<%BANNER%>
HIDE
 Front Cover
 Abstract and acknowledgements
 Table of Contents
 List of Tables
 Introduction and procedure
 Definitions
 Data and results
 Concluding comments


UF FLAG IFAS PALMM



Business analysis of south Florida foliage plant nurseries
CITATION SEARCH THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00026139/00001
 Material Information
Title: Business analysis of south Florida foliage plant nurseries
Series Title: Economic information report
Portion of title: Foliage plant nurseries
Physical Description: 1 v. : ; 28 cm.
Language: English
Creator: University of Florida -- Food and Resource Economics Dept
Publisher: Food and Resource Economics Dept., Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Creation Date: 1979
Publication Date: 1981
Frequency: annual
regular
 Subjects
Subjects / Keywords: Nurseries (Horticulture) -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Foliage plant industry -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
statistics   ( marcgt )
serial   ( sobekcm )
 Notes
Dates or Sequential Designation: 1979.
General Note: Title from cover.
Funding: This collection includes items related to Florida’s environments, ecosystems, and species. It includes the subcollections of Florida Cooperative Fish and Wildlife Research Unit project documents, the Sea Grant technical series, the Florida Geological Survey series, the Coastal Engineering Department series, the Howard T. Odum Center for Wetland technical reports, and other entities devoted to the study and preservation of Florida's natural resources.
 Record Information
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000318890
oclc - 09221548
notis - ABU5739
System ID: UF00026139:00001
 Related Items
Preceded by: Business analysis of foliage nurseries in south Florida
Succeeded by: Business analysis of foliage plant nurseries in south Florida

Table of Contents
    Front Cover
        Front Cover
    Abstract and acknowledgements
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    Introduction and procedure
        Page 1
        Page 2
    Definitions
        Page 3
    Data and results
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
    Concluding comments
        Page 32
Full Text


J. Robert Strain


Economic Information


Report 149



I F. F : of 2Flc i .!.-

Business Analysis of South Florida
Foliage Plant Nurseries, 1979


Food and Resource Economics Department
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


August 1981


il~; O
,_ tr.:~ Fe














ABSTRACT


Average sales, costs, and returns information are presented for 11 whole-
sale foliage plant nurseries in South Florida for the tax year of 1979. Aver-
age value of plant sales was $709,109. Cash costs averaged $646,962. Non-
cash costs and allowances including a 12 percent return on investment amounted
to another $69,569. Total costs, then, were $716,531. After adjustments for
the change in plant inventory value and additions for miscellaneous income,
return to capital averaged $45,025 for a 9.38 percent return on investment.
Comparable information is also presented for the average of the four larger
and seven smaller foliage nurseries in the study.


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







ACKNOWLEDGEMENTS


This report was made possible by the 11 cooperating foliage plant nur-
serymen who made available their production and accounting records on a confi-
dential basis for analysis and averaging. In addition, assistance and encour-
agement were supplied by Extension Ornamental Horticultural Agents Loretta
Hodyss and DeArmand Hull. Linda Gauer tabulated the data and Susan Beverly
did the typing. Acknowledgement and appreciation of the help received, how-
ever, 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 . .
The Use of Space . .
Efficiency in Use of Capital .
Dollar Costs by Expense Category1


1


1
Percent of Total Cost by Expense Category .
Costs Per Square Foot of Total Bed and Bench Space


Costs Per Square Foot of Propagating and Finishing Space
Costs Per Dollar of Sales Adjusted for Inventory Changel.
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 . . .. . .
Space Use Intensity . . . .

These sections also contain the following subcategories:
Salaries and Wages
Production Supplies
Other Production Costs
Administrative and Overhead
Total Cash Costs
Non-Cash Costs
Total All Costs


ii






I I 1 I


Page
i
i
iii

1
1
3
4
4
6
7
8
10
12
14
16
18
20
22
24
24
24
24
26
26
26
28
28







I .
l .











TABLE OF CONTENTS (Continued)
Page
Use of Capital . . . . ... ... .29
Level of Costs . . . . ... . 29
Cost Efficiency . . . .. . 30
Growth in the Business . . . .... 30
Range of Figures . . . . ... .. .... .31
CONCLUDING COMMENTS . . . . ... ...... 32

