. After adjust-
ments for changes in inventory values and additions for miscellaneous income,
return to capital averaged $124,877 for a 22.58 percent return on investment.
Comparable information is presented for the average of the four larger and
the ten smaller container nurseries in the study.

Key words: container nurseries, nursery business analysis, nursery costs,
nursery income, nursery efficiency measures, nursery investment, Florida
nurseries.








ACKNOWLEDGEMENTS


This report was made possible by the 14 cooperating container nurserymen
who made available their production and accounting records on a confidential
basis for analysis and averaging. In addition, assistance and encouragement
were supplied by Extension Ornamental Horticultural Agents Stan DeFreitas,
Loretta Hodyss, DeArmand Hull, Charles Lowery, Roger Newton, Doug Ross, and
Victor Yingst. Linda Gauer tabulated the data and Susan Beverly did the typ-
ing. Acknowledgement and appreciation of the help received, however, does
not alter the fact that errors in the data or in the interpretation of the
information presented herein are the sole responsibility of the author.













ABSTRACT


Average sales, costs, returns, and efficiency measures are presented for
14 wholesale container ornamental plant nurseries in Florida for the tax year
of 1979. Average value of plant sales was $399,828. Cash costs accounted for
$327,023. Non-cash allowances including a 12 percent return on investment
amounted to another $87,403. Total costs, then, were $414,426. After adjust-
ments for changes in inventory values and additions for miscellaneous income,
return to capital averaged $124,877 for a 22.58 percent return on investment.
Comparable information is presented for the average of the four larger and
the ten smaller container nurseries in the study.

Key words: container nurseries, nursery business analysis, nursery costs,
nursery income, nursery efficiency measures, nursery investment, Florida
nurseries.








ACKNOWLEDGEMENTS


This report was made possible by the 14 cooperating container nurserymen
who made available their production and accounting records on a confidential
basis for analysis and averaging. In addition, assistance and encouragement
were supplied by Extension Ornamental Horticultural Agents Stan DeFreitas,
Loretta Hodyss, DeArmand Hull, Charles Lowery, Roger Newton, Doug Ross, and
Victor Yingst. Linda Gauer tabulated the data and Susan Beverly did the typ-
ing. Acknowledgement and appreciation of the help received, however, does
not alter the fact that errors in the data or in the interpretation of the
information presented herein are the sole responsibility of the author.










TABLE OF CONTENTS


ABSTRACT . . . .

ACKNOWLEDGEMENTS . . .

LIST OF TABLES . . .

INTRODUCTION . . . . .

PROCEDURE . . . . .

DEFINITIONS . . . . .

DATA AND RESULTS . . . .

Size of Business . . . .

Rates of Production . .. . .

Labor Efficiency . . .

Capital Efficiency . . . .

Dollar Costs by Expense Category . .

Percent of Total Costs by Expense Category

Costs Per Square Foot of Production Areal

Costs Per Dollar of Sales Adjusted for Change

Costs Per Dollar of Sales . .

Income Summary . . . .

Total Gain . . . .

Net Nursery Income . . .

Return to Capital . . .

Factors Associated With Level of Profit .

Size of Business . . .

Production Rate . . .

Labor Efficiency . . .

Use of Capital . . .

Level of Costs . . . .

Cost Efficiency . . .


IThese sections also contain the

Salaries and Wages
Production Supplies
Other Production Costs
Administrative and Overhead
Total Cash Costs
Non-Cash Costs
Total All Costs


* 9 9
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following subcategories:


Page

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TABLE OF CONTENTS (Continued)


Growth in the Business . . . 26
Range of Figures . ... . . . 27
CONCLUDING COMMENTS . . . . ....... 28





LIST OF TABLES
Table Page

1 Size of business, 14 wholesale container ornamental plant nurser-
ies in Florida, 1979 . . . .. . 5
2 Rates of production, 14 wholesale container ornamental plant nur-
series in Florida, 1979 . . . ... 6
3 Labor efficiency, 14 wholesale container ornamental plant nurser-
ies in Florida, 1979 . . . . . 7
4 Efficiency in use of capital, 14 wholesale container ornamental
plant nurseries in Florida, 1979 . . . . 9
5 Dollar cost by expense category, 14 wholesale container ornamental
plant nurseries in Florida, 1979 . ... . .. 11
6 Percent of total costs by expense category, 14 wholesale container
ornamental plant nurseries in Florida, 1979 . 13
7 Costs per square foot of production area, 14 wholesale container
ornamental plant nurseries in Florida, 1979 ... .... 15
8 Costs per dollar of sales adjusted for change in plant inventory,
14 wholesale container ornamental plant nurseries in Florida, 1979 17
9 Costs per dollar of sales (no adjustment for change in inventory),
14 wholesale container ornamental plant nurseries in Florida, 1979 19
10 Income summary, 14 wholesale container ornamental plant nurseries
in Florida, 1979 . . . . ... 20
11 Factors associated with level of profit, 14 wholesale container
ornamental plant nurseries in Florida, 1979 . . 23
12 Range of figures associated with level of profit, 14 wholesale
container ornamental plant nurseries in Florida, 1979 . 25















BUSINESS ANALYSIS OF CONTAINER NURSERIES IN FLORIDA, 1979


J. Robert Strain

INTRODUCTION


This publication contains information on sales, costs, returns, and prod-
uction efficiency for wholesale container ornamental plant nurseries in Flor-
ida for 1979. A container ornamental plant nursery is defined as one-produc-
ing primarily woody landscape plants in containers. Other publications in
this series include reports on Central Florida foliage nurseries, South Flor-
ida foliage nurseries, and field nurseries.
Purposes of the nursery business analysis series include:
1) Furnishing nurserymen with various physical and economic measures
that may be used in evaluating the efficiency of individual nurseries;
2) Supplying cooperating nurserymen with data so that they may make
more informed management decisions;
3) Providing individuals considering entering the wholesale plant prod-
uction business with an estimate of the input requirements and the revenue
potential; and
4) Providing Florida Extension personnel with data for conducting educa-
tional programs with nurserymen.

PROCEDURE


The information and averages presented in this report are based on data
supplied by 14 nurserymen in the form of confidential production and account-
ing records. The nurserymen participated in the program voluntarily, and do
not represent a statistically selected sample. In fact, nurserymen partici-
pating in the Florida Nursery Business Analysis Program are thought to repre-
J. ROBERT STRAIN is extension economist and professor of food and
resource economics.









sent some of the more efficient container prnamental plant nurseries in the
state, rather than being typical of tpe container nursery industry.
Data were collected for the 1979 tax year. In some cases, data were re-
ceived for a fiscal year which did not coincide with the 1979 calendar year.
Data for fiscal years ending after July 1, 1978 and before July 1, 1980 were
included with 1979 calendar year data.
Not all nurserymen drew a regular salary from their operation. In these
instances, an estimate of the value of the time of the operator was collected
and used in the analysis in order to provide a more equitable basis for com-
paring data. For the same reason, interest expense paid by individual nur-
serymen was excluded from the costs listed in this report. Instead, an inter-
est charge for the value of the capital invested was calculated at the rate
of 12 percent per year and included as a non-cash cost of operation.
The value of the capital investment reflects the depreciated book value
of buildings, improvements, machinery and equipment. Growing plants are also
included as a part of the capital investment, but at a value lower than the
regular wholesale price. This is because in a normal growing operation, most
of the plants in inventory are not yet of a salable size. Some will barely
be started, others almost ready to sell, and others scattered in between. A
common practice is to value all plants, whether just started or almost finish-
ed, at 50 to 60 percent of their wholesale price if finished. However, some
nurserymen use other methods. For this report, the values received from the
nurserymen were the values used.
Land included in owned capital investment was valued at the original pur-
chase price. While this may not represent the investment of a nurseryman if
he were to buy it in 1979, it does represent the investment he actually had
in the operation.
The data from the individual nurseries were averaged and are presented
here in tabular form. The tables contain average values for all 14 nurseries,
for the four "larger" nurseries and for the ten "smaller" nurseries. For the
purposes of this report, the larger nurseries were those with $500,000 or
more in plant sales, while smaller nurseries were those with less than
$500,000 in plant sales.
Nurserymen participating in the program received an analysis of their
own operation shortly after they supplied their data. Their analysis follow-
ed the same format used in this report.








DEFINITIONS


In general, terms used in this report are thought to be self explanatory.
However, experience indicates that some of the terms used here are less famil-
iar than others. They are defined as follows, and again later where used.


Value of own plants sold: the value of total plant sales minus the cost
of plants purchased for immediate resale. The cost of plants purchased for
growing-on are not deducted.

Fulltime equivalent employee: the equivalent of one person working 40
hours a week for 52 weeks a year (2080 manhours a year). The most common
method for obtaining the number of fulltime equivalent employees for this
report was to divide the total annual payroll hours for the nursery by 2080,
and then add on any unpaid family or management time.

Capital owned: the net value (cost after adjusting for depreciation
taken in prior years) of capital assets or investment in the nursery opera-
tion.
Capital managed: the sum of capital owned plus the value of additional
capital items used and under the control of the manager. The value of rented
land and leased buildings and equipment is added to the value of capital own-
ed to obtain the value of capital managed in the nursery operation. It is
the value of the total capital package being used.

Annual turnover of capital: the percentage that results from dividing
the value of own plants sold by the value of capital (either owned or manag-
ed). It is annual plant sales stated in terms of percent of the capital in-
volved in the operation.

Total gain: the sum of plant sales, change in plant inventory, increase
in supply inventory, and miscellaneous cash income. It represents the total
effect of the year's operation, be it in the form of cash or inventory change.

Net nursery income: the net effect of the year's operation. To obtain
it, all cash costs (except operator's salary), and all non-cash allowances
(except interest on capital) are subtracted from total gain. The result is
the return for the time and managerial skills of the operator, and for the
use of the capital invested in the operation.

Return to capital: the portion of net nursery income that is left after
subtracting the salary or time value of the operator. It is what the owned
capital earned.

Rate of return to capital: return to capital divided by the value of
owned capital. It is the rate of return earned on the capital invested.








DATA AND RESULTS


The data in the first nine tables present various size and efficiency
measures. Data in tables 10 through 12 relate to the profitability of con-
tainer ornamental plant nurseries. Where information in the tables is pre-
sented as the nearest whole number, arithmetic errors due to rounding may be
noted.
In the first four tables dealing with size of business, rates of produc-
tion, labor efficiency, and capital efficiency, more than one indicator could
he used. The first item in each table is the one selected as the one best
measure. It is followed by others that are also useful for certain purposes
or are meaningful to many growers.

Size of Business (Table 1)


Table 1 is basic. It plus Table 5 provide most of the data required for
developing the remaining tables in this report.
For size of business, the one best measure selected was "Value of own
plants sold" (Table 1A). This amounted to $201,716 for the ten smaller nur-
series. For the four larger nurseries, the average was $895,111, or approxi-
mately five times the volume of the smaller nurseries. The average for all
14 nurseries was $399,828.
Production area (Table 1C & ID) for the smaller nurseries was 5.37 acres
(234,122 square feet). For the larger nurseries, the average was 31.83 acres
(1,386,651 square feet), or about six times the average of the smaller ones.
The average for all 14 was 12.93 acres (563,416 square feet).
Employee numbers (Table 1E) for the ten smaller nurseries averaged 8.22
people. For the four larger nurseries, it was 35.96 persons, or over four
times the number of the smaller ones. The average for all 14 was 16.14.
Capital owned (Table 1K) in the ten smaller nurseries averaged $405,065.
For the larger nurseries, it was $992,583, or a little over double the figure
for the smaller ones. The average for all 14 was $552,927.
Capital managed (Table 1Q) was the same for the larger nurseries. The
smaller ones had another $26,438 in additional land and buildings.






5




Table 1.--Size of business, 14 wholesale container ornamental plant nurseries
in Florida,.1979
Average Average Average
Item Unit all 14 4 larger 10 smaller ur
nurseries nurseries nurseries nursery
The one best measure


A Value of own plants solda $ 399,828 895,111

Other useful indicators of size


Value of own plants sold
B adjusted for change in .$ 458,355
plant inventory values
C Plant production area sq ft 563,416
D Plant production area acres 12.93


E Average fulltime b
equivalent employees
Capital ownedc in:
F Growing plants. .
G Land . .
H Machinery & equipment ..
I Buildings & improvements.
J Supplies. . .
K Total owned capital. .
Capital managed in:
L Growing plants. .
M Land . . .
N Machinery & equipment ..
0 Buildings & improvements.
P Supplies. . ....
Q Total managed capital. .


.number 16.14


350,333
55,508
49,284
75,592
22,209
552,927

350,333
69,737
49,284
80,248
22,209
571,812


201,716


965,744 255,400


1,386,651
31.83

35.96


586,903
121,379
115,002
43,739
55,562
922,583

586,903
121,379
115,002
43,739
55,562
922,583


234,122
5.37

8.22


255,705
29,160
22,997
88,334
8,869
405,065

255,705
49,080
22,997
94,851
8,869
431,503


aValue of
cost of plants
for growing-on


own plants sold--is the value of total plant sales minus the
purchased for immediate resale. The cost of plants purchased
are not deducted.


Fulltime equivalent employee--is the equivalent of one person working
40 hours a week for 52 weeks a year (2080 manhours).
Capital owned--is the net value (original cost less depreciation taken)
of capital assets used in the nursery operation.
capital managed--is the sum of capital oened plus the value of addition-
al capital items used and under the control of the manager (e.g., rented land).