LIST OF TABLES
Table
1 Size of business, 11 wholesale foliage plant nurseries in South
Florida, 1979 . . . . .... .. 5
2 Rates of production, 11 wholesale foliage plant nurseries in
South Florida, 1979 . . . . . 6
3 Labor efficiency, 11 wholesale foliage plant nurseries in South
Florida, 1979 . . . . . . 7
4 The use of space, 11 wholesale foliage plant nurseries in South
Florida, 1979 . . . . . . 9
5 Efficiency in use of capital, 11 wholesale foliage plant nurseries
in South Florida, 1979 .. . . . . 11
6 Dollar costs by expense category, 11 wholesale foliage plant
nurseries in Sout Florida, 1979 . . . .. 13
7 Percent of total costs by expense category, 11 wholesale foliage
plant nurseries in South Florida, 1979 . . .. 15
8 Costs per square foot of total bed and bench space, 11 wholesale
foliage plant nurseries in South Florida, 1979 . . .. 17
9 Cost per square foot of propagating and finishing bed and bench
space, 11 wholesale foliage plant nurseries in South Florida, 1979 19
10 Costs per dollar of sales adjusted for change in plant inventory,
11 wholesale foliage plant nurseries in South Florida, 1979 21
11 Costs per dollar of sales (no adjustment for change in plant inven-
tory), 11 wholesale foliage plant nurseries in South Florida, 1979 23
12 Income summary, 11 wholesale foliage plant nurseries in South
Florida, 1979 . . . . . . 25
13 Factors associated with level of profit, 11 wholesale foliage
plant nurseries in South Florida, 1979 . . . 27
14 Range of figures on factors associated with level of profit,
11 wholesale foliage plant nurseries in South Florida, 1979 31














BUSINESS ANALYSIS OF SOUTH FLORIDA FOLIAGE PLANT NURSERIES, 1979


J. Robert Strain


INTRODUCTION


This publication contains information of sales, costs, returns, and pro-
duction efficiency for foliage plant nurseries in South Florida for 1979. The
other publications in this series include reports on Central Florida foliage
nurseries, container 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 pro-
duction business with an estimate of the input requirements and revenue
potential; and
4) Providing Florida Extension personnel with data for conducting
educational programs with nurserymen.


PROCEDURE


The information and averages presented in this report are based on data
supplied by 11 nurserymen in the form of confidential production and account-
ing records. Their nurseries are all located in southern Florida. The nur-
serymen participated in the program voluntarily and do not represent a statis-
tically selected sample. In fact, the nurserymen participating in the Florida
Nursery Business Analysis Program are thought to represent some of the more
efficient foliage nurseries in South Florida, rather than being typical of the
foliage nursery industry.

J. ROBERT STRAIN is extension economist and professor of food and
resource economics.










Data collected were 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 11 nurseries,
for the four "larger" nurseries, and for the seven "smaller" nurseries. For
the purposes of this report, the larger nurseries were those with $500,000 or
more in plant sales, while the 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 analyses contain-
ed the same tables presented in the same sequence and with the same table num-
bers 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 is 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. Rented land and
leased buildings, equipment, etc., would be additional capital items whose
value would be added to capital owned to obtain capital managed in the nur-
sery operation.

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
net nursery income, 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.









DATA AND RESULTS


The data in the first 11 tables present various size and efficiency
measures. Data in tables 12 through 14 relate to the profitability of South
Florida foliage nurseries. Where information in the tables is presented
as the nearest whole number, arithmetic error's due to rounding may be noted.
In the first five tables dealing with size of business, rates of pro-
duction, labor efficiency, use of space and capital efficiency, more than one
measure of efficiency could be used. The first item in each table is the
one selected as the best single measure. It is followed by other measures
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 6 provide most of the data required for
developing the remaining tables in this report.
For the size of business, the one best measure selected was "Value of own
plants sold" (Table 1A). This amounted to $157,950 for the seven smaller nur-
series. For the four larger ones, the average was $1,673,636, or 10 times the
volume of the smaller nurseries. The average for all 11 was $709,109.
Bed and bench space for propagating and finishing plants (Table ID) for
the seven smaller nurseries was 149,785 square feet. For the four larger nur-
series, it was 736,940 square feet, or about five times that of the smaller
nurseries. The average for all 11 nurseries was 363,296 square feet.
Total nursery area including buildings and roadways (Table 1F & 1G) for
the smaller nurseries was 3.77 acres (164,222 square feet). For the four lar-
ger nurseries, the average was 31.70 acres (1,380,700 square feet), or over
eight times the average of the smaller nurseries. The average for all 11 nur-
series was 13.93 acres (606,578 square feet).
Employee numbers for the seven smaller nurseries averaged 6.39 fulltime
equivalent employees. For the four larger nurseries, it was 44.75, or seven
times the number of the smaller nurseries. The average for all 11 nurseries
was 20.34 employees.
Capital owned in the seven smaller nurseries averaged $223,005. For the
four larger nurseries, it was $930,018, or a little over four times the figure
for the smaller nurseries. The average for all 11 nurseries was $480,100.