Rates of Production (Table 2)


"Value of own plants sold per square fpot of area in production" (Table
1A t 1C) was selected as the one best measure of nursery production rate. The
ten smaller nurseries averaged 86.16 cents per square foot. For the four
larger nurseries, the average was 64.55 cents per square foot, or only three
quarters of the rate of the smaller nurseries. The average for all 14 nurseries
was 70.96 cents.
When sales were adjusted for changes in plant inventory values (Table
IB -. 1C),the rate for the smaller nurseries increased to 109.09 cents, up 22.93
cents. For the larger nurseries, it increased 5.10 cents to an average of
69.65 cents per square foot. This was 64 percent of the rate for the smaller
nurseries. The average for all 14 nurseries was 81.35 cents, up 10.39 cents.
The rate per square foot was given preference because of ease in com-
paring with costs per square foot presented later. However, these data are
also shown in terms of dollars per acre in production for those who are more
accustomed to thinking in these terms.
Plant inventory values per acre in production (Table IF e1 D) for the
ten smaller nurseries averaged $47,576 per acre. For the four larger nurseries,
it averaged $18,437, or about 40 percent of the average per acre for the smaller
nurseries. The average for all 14 was $27,086.

Table 2.--Rates of production, 14 wholesale container ornamental plant nurs-
eries in Florida, 1979
Average Average Average Your
Item Unit all 14 4 larger 10 smaller r
nurseries nurseries nurseries nursery
The one best measure
----------------------------------------- --------
Value of own plants sold per 70.96 6455 86.16
sq ft in prod(Table 1A I 1C)ents
-------------------------------------
Other useful indicators
Value of own plants sold per
sq ft adjusted for inventory cents 81.35 69.65 109.09
change (Table 1B 1 1C)
Value of own plants sold per $ 30,912 28,119 37,531
acre in prod (Table 1A 1D)
--- adjusted for inventory $ 35437 30,338 47,519
change (Table 1B ) ID) 3537 333 7
Plant inventory value per $ 27,086 18,437 47,576
acre in prod (Table IF 0 1D)











Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A IE) was selected as
the one best measure of labor efficiency. This was $24,540 per employee for
the ten smaller nurseries. For the four larger nurseries, the average was
$24,392, or about 1 percent above the volume per employee of the smaller
nurseries. For all 14, the average was 34,908 square feet.
Plant sales adjusted for changes in inventory (Table IB IE) increased
$6,531 for the seven smaller nurseries to an average of $31,071. For the four
larger nurseries, they increased $1,964to an average of $26,856. This was 15
percent below the average for the smaller nurseries. The average for all 14
was up $2,626 to $28,399.
Production area per employee (Table 1C 1E) averaged 28,482 square feet
for the ten smaller nurseries. For the four larger nurseries, the average was
38,561 square feet, or a third more than the average of the smaller nurseries
For all 14, the average was 34,908 square feet.


Table 3.--Labor efficiency, 14 wholesale container ornamental plant nurseries
in Florida, 1979

Average Average Average
Item Unit all 14 4 larger 10 smaller Your
nurseries nurseries nurseries nursery
The one best measure
"Value of own plants sold per $ 2 3 2
employee (Table 1A 1E) 2 3 2
---------------------------------------
Other useful indicators
Value of own plants sold per
employee adjusted for change $ 28,399 26,856 31,071
in inventory (Table 1B 7 1E)
Average area in production s 34,90 38,561 28,482
per employee (Table 1C I 1E) sq ft 908 38561 28482
ii i i i n ,







Capital Efficiency (Table 4)


A number of possibilities exist for measuring efficiency in the use of
capital. The one selected as the best single indicator was "Annual turnover
of owned capital value" (Table 1A t 1K). This is the percentage that results
from dividing the value of own plants sold by the value of capital owned.
Annual turnover for the ten smaller nurseries was 49.80 percent, meaning that
annual sales amounted to 49.80 percent of the capital invested in the nursery.
For the four larger nurseries, it was 97.02 which was almost two times the
sales per dollar of investment of the smaller nurseries. The average for all
14 was 72.31. Using managed capital, the figures are slightly different for
the smaller nurseries and the same for the larger ones.
Capital owned per employee (Table 1K i IE) in the ten smaller nur-
series amounted to $49,278. For the four larger nurseries, it was $25,656 or
about 52 percent of the amount of the smaller nurseries. For all 14 it was
$34,258.
Owned capital invested per acre (Table 1K i ID) by the ten smaller nur-
series was $75,365. For the four larger nurseries, it was $28,982 or about
38 percent of the rate of the smaller nurseries. The average for all 14 was
$42,749.
Managed capital tied up in plant inventory (Table 1L 1Q) for the ten
smaller nurseries amounted to 59.26 percent of the total. For the four larger
nurseries, it was slightly higher at 63.62 percent.
Managed capital invested in land (Table 1M + 1Q) by the seven smaller
nurseries represented 11.37 percent of the total. For the four larger nur-
series, it was about two percent higher at 13.16 percent. The average for the
14 was 12.20 percent.
Machinery and equipment (Table IN 1Q) of the seven smaller nurseries
accounted for 5.33 percent of the total capital managed. For the four larger
nurseries, it was 12.47 percent, over twice the portion of the total invested
by the smaller nurseries. The average for the 14 was 8.62 percent of the
total.
Buildings, fences, and wells (Table 10 ; 1Q) required 21.98 percent of
the total resources of the ten smaller nurseries. For the four larger nur-
series, it was 4.47 percent--about a fifth of the share invested this way by
the smaller nurseries. The average for all 14 nurseries was 14.03 percent.













Supply inventories (Table IP t 1Q) of the ten smaller nurseries took but
2.06 percent of the managed capital of the business. For the four larger
nurseries, the figure was 6.02 percent, almost three times the percent of the
smaller nurseries. The average for all 14 nurseries was 3.88 percent.




Table 4.--Efficiency in use of capital, 14 wholesale container ornamental
plant nurseries in Florida, 1979
Average Average Average
Item Unit all 14 4 larger 10 smaller our
nurseries nurseries nurseries nursery
The one best measure
--------------- --------------------------
Annual turnover of owned
capital value (Table 1A i 1K) 72.31 97.02 9.80
---------------------------------------
Other useful indicators
Annual turnover of managed
capital value (Table 1A 1Q) % 69.92 97.02 46.75_


Per employee:
Capital owned (Table 1K 1E)
--- managed (Table 1Q 1 1E)
Per acre:
Capital owned (Table 1K ID)
--- managed (Table 1Q ID)
Managed capital/employee in:
Plants (Table IL 1 E)
Land . (Table 1M I E)
Mach & equip. (Table IN 0 IE)
Managed capital/acre in:
Plants (Table IL D D)
Land . (Table 1M ID)
Mach & equip. (Table IN ID)
Percent of capital managed in:
Plants (Table 1L Q)
Land (Table IM 1Q)
Mach & equip. (Table IN 1Q)
Bldgs, etc. (Table 10 1Q)
Supplies (Table 1P 1Q)
Total nursery(Table 1Q 1Q)


34,258
35,428

42,749
44,209

21,706
4,321
3,054

27,086
5,392
3,810

61.27
12.20
8.62
14.03
3.88
100.00


25,656 49,278
25,656 52,494


28,982
28,982

16,321
3,375
3,198

18,437
3,813
3,613

63.62
13.16
12.47
4.74
6.02
100.00


75,365
80,284

31,108
5,971
2,798

47,576
9,132
4,279

59.26
11.37
5.33
21.98
2.06
100.00


eAnnual turnover of capital
dividing the value of own plants
(Table 1K or 1Q).


value--is the percentage that results f
sold (Table 1A) by the value of capital


100.00


rom


- u


S 4









Dollar Costs by Expense Category (Table 5)


Expenses by cost category were obtained from annual profit and loss
statements or tax records of the participating nurseries. The cash cost cat-
egories were grouped into wages and salaries, production supplies, other prod-
uction costs, and administrative and overhead expenses. Dollar costs should
be useful for comparing the relative magnitude of the various cost items, and
as a guide to persons interested in container nurseries as an investment,
either as a buyer or as a lender.
Salaries and Wages
The salary and wage group includes operator salary or time value. The
ten smaller nurseries averaged $84,478. For the four larger ones, this expend-
iture was over four times that amount, or $340,189.
Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". They averaged $60,641 in the ten smaller
nurseries. For the larger ones, they were three times this amount, or $198,386.