Table 1.--Size of business, 11 foliage plant nurseries in South Florida, 1979
Ill-~ I I II
Average Average Average
Item Unit all 11 4 larger 7 smaller- ur
nursery
nurseries nurseries nurseries nur
The one best measure
A Value of own plants solda- $ 709,109 1,673,636 157,950

Other useful indicators of size


Value of own plants sold
B adjusted for change in $
plant inventory value


C Total bed & bench space
DPropagating & finishing_
bed & bench space


717,647 1,702,726


- sq ft 516,937

- sq ft 363,296


Stock plant bed
E Sto- - sq ft 153,641
& bench space


F Total nursery area -
G Total nursery area -


- sq ft 606,578
- acres 13.93


H Average fulltime -number
H b -number
equivalent employees
Capital owned in:
I Growing plants - $
J Buildings, fences, wells $
K Machinery & equipment $
L Land - - - $
M Supplies - - $
N Total owned capital - $
Capital managedd in:
0 Growing plants - $
P Buildings, fences, wells $
Q Machinery & equipment $
R Land - - - $
S Supplies - - $
T Total managed capital $


20.34


193,185
121,350
53,340
103,623
8,602
480,100

193,185
127,273
54,522
138,578
8,602
522,159


1,141,120

736,940

404,180

1,380,700
31.70

44.75


346,841
257,089
112,986
206,570
6,533
930,018

346,841
273,376
116,236
257,820
6,533
1,000,850


value of own plants sold--is the value of
cost of plants purchased for immediate resale.
for growing-on are not deducted.


total plant sales minus the
The cost of plants purchased


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 the capital assets used in the nursery operation.
dCapital managed--is the sum of capital owned plus the value of addition-
al capital items used and under the control of the manager (e.g., rented land).


154,745

160,261

149,785

10,476

164,222
3.77

6.39


105,281
43,785
19,258
44,796
9,784
223,005

105,381
43,785
19,258
70,439
9,784
248,647











Capital managed by the
value was from rented land.
additions being in the form


smaller nurseries averaged $248,647. The added
For the larger ones, it was $1,000,850, with the
of both buildings leased and land rented.


Rates of Production (Table 2)


"Value of own plants sold per square foot of total bed and bench space"
(Table 1A ~ 1C) was selected as the one best measure of rate of production in
the nursery. The seven smaller nurseries averaged 99 cents per square foot.
For the four larger nurseries, the average was $1.47 per square foot, or half
again the rate of the smaller ones. The average for all 11 was $1.37.
When sales were adjusted for changes in inventory (Table 1B 7 1C), the
value for the smaller nurseries decreased two cents per square foot. For the
larger nurseries, it increased two cents.
On a per acre basis for total nursery area including stock plants build-
ings and roadways (Table 1A L 1G), own plants sold by the smaller nurseries a-
mounted to $41,896 per acre. For the four larger nurseries, it was a little
greater at $52,802 per acre.


Table 2.--Rates of production, 11 wholesale foliage plant nurseries in South
Florida, 1979
Average Average Average
Item Unit all 11 4 larger 7 smaller
nursery
nurseries nurseries nurseries nu
The one best measure
Value of own plants sold per
sq ft of total bed & bench- $ 1.37 1.47 0.99
space - (Table 1A I IC)

Other useful indicators
Value of own plants sold per
sq ft adjusted for inventory $ 1.39 1.49 0.97
change (Table 1B i 1C)
Value of own plants sold per
sq ft of propagating & fini- $ 1.95 2.27 1.05
shing space (Table 1A 1ID)
--- adjusted for inventory $ 198 2.31 1.03
change (Table lB ID) $ 1 2
Value of own plants sold per $ 50,923 52,796 41.896
acre - (Table A G) 5 23 52 6 1
--- adjusted for inventory $ 51720 53,720 41,046
change (Table lB 1IG)









Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A 1 1H) was selected as
the one best measure of labor efficiency. This was $24,718 per employee for
the seven smaller nurseries. For the four larger nurseries, the average was
$39,400, or about one and a half times the volume per employee of the smaller
nurseries. For all 11 nurseries, the average was $34,863 per employee.
Plant sales adjusted for changes in inventory (Table 1B + 1H) decreased
$501 for the seven smaller nurseries to an average for $24,217. For the four
larger nurseries, they increased $650 to an average of $38,050.
Total bed and bench space per employee (Table 1C 1H) was 25,080 square
feet for the seven smaller nurseries. For the four larger nurseries, the
average was only slightly different at 25,500 square feet.
Total nursery area including stock beds, buildings and roadways per
employee (Table 1F 1H) amounted to 25,700 square feet for the seven
smaller nurseries. For the four larger nurseries, it was 20 percent
greater at 30,854 square feet.


Table 3.--Labor efficiency, 11 wholesale foliage plant nurseries in South
Florida, 1979
Average Average Average Your
Item Unit all 11 4 larger 7 smaller
nurseries nurseries nurseries nursery
The one best measure
Value of own plants sold per $ 34,863 37,400 24,718
employee (Table 1A t 1H) 3 00 24,1

Other useful indicators
Value of own plants sold per
employee adjusted for change $ 35,283 38,050 24,217
in inventory (Table 1B 1 1H)
Total bed & bench space per ,
employee (Table IC 7 1H) sq ft 25,415 25,500 25,080 _
employee (Table IC 1H)
Propagating & finishing space ft 17,861 16468 23,441
per employee (Table ID 1H) sq f 1 1 1 1
Total nursery area per
Total nursery area persq ft 29,822 30,854 25,700
employee (Table 1F 1H)








The Use of Space (Table 4)

The one measure selected as best for measuring the intensity of space use
was "Annual turnover of plant inventory value" (Table 1A ii). This indicates
the number of times that funds tied up in plant inventory were represented by
sales during the year.
The reliability of this number depends upon the care and accuracy with
which plant inventory records are kept. Some nurserymen on the program keep
careful inventories of plant numbers, while others tend to approximate their
figures. For this reason, the industry average for this measure may not be as
reliable as desired. But the idea is deemed valid, and should be especially
useful to those who compare their figures with their own data of the previous
year. In this case, the nurseryman has first hand knowledge of the nature and
dependability of the comparison.
Annual turnover of plant inventory value in the seven smaller nurseries
averaged 150 percent. This means that annual plant sales amounted to one and
a half times (150 percent) the value of plants in inventory. For the four
larger nurseries, turnover was 483. Their annual plant sales were 4.83 times
the value of plants in inventory. The average for all 11 nurseries was 367
percent.
Vacant bed and bench space is the measure used for efficiency of space use.
Generally, reducing the percent of space vacant is desirable. However, some
vacancy is inevitable between the time a plant is removed for sale and the time
another is put in its place. The average amount of vacant space during the
year divided by total bed and bench space (Table IC) shows the average percent
of vacant space. This was 8.63 percent for the seven smaller nurseries. For
the four larger ones, it was only 2.11 percent. The average for all was 3.34
percent.
Other useful indicators to study are percent of total nursery area includ-
ing buildings and roadways that is bed and bench space, and the division .of bed
and bench space between propagating and finishing area and stock plants. Other
things being equal, the higher the percentage of total nursery area devoted to
bed and bench space, and the higher the percentage of bed and bench space used
for propagating and finishing rather than stock plants, the better. But, of
course, other things are not always equal. The most common two differences
are cost of cuttings and availability of quality material when it is needed.









The seven smaller nurseries had 160,261 square feet of bed and bench
space, which was 97.59 percent of their total nursery area. For the four
larger nurseries, it was 1,141,120 square feet, which was seven times the
area of the smaller nurseries. As a percent of total nursery area, it was
lower at 82.65 percent. The average for all 11 nurseries was 516,937 square
feet, which amounted to 85.22 percent of the total nursery area.
Propagating and finishing area as a percent of total bed and bench space
(Table 1D 1IC) in the seven smaller nurseries represented 93.46 percent of
the total area. For the four larger nurseries, it was quite a bit lower at
64.58 percent. Thus, the larger nurseries maintained a much larger proportion
of their total bed and bench space for stock plants. This may be due in part
to smaller nurseries, especially those just getting started, being unable to
afford the luxury of maintaining as many stock plants as they would like. In
any event, smaller nurseries appeared more efficient in their division of area
Between stock plants and plant production than the larger nurseries.


Table 4.--The use of space, 11 wholesale foliage plant nurseries in South
Florida, 1979
Average Average Average
Item Unit all 11 4 larger 7 smaller Your
nurseries nurseries nurseries nursery
Intensity of space use
Annual turnover of plant in-
ventory value (Table lA 1 II) $ 367 483 150
--- ---------------Effciency of space use
Efficiency of space use


Vacant bed & bench space sq ft 17,268 24,052
- (divided by Table IC) % 3.34 2.11

Other useful indicators
Total nursery area incl bldgs
& roadways (same as Table IF) sq ft 606,578 1,380,700
Total bed & bench space sq ft 516,937 1,141,120
- - (Table IC 1 IF) % 85.22 82.65
Propagating & finishing bed & sq ft 363,296 736,940
bench space (Table 1D 7 1C) % 70.28 64.58
Stock plant bed & bench sq ft 153,641 404,180
space - (Table 1E 1IC) % 29.72 35.42


13,391
8.63



164,222

160,261
97.59
149,785
93.46
10,476
6.54








Efficiency in Use of Capital (Table 5)