Other Production Costs
Other production costs include"repairs"and"equipment operating costs.' They
averaged $14,912 in the smaller nurseries. The four larger ones had $46,854, a
little over three times the amount of the smaller nurseries.

Administrative and Overhead
Administrative and overhead expenses usually cannot be assigned to any par-
ticular crop or growing activity, yet must be pa-id in order to stay in busi-
ness. They include the group starting with "travel and entertainment" through
-"other cash expense". They averaged $28,489 in the ten smaller nurseries. The
larger ones had $87,846, a little over three times that of the smaller ones.

Total Cash Costs
Total cash costs in the ten smaller nurseries averaged $188,522. For
the four larger ones, they were $673,277, three and a half time more.

Non-Cash Costs
Non-cash costs and allowances, though not out-of-pocket during the year,
are still amounts that need to be covered by the business activity during the
year. These include depreciation allowances, decreases in the supply inventory
(using supplies purchased during a previous time period), and an interest










charge for the use of the capital invested in the nursery. Failure to cover
all of these non-cash costs means that the business is not generating enough
funds to replace equipment and supply inventories as they are used up plus
providing a return on the money invested. These costs and allowances amount-
ed to $64,134 in the smaller nurseries. For the larger ones, they averaged
$145,576, a little over twice the expense of the smaller nurseries.

Total All Costs
Total costs in the smaller nurseries averaged $252,656. For the larger
ones, they were $818,853, or three and a quarter times more.


Table 5.--Dollar costs by expense category, 14
plant nurseries in Florida, 1979


Item


~ve rage


average
all 14
nurseries


Cash costs
Operator's salary. . .
Other wages & salaries . .
Plants & seeds to grow on .
Cans & other growing containers
Peat, soil, shavings, etc ..
Fertilizer & lime . .
Pesticides & other chemicals .
Other production supplies .
Repairs & maintenance .
Equipment operating costs .
Travel & entertainment . .
Insurance . .
Telephone . . .
Electricity . . .
Taxes, licenses, bonds .
.Advertising ..* . .
Rent: land and/or buildings
Other cash expense ..
Total cash costs . .
Non-cash costs
Depreciation: mach & equip .
Depreciation: bldgs, fences, wells
Inventory decrease in supplies ..
Interest on capital, 12% .
Total non-cash costs . .
Total all costs . . .


34,586
122,953
17,336
36,203
17,274
7,486
6,528
14,583
12,647
11,391
3,160
8,100
2,636
4,599
8,405
1,898
3,073
13,577
327,023


13,477
7,575
0
66,351
87,403
414,426


wholesale container ornamental


Average Average Your
4 larger 10 smaller
nurseries nurseries use
- Dollars - -


74,312
265,877
18,643
81,274
37,274
16,982
16,045
28,168
23,887
22,967
8,484
18,513
3,564
9,047
17,977
4,543
0
25,718
673,277


28,256
6,611
0
110o710
145,576
818,853


18,695
65,783
16,814
18,175
10,095
3,688
2,720
9,149
8,151
6,761
1,030
3,935
2,265
2,820
4,576
840
4,302
8 721
188,522


7,565
7,961
0
48 608
64 134
252,696


-e I


-- -- --


- -- ---









Percent of Total Costs by Expense Category (Table 6)

While expenditures in the form of dollars show the magnitude of expenses
for various cost categories, they are not very helpful for comparing cost re-
lationships between different sizes of nurseries. But costs as a percent of
the total are useful for this purpose. These are obtained by dividing each
of the dollar expense items in Table 5 by the corresponding "Total all costs"
figure at the bottom of the table.

Salaries and Wages
Salaries and wages (includes operator) for the ten smaller nurseries were
33.44 percent of all costs, cash plus non-cash. For the four larger nurseries,
they averaged 41.55 percent, eight points more than the smaller nurseries. The
average for all 14 nurseries was 38.02 percent.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") in the smaller nurseries averaged 24.00 percent of all costs. For the
larger nurseries, they were 24.32 percent--practically the same. The all-14
nursery averagewas 24.14 percent.
Other Production Costs
Other production costs ("repairs" and "equipment operating costs") for the
ten smaller nurseries accounted for 5.91 percent of all costs. For the larger
nurseries, they were 5.72 percent, also practically the same share of total ex-
pense. The average for all 14 nurseries was 5.80 percent of total costs.
Administrative and Overhead
These costs ("travel" through "other cash expense") for the smaller nurser-
ies amounted to 11.28 percent of all costs. For the larger nurseries, they
were 10.73 percent, or only slightly less than the smaller nurseries. The av-
erage for all 14 nurseries, thus, was also about the same at 10.97 percent.
Total Cash Costs
Total cash costs for the smaller nurseries represented 74.62 percent of
all costs. For the four larger nurseries, they were 82.22 percent of the total,
or seven and a half percent more than the smaller nurseries. The average for
all 14 nurseries.was 78.91 percent of all costs.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") are the addi-






13


tional costs that need to be covered eventually, though not necessarily with
cash during this accounting period. They averaged 25.38 percent of all costs
and allowances of the ten smaller nurseries. For the four larger nurseries,
they were 17.78 percent of the total, over 7 percent less than the smaller
nurseries. The average for all 14 nurseries was 21.09 percent






Table 6.--Percent of total costs by expense category, 14 wholesale container
ornamental plant nurseries in Florida, 1979
Average Average Average Your
Item all 14 4 larger 10 smaller
nurseries nurseries nurseries nur
- - Percent - -


Cash costs
Operator's salary . .
Other wages & salaries . .
Plants & seeds to grow on .
Cans & other growirig containers
Peat,-soil', shavings, etc .
Fertilizer & lime .
Pesticides &other chemicals .
Other production supplies ..
Repairs & maintenance .
Equipment operating costs ..
Travel & entertainment .
Insurance . . .
Telephone . . .
Electricity . . .
Taxes, licenses, bonds . .
Advertising . ..
Rent: land and/or buildings .
Other cash expense . .
Total cash costs . .
Non-cash costs
Depreciation: mach & equip .


DepreciatLUii; UiUy>, ibiences, we s
Inventory decrease in supplies .
Interest on capital, 12% .
Total non-cash costs . .
Total all costs . . ..


8.35
29.67
4.18
8.74
4.31
1.81
1.58
3.52
3.05
2.75
0.76
1.95
0.64
1.11
2.03
0.46
0.74
3.28
78.91


3.25
1.83
0.00
16.01
21.09
100.00


9.08
32.47
2.28
9.93
4.55
2.07
1.96
3.44
2.92
2.80
1.04
2.26
0.44
1.10
2.20
0.55
0.00
3.14
82.22


3.45
0.81
0.00
13.52
17.78
100.00


7.40
26.04
6.65
7.19
4.00
1.46
1.08
3.62
3.23
2.68
0.41
1.56
0.90
1.12
1.81
0.33
1.70
3.45
74.62


2.99
3.15
0.00
19.24
25.38
100.00


100.00


--


--


1 f1 S:


I I









Costs Per Square Foot of Production Area (Table 7)

While expenses as a percent of total costs facilitate comparing operating
statements, they do not allow easy comparison of relative growing costs be-
tween nurseries. But costs per square foot of growing area do. These were
obtained by dividing each of the dollar cost figures in Table 5 by the appro-
priate area in production figure from Table 1C, "Average area of own plants in
production".

Salaries and Wages
Salaries and wages (includes operator) per square foot of production area
averaged 36.09 cents in the smaller nurseries. For the four larger nurseries,
they averaged 24.53 cents, or 11 cents a square foot less than the smaller
nurseries. Thus, the average for all 14 nurseries came out 27.96 cents per
square foot.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") in the ten smaller nurseries averaged 25.90 cents per square foot.
For the four larger nurseries, they were 14.30 cents, another 11 cents a
square foot less than the smaller nurseries. The average for all 14 nurseries,
then, was 17.76 cents a square foot.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") in the
ten smaller nurseries averaged 6.36 cents per square foot. For the four larger
nurseries, they were 3.38 cents, or about three cents a square foot less than
the smaller nurseries. The average for all 14 nurseries was 4.26 cents.

Administrative and Overhead
These costs ("travel" through "other cash expense") in the ten smaller
nurseries averaged 12.39 cents a square foot. For the four larger nurseries,
they were 6.33 cents, or about half the cost of the smaller nurseries. The
average for all 14 was 8.08 cents a square foot.

Total Cash Costs
Total cash costs per square foot of growing area in the ten smaller nur-
series averaged 80.52 cents. For the four larger nurseries, they were 48.55
cents, or about 60 percent of the rate per square foot of the smaller nurser-
ies. The average for all 14 was 58.04 cents per square foot.









Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") in the smal-
ler nurseries averaged 27.39 cents per square foot. For the larger nurseries,
they were 10.50 cents, or 38 percent of the smaller nursery cost. Average for
all 14 was 15.51 cents.

Total All Costs
Total costs for the smaller nurseries averaged about $1.08 a square foot.
For the larger nurseries, they were 59.05 cents, or 55 percent of the smaller
nursery costs. Average for all 14 was 73.56 cents a square foot.



Table 7.--Costs per square foot of production area, 14 wholesale container
ornamental plant nurseries in Florida, 1979


Item


Average
all 14
nurseries
-


Cash costs
Operator's salary . .
Other wages & salaries . .
Plants & seeds to grow on ..
Cans & other growing containers
Peat, soil, shavings, etc .
Fertilizer & lime . .
Pesticides & other chemicals .
Other production supplies .
Repairs & maintenance . .
Equipment operating costs .
Travel & entertainment . .
Insurance . . .
Telephone . . .
Electricity . . .
Taxes, licenses, bonds . .
Advertising . . .
Rent: land and/or buildings .
Other cash expense . .
Total cash costs . .


6.14
21.82
3.08
6.43
3.17
1.33
1.16
2.59
2.24
2.02
0.56
1.44
0.47
0.82
1.49
0.34
0.55
2.41
58.04


Non-cash costs
Depreciation: mach & equip 2.39
Depreciation: bldgs, fences, wells 1.34
Inventory decrease in supplies 0.00
Interest on capital, 12% .. 11.78
Total non-cash costs . 15.51
Total all costs . . 73.56


Average Average Your
4 larger 10 smaller
nurseries nurseries nursery
- Cents - -


5.36
19.17
1.34
5.86
2.69
1.22
1.16
2.03
1.72
1.66
0.61
1.34
0.26
0.65
1.30
0.33
0.00
1.85
48.55


2.04
0.48
0.00
7.98
10.50
59.05


7.99
28.10
7.18
7.76
4.31
1.58
1.16
3.91
3.48
2.89
0.44
1.68
0.97
1.20
1.95
0.36
1.84
3.73
80.52


3.23
3.40
0.00
20.76
27.39
107.92


- ---


--

- -









Costs Per Dollar of Sales Adjusted for Inventory Change (Table 8)

Costs per square foot of growing area are important for comparing relative
growing costs between nurseries, and for estimating individual plant growing
costs. However, they do not indicate the profitability of the nursery opera-
tion as well as do costs per dollar of sales. Adjusting sales for changes in
plant inventory value shows how the business is doing in total, not just cash-
wise. These figures were developed by dividing the dollar costs shown in Table
5 by the appropriate figure from Table 1B, "Value of own plants sold adjusted
for change in plant inventory values".

Salaries and Wages
Salaries and wages (includes operator) in the ten smaller nurseries aver-
aged 33.08 cents per dollar of sales after adjusting for changes in plant in-
ventory values. For the larger nurseries, they were 35.22 cents, or about two
cents more than the smaller nurseries. Average for all was 34.37 cents.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") in the smaller nurseries averaged 23.74 cents per dollar of adjusted
sales. Larger nurseries showed 20.55, or 3.19 cents less than the smaller nur-
series. The average for all 14 nurseries was 21.81 cents.per dollar.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") in the
smaller nurseries averaged 5.84 cents per dollar of adjusted sales. For the
larger nurseries, they were 4.85 cents, or one cent less than the smaller nur-
series. The average for all 14 nurseries was 5.25 cents per dollar.

*Administrative and Overhead
These costs ("travel" through "other cash expense") in the smaller nurser-
ies averaged 11.14 cents per dollar of adjusted sales. For the four larger
nurseries, they averaged 9.10 cents, of about two cents less than the smaller
nurseries. The average for all 14 nurseries was 9.91 cents per dollar.
Total Cash Costs
Total cash costs per dollar of adjusted sales in the ten smaller nurser-
ies averaged 73.81 cents. For the four larger nurseries, they were 69.72
cents, or four cents per dollar of adjusted sales less than the smaller nur-
series. The average for all 14 nurseries was 71.35 cents per dollar.









Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") in the smal-
ler nurseries averaged 25.11 cents per dollar of adjusted sales. For the four
larger nurseries, they averaged 15.07 cents, of about 60 percent of the cost of
the smaller nurseries. The average for all 14 was 19.07 cents.

Total All Costs
Total costs in the ten smaller nurseries averaged 98.93 cents, or almost
equal the value per dollar of adjusted sales. For the four larger nurseries,
they were 84.79 cents, or about 15 cents under the value of each dollar of ad-
justed sales. The average for all 14 was 90.42 cents.