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". This is the percentage that results from dividing
the value of own plants sold by the value of capital owned (Table 1A 1IN).
Other things being equal, larger turnover numbers are desirable, because lar-
ger numbers indicate greater sales per dollar invested in the nursery.
Annual turnover for the seven smaller nurseries was 70.83 percent. This
means that annual sales amounted to 70.83 percent of the amount of money in-
vested in the nursery. For the four larger nurseries, it was 179.96 percent,
or two and a half times the annual sales of plants per dollar invested in the
nursery when compared to the smaller nurseries. All 11 averaged 147.70.
Capital invested per employee (Table 1N 7 1H) averaged $34,899 in the
seven smaller nurseries. For the four larger nurseries, it was lower at
$20,783, or about 60 percent of the amount of the smaller nurseries. Capital
managed per employee is slightly higher in all cases, but the relationships
stayed about the same. Thus, smaller nurseries averaged higher capital in-
vestments per employee than the larger nurseries.
The same was true on a per acre basis. Capital invested in smaller nur-
series averaged $59,152 per acre (Table IN 7 1G). For the four larger nurser-
ies, it was only $29,341, or about half the rate of the smaller nurseries.
Managed capital tied up in plant inventory amounted to 42.38 percent of
the total in the smaller nurseries (Table 10 7 IT). For the four larger nur-
series, it was less at 34.66 percent. Average for all 11 nurseries was 37.00
percent.
Buildings, fences, and wells required 13.31 percent of the total resour-
ces of the seven smaller nurseries (Table IP 7 IT). For the four larger nur-
series, it was 27.32 percent, over double the share invested this way by the
smaller nurseries. The average for all 11 nurseries was 22.20 percent.
Managed capital invested in machinery and equipment by the seven smaller
nurseries represented 7.74 percent of the total (Table 1Q 7 IT). For the four
larger nurseries, it was 11.61 percent, half again the portion of the total
invested this way by the smaller nurseries. Average for all was 10.44 percent.
The land of the seven smaller nurseries accounted for 28.33 percent of
the total capital managed (Table 1R 7 IT). For the four larger nurseries, it





11


was two and a half percent less at 26.76 percent. Average for all 11 nurser-
ies, then, was 26.54 percent.
Supply inventories of the seven smaller nurseries took 3.93 percent of
the managed capital of the business (Table IS IT). For the four larger nur-
series, the figure was only 0.65 percent. Average for all 11 nurseries was
1.65 percent.

Table 5.--Efficiency in use of capital, 11 foliage plant nurseries in South
Florida, 1979

Average Average Average
Item Unit all 11 4 larger 7 smaller Your
nurseries nurseries nurseries nur
The one best measure
Annual turnover of owned
capital value (Table 1A S IN) 147.70 179.96 70.83
---------------------------------------
Other useful indicators
--------------------------------------------------------
Annual turnover of managed
capital value (Table 1A IT) 1350 1 23 52


Per employee:
Capital owned (Table IN 1H)
--- managed (Table IT 1H)
Per acre:
Capital owned (Table IN I 1G)
--- managed (Table IT 1G)
Managed capital/employee in:
Plants (Table 10 1H)
Buildings (Table IP 1H)
Mach & equip (Table 1Q 1H)
Land - (Table 1R 1H)
Managed capital per acre in:


Plants (Table 10
Buildings (Table 1P -
Mach & equip- (Table 1Q -
Land - (Table 1R -
Percent of capital managed


Plants (Table 10 IT)
Buildings (Table IP IT)
Mach & equip- (Table 1Q IT)
Land - (Table IR IT)
Supplies (Table IS IT)
Total nursery(Table IT IT)


23,604
25,672

34,477
37,498

9,498
6,257
2,681
6,813

13,873
9,140
3,915
9,952

37.00
24.37
10.44
26.54
1.65
100.00


20,783
22,364


34,899
38,912


29,341 59,152
31,575 65,954


7,751
6,109
2,597
5,761

10,943
8,625
3,667
8,134

34.66
27.32
11.61
25.76
0.65
100.00


16,492
6,852
3,014
11,023

27,952
11,614
5,108
18,684

42.38
17.61
7.74
28.33
3.93
100.00


that results from
value of capital


e


Annual turnover of capital value--is the percentage
dividing the value of own plants sold (Table 1A) by the v
(table IN or IT).


100.00










Dollar Costs by Expense Category (Table 6)


Dollar costs by expense category were obtained from the annual profit and
loss statement or tax records of the participating nurseries. The cash cost
categories were grouped into wages and salaries, production supplies, other
production costs, and administrative and overhead. Dollar costs should be
useful for comparing the relative magnitude of the various cost items, and
as a guide to persons interested in South Florida foliage nurseries as an in-
vestment, either as buyers or as lenders.