Table 8.--Costs per dollar of sales adjusted for change in plant inventory,
14 wholesale container ornamental plant nurseries in Florida, 1979
,,- j ,, 1 IIII "H J ,, l I


Item


Average
all 14
nurseries


Cash costs
Operator's salary .
Other wages & salaries . ..
Plants & seeds to grow on .
Cans & other growing containers
Peat, soil, shavings, etc ..
Fertilizer & lime . .
Pesticides & other chemicals .
Other production supplies .
Repairs & maintenance . .
Equipment operating costs .
Travel & entertainment .
Insurance . . .
Telephone . . .
Electricity . . .
.Taxes, licenses, bonds . .
Advertising . .
Rent: land and/or buildings .
Other cash expense ..
Total cash costs . .
Non-cash costs
Depreciation: mach & equip .. .
Depreciation: bldgs, fences, wells
Inventory decrease in supplies .
Interest on capital, 12 ....
Total non-cash costs ..
Total all costs . .


7.55
26.82
3.78
7.90
3.90
1.63
1.42
3.18
2.76
2.49
0.69
1.77
0.58
1.00
1.83
0.41
0.67
2.96
71.35


2.94
1.65
0.00
14.48
19.07
90.42


Average Average Your
4 larger 10 smaller ur
nurseries nurseries nursery
- Cents - -


7.69
27.53
1.93
8.42
3.86
1.76
1.66
2.92
2.47
2.38
0.88
1.92
0.37
0.94
1.86
0.47
0.00
2.66
69.72


2.93
0.68
0.00
11.46
15.07
84.79


7.32
25.76
6.58
7.12
3.95
1.44
1.07
3.58
3.19
2.65
0.40
1.54
0.89
1.10
1.79
0.33
1.68
3.41
73.81


2.96
3.12
0.00
19.03
25.11
98.93


`F









Costs Per Dollar of Sales (Table 9)


While costs per dollar of sales adjusted for changes in inventory show how
well a business is doing in total, they are not necessarily a good indicator of
bill paying ability. The ability of a nurseryman to pay his bills depends upon
costs relative to cash received. These figures were developed by dividing the
dollar costs shown in Table 5 by the appropriate figure from Table 1A, "Value
of own plants sold".

Salaries and Wages
Salaries and wages (includes operator) in the ten smaller nurseries aver-
aged 41.88 cents per dollar of cash received. For the four larger nurseries,
they were 38.00 cents, or almost four cents less than the smaller nurseries.
The average for all 14 nurseries was 39.40 cents per dollar of sales.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") in the ten smaller nurseries averaged 30.07 cents per dollar of sales.
For the larger nurseries, they were 22.16 cents, or almost eight cents less.
The average for all 14 nurseries was 25.01 cents per dollar of cash received.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") in the
ten smaller nurseries averaged 7.39 cents per dollar of sales. For the four
larger nurseries, they averaged 5.24 cents, or about two cents less. The aver-
age for all 14 nurseries was 6.01 cents per dollar of sales.

Administrative and Overhead
These costs ("travel" through "other cash expenses") in the ten smaller
nurseries averaged 14.12 cents per dollar of cash received. For the four lar-
ger nurseries, they were 9.82 cents, or four cents less than the smaller nur-
series. The average for all 14 nurseries was 11.37 cents per dollar of sales.
Total Cash Costs
Total cash costs in the ten smaller nurseries averaged 93.46 cents.leav-
ing only six and a half cents to apply to non-cash costs. For the larger
nurseries, they were 75.22 cents leaving about a quarter to apply to non-cash
costs. The average for all 14 nurseries was 81.79 cents.











Total All Costs
In terms of bill paying ability, average cost per dollar of sales for
both the smaller and the larger nurseries were low enough to permit payment
of all cash expense from cash receipts. The four larger nurseries also re-
ceived more than enough cash to cover all non-cash allowances for the year.
The smaller nurseries averaged 31.79 cents in non-cash costs per dollar of
sales, but had only 6.54 cents left after paying cash costs. Thus, before
adjustments for changes in inventory values, the smaller nurseries were about
a quarter short of covering all costs for each dollar of product sold.


Table 9.-- Costs per dollar of sales (no adjustment for change in plant inven-
tory), 14 wholesale container ornamental plant nurseries in Flor-
ida, 1979


Item


Average
all 14
nurseries
--- -


Cash costs
Operator's salary . .
Other wages & salaries . .
Plants & seeds to grow on .
Cans & other growing containers
Peat, soil, shavings, etc .
Fertilizer & lime . .
Pesticides & other chemicals .
Other production supplies ..
Repairs & maintenance .
Equipment operating costs .
Travel & entertainment .
Insurance . . .
Telephone . . .
Electricity . . .
Taxes, licenses, bonds . .
.Advertising . .
Rent: land and/or buildings .
Other cash sxpense .....
Total cash costs . .
Non-cash costs
Depreciation: mach & equip .
Depreciation: bldgs, fences, wells
Inventory decrease in supplies .
Interest on capital, 12% .
Total non-cash costs .
Total all costs . ..


8.65
30.75
4.34
9.05
4.47
1.87
1.63
3.65
3.16
2.85
0.79
2.03
0.66
1.15
2.10
0.47
0.77
3.40
81.79


3.37
1.89
0.00
16.59
21.86
103.65


Average Average
4 larger 10 smaller Your
nurseries nurseries nursery


- Cents - -


8.30
29.70
2.08
9.08
4.16
1.90
1.79
3.15
2.67
2.57
0.95
2.07
0.40
1.01
2.01
0.51
0.00
2.87
75.22


3.16
0.74
0.00
12.37
16.26
91.48


9.27
32.61
8.34
9.01
5.00
1.83
1.35
4.54
4.04
3.35
0.51
1.95
1.12
1.40
2.27
0.42
2.13
4.32
93.46


3.75
3.95
0.00
24.10
31.79
125.25


--
--~-- ~-~~~-










Income Summary (Table 10)

This section concentrates on developing net nursery income and allocating
it between the time and effort of the owner-operator and a return on money in-
vested in the operation. After all is said and done, it is for a payment for
his time that a nurseryman works, and it is for a return to capital that nur-
serymen and lending institutions invest funds in nursery operations.

Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant inventory, increases in supply inventory,
and miscellaneous income. Miscellaneous income refers to money received by the
nursery from sources other than plant sales, such as rent income,. interest in-
come, delivery income, and sale of fertilizer and supplies.
Total gain in the ten smaller nurseries averaged $259,362. For the four
larger nurseries, it amounted to $1,006,925, or almost four times that of the
smaller nurseries. The average for all 14'nurseries was $472,951.
Net Nursery Income
Net nursery income is the total return of the year for the time and mana-
gerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, all cash costs of Table 5 except the operator's
salary and all non-cash costs shown there except interest on capital are sub-
tracted from total gain. The reselt is net nursery income, or income received
for all the time and capital investment supplied by the owner-operator.
Net nursery income for the ten smaller nurseries averaged $74,009. For
the four larger nurseries, it amounted to $373,095, or almost four times that
of the smaller nurseries. The average for all 14 nurseries was $159,462.