Salaries and Wages
The salary and wage group includes operator salary or time value. Average
for the seven smaller nurseries was $62,842. For the four larger nurseries,
this expenditure was almost ten times that amount, or $598,254.

Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". They averaged $57,867 in the smaller nur-
series. For the four larger ones, they were over ten times this amount, or
$591,212.

Other Production Costs
Other production costs include "repairs" and "equipment operating costs".
They averaged $9,055 in the seven smaller nurseries. For the four larger ones,
they were $76,162, about eight and a half times the amount of the smaller ones.

Administrative and Overhead
Administrative and overhead expenses usually cannot be assigned to any
particular crop or growing activity, yet must be paid in order to remain in
business. They include the group starting with "travel and entertainment"
through "other cash expense". They averaged $15,410 in the smaller nurseries.
For the four larger nurseries, they were $256,801, or more than 16 times the
expense of the seven smaller nurseries.

Total Cash Costs
Total cash costs in the seven smaller nurseries averaged $146,697. For
the four larger nurseries, they were over ten times this amount, amounting to
$1,522,426.









Non-Cash Costs
Non-cash costs include the group starting with "depreciation" through
"interest on capital". These charges averaged $35,487 in the smaller nurser-
ies. For the larger ones, they were $182,023, or over five times more.

Total All Costs
The sum of all costs and allowances in the seven smaller nurseries
amounted to $182,184. For the four larger nurseries, they were $1,704,449,
or over nine times higher than those of the smaller nurseries.

Table 6.--Dollar costs by expense category, 11 wholesale foliage plant
nurseries in South Florida, 1979
Average Average Average Your
Item all 11 4 larger 7 smaller ur
nurseries nurseries nurseries n ry
- - Dollars - -
Cash costs
Operator's salary ----- 63,836 148,567 15,419
Other wages & salaries - 193,700 449,687 47,422
Plants & seeds to grow on - 132,852 322,078 24,732
Pots & growing containers - 34,415 64,870 17,012
Fuel for production heat - 2,237 4,201 1,115
Peat, soil, shavings, etc - 16,414 36,462 4,958
Fertilizer & lime -- ---- 11,592 25,474 3,660
Pesticides & other chemicals 15,691 40,462 1,536
Packing boxes & supplies - 27,521 73,897 1,020
Other production supplies - 12,060 23,768 5,370
Repairs & maintenance - 17,814 40,336 4,944
Equipment operating costs - 15,643 35,826 4,111
Travel & entertainment -- --- 6,213 12,709 2,501
Insurance - ------- 5,971 10,911 3,148
Telephone - ------- 5,503 12,360 1,585
Electricity - ------ 3,886 7,321 1,923
Taxes, licenses, bonds - 24,522 65,255 1,923
Advertising - ------ 5,138 12,970 663
Rent: land and/or buildings 3,294 7,278 1,017
Other cash expense - - 48,662 127 997 3,327
Total cash costs - - 646,962 1,522,426 146,697
Non-cash costs
Depreciation: mach & equip - 14,159 31,308 4,360
Depreciation: bldgs, fences, wells 17,001 39,113 4,366
Inventory decrease in supplies 0 0 0
Interest on capital, 12% - 57,612 111 602 26,761
Total non-cash costs ---- -88,772 182,023 35,487
Total all costs - - 735,735 1,704,449 182,184











Percent of Total Cost by Expense Category (Table 7)

While expenditures in the form of dollars show the magnitude of expenses
for various cost categories, they are not very helpful for comparing cost rela-
tionships 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 6 by the corresponding "Total all costs" figure
at the bottom of the table.

Salaries and wages
Salaries and wages (includes operator) averaged 34.49 percent of all costs,
cash plus non-cash, in the seven smaller nurseries. For the four larger ones,
they were 35.10 percent, about the same, percentagewise.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 32.60 percent of all costs in the smaller nurseries. For the
four larger ones, they were 34.69 percent, or about 2 percent more.

Other Production Costs
Other production costs ("repairs" through "equipment operating costs")
averaged 4.97 percent of the total in the smaller nurseries. For the four
larger nurseries, they were 4.47 percent, or a half a percent less than the
smaller nurseries.

Administrative and Overhead
Administrative and overhead expense ("travel" through "other cash expens-
es") averaged 8.46 percent of all costs in the smaller nurseries. For the four
larger nurseries, they were 15.08 percent of total costs, or 6 percent more
than the smaller nurseries. This is the first of the costs categories exam-
ined so far where there was much difference between the smaller and the lar-
ger nurseries, percentagewise.

Total Cash Costs
Total cash costs in the seven smaller nurseries represented 80.52 percent
of all costs and allowances. For the four larger nurseries, they were near 9
percent higher at 89.32 percent.








Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") are the ad-
ditional costs that need to be covered eventually, though not necessarily with
cash during this accounting period. They averaged 19.48 percent of all costs
and allowances in the seven smaller nurseries. For the four larger nurseries,
they amounted to 10.68 percent of the total. This was about 9 percent less
than the smaller nurseries. Practically all of this difference is in the
share of the total attributed to interest on capital. The smaller nurseries
had a considerably higher capital investment per dollar of expense than the
larger ones. This is one of the effects of that difference.
Table 7.--Percent of total costs by expense category, 11 wholesale foliage
plant nurseries in South Florida, 1979

Average Average Average
Your
Item all 11 4 larger 7 smaller
nursery
nurseries nurseries nurseries
- - Percent - -
Cash costs
Operator's salary - - 8.68 8.72 8.46
Other wages & salaries - 26.33 26.38 26.03
Plants & seeds to grow on - 18.06 18.90 13.57
Pots & growing containers - 4.68 3.81 9.34
Fuel for production heat - 0.30 0.25 0.61
Peat, soil, shavings, etc - 2.23 2.14 2.72
Fertilizer & lime - - 1.58 1.49 2.01
Pesticides & other chemicals 2.13 2.37 0.84
Packing boxes & supplies - 3.74 4.34 0.56
Other production supplies - 1.64 1.39 2.95
Repairs & maintenance - 2.42 2.37 2.71
Equipment operating costs - 2.13 2.10 2.26
Travel.& entertainment - -- 0.84 0.75 1.37
Insurance - - - 0.81 0.64 1.73
Telephone - - - 0.75 0.73 0.87
Electricity - - 0.53 0.43 1.06
Taxes, licenses, bonds - 3.33 3.83 0.68
Advertising - - 0.70 0.76 0.36
Rent: land and/or buildings 0.45 0.43 0.56
Other cash expenses - 6.61 7.51 1.83
Total cash costs - - 87.93 89.32 80.52
Non-cash costs
Depreciation: mach & equip - 1.92 1.84 2.39
Depreciation: bldgs, fences, wells 2.31 2.29 2.40
Inventory decrease in supplies 0.00 0.00 0.00
Interest on capital, 12% - 7.83 6.55 14.69
Total non-cash costs - 12.07 10.68 19.48
Total all costs - - 100.00 100.00 100.00 100.00









Costs Per Square Foot of Total Bed and Bench Space (Table 8)

While expenses as a percent of total costs facilitate comparing operating
statements, they do not allow easy comparison of the relative growing costs be-
tween nurseries. But costs per square foot do. The traditional basis for com-
parison is costs per square foot of total bed and bench space. These were ob-
tained by dividing each of the dollar cost figures in Table 6 by the appropri-
ate area in production figure from Table 1C, "Total bed and bench space".

Salaries and Wages
Salaries and wages (includes operator) per square foot of total bed and
bench space averaged 39.21 cents per square foot in the seven smaller nurser-
ies. For the four larger ones, they were 52.43 cents, over 13 cents a square
foot more than the smaller nurseries.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 39.07 cents in the smaller nurseries. For the larger ones,
they were 17.54 cents, less than half the cost per square foot of the smaller
nurseries.

Other Production Costs
Other production costs ("repairs" through "equipment operating costs")
averaged 5.65 cents per square foot in the smaller nurseries. For the larger
nurseries, they averaged 6.67 cents, or about a cent more than the smaller
nurseries.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 9.61 cents
per square foot. For the four larger nurseries, they amounted to 32.52 cents,
or more than triple the cost of the smaller nurseries.
Total Cash Costs
Total cash costs per square foot of total bed and bench space in the
smaller nurseries were 91.54 cents. For the larger nurseries, they were 133.42
cents, or almost half again as much as the costs of the smaller nurseries. As
was seen in Table 2, the higher costs per square foot of the larger nurseries
were at least partially offset by higher sales per square foot of bed and
bench space.








Non-Cash Costs
Non-cash Costs ("depreciation" through "interest on capital") amounted to
22.14 cents per square foot of total bed and bench space in the seven smaller
nurseries. For the four larger nurseries, they averaged 15.95 cents, or over
six cents less than the amount for the smaller nurseries. As mentioned be-
fore, the main reason for the difference is the allowance for interest.

Total All Costs
The total for all costs and allowances averaged 113.68 cents in the smal-
ler nurseries. For the larger ones, it was 149.37 cents, or 35.7 cents more.