Return to Capital
From net nursery income is subtracted the salary or time value of the own-
er-operator to obtain that part of net nursery income attributable to capital.
This is the earnings of the money invested in the nursery. Dividing it by the
value of capital invested gives the rate of return earned by the investment.
When the owner and operator are the same person, dividing net nursery income
between the time of the operator and return to capital may not seem very im-
portant. But when owners are outside investors, then an acceptable division
of earnings is important. In either case, rate of return is a common indica-










tor for evaluating an investment or f6r selecting between alternative invest-
ment opportunities.
Return to capital in the ten smaller nurseries averaged $55,314, or 13.66
percent return on investment. For the four larger nurseries, return to capi-
tal averaged $298,782, or 32.39 percent return on investment. The average for
all 14 nurseries was $124,877 return to capital, or 22.58 percent return on
investment.


Table 10.--Income summary, 14
in Florida, 1979


wholesale conatiner ornamental plant nurseries


Average Average Average Your
Item Unit all 14 4 larger 10 smaller
nurseries nurseries nurseries nursery

Value of own plants sold $ 399,828 895,111 201,716
Plant inventory change . $ 58,527 70,633 53,684 __
Supply inventory change $ 8,365 22,554 2,689
Miscellaneous cash income $ 6,232 18,627 1,274
f
Total gain ......... $ 472,951 1,006,925 259,362
Deduct cash costs less op sal. $ (292,437) ( 598,964)(169,827) ( )
Deduct non-cash costs less int $ ( 21,052) ( 34,866)( 15,52) ()
Total deductions . $ (313,489) ( 633,831)(185353) ( )
Net nursery incomeg. . $ 159,462 373,095 74,009
Deduct op salary or time value $ ( 34,586) ( 74,313)( 18695) ( )
Return to capital . $ 124,877 298,782 55,314
Rate of return to capital .. % 22.58 32.39 13.66

Total gain--the sum of plant sales, change in plant and supply inven-
tories, and miscellaneous income. It represents the total effect of the
year's operation, be it in the form of cash or change in inventory values.
9Net nursery income--the net effect of the year's operation. To obtain
it, all cash costs (except operator's salary), and all non-cash allowances
(except interest on capital) are subtracted from total gain. The result is
the return for the time and managerial skills of the operator, and for the
use of the capital invested in the operation.
hReturn to capital--the portion of net nursery income that is left after
subtracting the salary or time value of the operator. It is what the owned
capital earned.
iRate of return to capital--return to capital divided by the value of
owned capital. It is the rate of return earned on the capital invested.









Factors Associated With Level of Profit (Table 11)


In this section, information presented earlier is re-grouped to concen-
trate attention on factors that are generally deemed related to level of pro-
fit in a container nursery. The factors are presented in the same sequence
that they appeared earlier. But here, the average for all 14 nurseries is com-
pared with the average for the five most profitable and the five least profit-
able of the nurseries participating in the program. As will be seen, profit
or lack of profit does not depend upon performance in any single area, but,
rather, on the balance ofperformance in all the areas. Nevertheless, nursery-
men analyzing their own operation may find this section especially valuable
for indicating the general area of their business needing additional study and
analysis.
"Net nursery income" from Table 10 was selected as the indicator for level
of profit. Average for all 14 nurseries was $159,462. The most profitable
third of the nurseries averaged over double this amount, or $367,942. The
least profitable third averaged only $8,397, which is but five percent of the
average. The following compares the average for these three groupings of con-
tainer nurseries using one indicator from each of most of the proceeding tables.
A more complete analysis would use all the indicators listed in those tables,
for in most cases, each indicator measures things from a little different
angle.

Size of Business
The indicator of size of business selected from Table 1 was "Value of own
plants sold". The average for all 14 nurseries was $399,828. The most profit-
able third had $717,100 in sales, or 80 percent more than the average. The
least profitable third averaged $177,137, or about a third of the volume of the
average. This does not mean that small businesses cannot be profitable, but it
does indicate that larger profits tend to be associated with higher dollar vol-
umes of business.

Production Rate
The indicator of rate of production selected from Table 2 was "Value of
own plants sold per square foot of area in production" which is listed here as
"Sales per square foot of area in production". In general, other things being
equal, increasing sales per square foot should increase the profitability of










a nursery. Average was 70.96 cents. Both the most and the least profitable
thirds were below this average at 58.88 and 66.84 cents respectively.
Lower sales per square foot of growing area can result from a number of
things, such as letting plants continue to grow after reaching salable size,
letting space sit vacant too long between the time a plant is sold and another
is put in its place to start growing, selecting varieties that grow slower or
are priced low relative to their growing time and space requirements, and hav-
ing disease and quality problems that reduce the yield of salable plants. In
addition, nursery layout and fertilizing and growing techniques can alter the
time and space used for the same crop in two different nurseries. Also, mar-
kets and marketing programs can alter the returns received by two different
nurseries from the same crop.




Table 11.--Factors associated with level of profit, 14 wholesale container
ornamental plant nurseries in Florida, 1979
Average Most Least Your
Item Unit all 14 profitable profitable
nurseries third (5) third (5) nursery
-_----_ ---- -Level of profit _________
Net nursery income (Table 10) $ 159,462 367,942 8,397
-------------------------------Factors associated with level of ---rofit
Factors associated with-level of profi t-


(Table 1)


Value of own plants.sold $
Production rate (Table 2)
sales/sq ft of area
in production
Labor efficiency (Table 3)
'Own plant sales/employee $
Use of capital (Table 4)
Annual turnover of owned
capital value
Level of costs (Table 7)
Cost/sq ft of production area. cents
Cost efficiency (Table 8)
Cost/$ sales adjusted for
change in plant inventory
Growth in the business
Increase in sales & plant $
inventory over last year


399,828


70.96


24,773


72.31


73.56


90.42


717,100 117,137


58.88


25,214


81.06


56.95

81.04


88,609 186,764


66.84


22,354


33.06


96.31


139.86


6,162


Size of business








Labor Efficiency
The indicator of efficiency in the management and use of labor selected
from Table 3 was "Value of own plants sold per employee". If all other things
are equal, then higher sales per person involved is desirable.
Average for all 14 nurseries was $24,773. For the most profitable third
of the nurseries, sales were 2 percent greater at $25,214 per employee. The
least profitable third had almost 10 percent less than the average at $22,354
per employee.
Lower sales per employee can result during periods of rapid expansion when
extra help is needed to care for larger numbers of plants before they begin
reaching salable size. They can also be the result of difficult economic times
when sales are slow, but plant care must go on. Differences between nurseries
can be the result of differences in investment in labor saving capital items,
the result of any or all of the factors noted above that lower production rate,
or the result of poor management practices in the planning and utilization of
labor.

Use of Capital
The indicator for efficiency in the use of capital selected from Table 4
was "Annual turnover of owned capital" shown here as "Owned capital turnover".
In general, larger percentage turnover numbers are desirable, for they indicate
greater sales per dollar of investment in the nursery.
Average turnover for all 14 nurseries was 72.31 percent, meaning that
plant sales during the year amounted to 72.31 percent of the money invested in
the operation. The most profitable third of the nurseries had a slightly high-
er rate of turnover at 81.06 percent. The least profitable third had an annual
turnover rate of 33.06. This was half the average rate. It means that the
least profitable third require three years for sales to equal the amount of
money invested in the nursery.
Problems that lower turnover rate include any of the items already mention-
ed that lower production rate (hence sales volume) for a given nursery invest-
ment. Low capital turnover is particularly common in nurseries just getting
started, or in nurseries that are expanding rapidly. Excessive investments in
land, labor saving machinery and equipment, or expensive (though maybe unneces-
sary) niceties will also tend to lower the capital turnover rate.

Level of Costs
The indicator of level of cost being used is "Cost per square foot of pro-









duction area" from Table 7. Other thingS being equal, a lower cost per square
foot is desirable.
Average cost for all 14 nurseries was 73.56 cents. This was 2.6 cents
higher than sales per square foot of area in production noted above. This
means that on the average, sales per square foot did not cover all cash costs
plus all non-cash costs and allowances noted in Table 7. For the most profit-
able third of the nurseries, costs per square foot were 56.95 cents, which were
almost two cents less than sales per square foot. The least profitable third
had 96.31 cents in costs, which was almost 30 cents greater than sales per
square foot of area in production.
Problems that cause costs per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor saving capi-
tal items, destruction or theft of plants and supplies, not checking for best
price before purchasing needs, and not carefully managing the nursery operation.
Other causes of increased costs may not be a problem if they result in enough
increased revenue. One example might be purchasing more expensive "decorator"
cans and pots in order to sell to a specialized premium market.

Cost Efficiency
The indicator of cost efficiency being used is "Cost per dollar of sales
adjusted for change in plant inventory" from Table 8. This shows how the nur-
sery is doing in total, cash plus change in inventory values. Other things
being equal, lower costs per dollar of sales are desirable.
Average for all 14 nurseries was 90.42 cents per dollar of sales after
adjusting for changes in inventory values. Thus, on the average, sales exceed-
ed costs by almost ten cents for every dollar of plant sales. For the more
profitable third of the nurseries, the cost was 81.04 cents, leaving a margin
of-almost 19 cents per dollar of sales. For the least profitable third, costs
were about $1.40. Thus, this group lacked almost 40 cents per dollar of sales
of being able to cover all cash costs plus all non-cash costs and allowances
during the year.
Rising costs per dollar of sales are very common during periods of rapid
expansion, because extra costs of a larger operation are incurred before the
nursery can experience accompanying extra sales. During inflationary times,
failure to get price increases as fast as costs are going up will also cause
it. While prices received are not always under the direct control of the









nurserymen, other things mentioned earlier are under his direction. These in-
clude things that affect rates of production, level of costs, and labor effi-
ciency. Examples include letting plants continue to grow after reaching sal-
able size without getting much if any more money for them, letting space sit
vacant too long between the time a plant is sold and another is put in its
place to start growing again, selecting varieties that grow slower or are
priced low relative to their growing time and space requirements, having dis-
ease and quality problems that reduce the yield of salable plants, failing to
plan and manage for efficient utilization of labor, ignoring needed invest-
ments in labor saving equipment and facilities, not checking for the best
price before purchasing needs, experiencing theft or destruction of plants or
supplies, practicing less than optimum fertilizing and growing techniques, and
pursuing less desirable markets and marketing programs.

Growth in the Business
The indicator used for measuring growth in the business is the sum of the
increase in plant sales and the increase in plant inventory over last year.
In general, a steady growth in the business is desirable.
Average growth for the year was $88,609. This was about 22 percent of
the $399,828 value of own plants sold. The most profitable third of the nur-
series grew $186,764, or about 26 percent of their annual sales rate of
$717,100. The least profitable third grew much less. Their growth of $6,162
was only 7 percent of the average for all 14 nurseries, and only 5 percent of
their $177,137 in sales of plants.
Growth in the sales of a business, of course, can be due partially to in-
flationary price increases. It can also be the result of all the things al-
ready mentioned that increase sales volume or plant inventory values for a
given operation. To stay healthy, businesses do need to grow, at least enough
to keep up with inflation. But at the same time, growth needs to be planned
and orderly so that is contributes to the profitability and financial stabili-
ty of an operation. For instance, an expansion program results in increased
costs for a period of time before additional plants from that expansion pro-
gram are ready for sale. Too rapid of an expansion program can result in ex-
cessive increases in costs and a strong need for cash to pay those costs be-
fore the new plants have reached a salable size. The growth indicator may
look good on paper. But tomorrow's potential sales (plant inventory) may not
be satisfactory for paying today's bills.







Range of Figures (Table 12)


In this section, the average for all 14 nurseries is repeated for ease
of comparison. The remainder of the table differs from the previous section
in that the three best and three worst numbers for each factor were-averaged
to provide the range of high-low figures shown for each factor. In the pre-
vious section, figures for all factors were for the same group of high profit
and low profit nurseries. This section shows the average for the best three
and worst three numbers regardless of the nursery or profit level to which
they belong.
As can be seen, quite a range in the figures was found for most of the
factors. Nurserymen analyzing their own operation should be suspicious about
any of their own figures that fall outside these ranges. The discussions of
things that contribute to variations in the figures in the previous section
would also apply here.

Table 12.--Range of figures on factors associated with level of profit, 14
wholesale container ornamental plant nurseries in Florida, 1979
Average 3 best 3 poorest
Item Unit all 14 factor factorur
nursery
nurseries average average
Level of profit
Net nursery income (Table 10) $ 159,462 391,075 ( 3,798)
---------------------------------------
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 399,828 979,006 38,573
Production rate (Table 2)
Sales/sq ft of area
ales/s ft of area . cents 70.96 129.98 33.64
in production
Labor efficiency (Table 3)
Own plant sales/ employee .. $ 24,773 31,784 11,433
Use of capital (Table 4)
-Annual turnover of owned 7.31 1 3
capital value 7231 11197 26.23
Level of costs (Table 7)
Cost/sq ft of production area. cents 73.56 39.36 139.78
Cost efficiency (Table 8)
Cost/$ sales adjusted for cents 90.42 8433 166.67
change in plant inventory
Growth in the business
Increase in sales & plant $ 88,609 239,329 ( 6,397)
inventory over last year














CONCLUDING COMMENTS


Nurserymen who are interested in seeing how they compare with those
participating in the Florida Nursery Business Analysis Program may calculate
their own numbers by the formulas shown and write them on the lines of each
table provided for this purpose. Doing so should provide some valuable in-
sight into the business side of operating a nursery. It should improve man-
agement decisions concerning things that affect the profitability of the
nursery operation.
Nurserymen who find this kind of information to be useful, but have
difficulty finding the time or energy to engage in the tedium of doing their
own calculations may wish to consider becoming participants in the program.
If you would like to do so, contact your nearby Extension Ornamental Horti-
cultural Agent, or contact the author in Gainesville.