Table 8. Costs per square foot of total bed and bench space, 11 wholesale
foliage plant nurseries in South Florida, 1979

Average Average Average Your
Item all 11 4 larger 7 smaller ur
nurseries nurseries nurseries nursery
- - Cents - - -


Cash costs
Operator's salary - -
Other wages & salaries - -
Plahts & seeds to grow on -
Pots & growing containers -
Fuel for production heat - -
Peat, soil, shavings, etc -
Fertilizer & lime - -
Pesticides & other chemicals -
Packing boxes & supplies - -
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 - - -


12.35
37.47
25.70
6.66
0.43
3.18
2.24
3.04
5.32
2.33
3.45
3.03
1.20
1.16
1.06
0.75
4.74
0.99
0.64
9.41
125.15


2.74
3.29
0.00
11.14
17.17
142.33


13.02
39.41
28.22
5.68
0.37
3.20
2.23
3.55
6.48
2.08
3.53
3.14
1.11
0.96
1.08
0.64
5.72
1.14
0.64
11.22
133.42


2.74
3.43
0.00
9.78
15.95
149.37


9.62
29.59
15.43
10.62
0.70
3.09
2.28
0.96
0.64
3.35
3.09
2.56
1.56
1.96
0.99
1.20
0.78
0.41
0.63
2.08
91.54


2.72
2.72
0.00
16.70
22.14
113.68


- ---~~-
I --~-









Costs Per Square Foot of Propagating and Finishing Space (Table 9)

Cost per square foot of total bed and bench space is the traditional
basis for comparisons between nurseries. However, costs per square foot of
propagating and finishing space are more appropriate for estimating individual
plant growing costs, or for comparing growing cost efficiency between nurser-
ies. These costs were obtained by dividing the dollar cost figures in Table
6 by the plant production area from Table 1D, "Propagating and finishing bed
and bench space".

Salaries and Wages
Salaries and wages (includes operator) per square foot amounted to 41.95
cents in the smaller nurseries. For the larger ones, they were 81.18 cents,
almost double that of the smaller nurseries.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 39.66 cents per square foot in the smaller nurseries. For
the larger ones, they were 80.23 cents, over double the cost per square foot
of propagating and finishing space.

Other Production Costs
Other production costs ("repairs" through "equipment operating costs")
averaged 6.04 cents in the smaller nurseries. For the larger ones, they were
10.33 cents, which was over four cents higher than the smaller nurseries.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 19.82 cents
in the seven smaller nurseries. For the four larger ones, they were 34.84
cents, which was 15 cents greater than these costs in the smaller nurseries.

Total Cash Costs
Total cash costs in the seven smaller nurseries averaged 97.94 cents per
square foot of propagating and finishing space. For the four larger nurser-
ies, they amounted to 206.59 cents, or more than double the cash cost per
square foot in the smaller nurseries.

Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") in the sev-
en smaller nurseries averaged 23.69 cents per square foot of propagating and









finishing space. For the four larger nurseries, they were about acent higher.

Total All Costs
Total for all costs and allowances in the seven smaller nurseries aver-
aged 121.63 cents per square foot. For the four larger nurseries, this total
was 231.29 cents. This was near double the cost per square foot of propaga-
ting and finishing space in the smaller nurseries. While smaller nurseries
appear more efficient by this indicator, final judgement must be reserved un-
til comparisons in the other indicators are completed.

Table 9.--Costs per square foot of propagating and finishing bed and bench
space, 11 wholesale foliage plant nurseries in South Florida, 1979

Average Average Average Your
Item all 11 4 larger 7 smaller
nursery
nurseries nurseries nurseries n
- - Cents - -
Cash costs
Operator's salary - - 17.57 20.16 10.29
Other wages & salaries - 53.32 61.02 31.66
Plants & seeds to grow on - 36.57 43.70 16.51
Pots & growing containers - 9.47 8.80 11.36
Fuel for production heat - 0.62 0.57 0.74
Peat, soil, shavings, etc - 4.52 4.95 3.31
Fertilizer & lime - - 3.19 3.46 2.44
Pesticides & other chemicals 4.32 5.49 1.03
Packing boxes & supplies - 7.58 10.03 0.68
Other production supplies - 3.32 3.23 3.59
Repairs & maintenance -- --- 4.90 5.47 3.30
Equipment operating costs - 4.31 4.86 2.74
Travel & entertainment - 1.71 1.72 1.67
Insurance - - - 1.64 1.48 2.10
Telephone - - - 1.51 1.68 1.06
Electricity - - 1.07 0.99 1.28
Taxes, licenses, bonds - 6.75 8.85 0.83
Advertising - - 1.41 1.76 0.44
Rent: land and/or buildings 0.91 0.99 0.68
Other cash expenses - 13.39 17.37 2.22
Total cash cbsts - - 178.08 206.59 97.94
Non-cash costs
Depreciation: mach & equip - 3.90 4.25 2.91
Depreciation: bldgs, fences, wells 4.68 5.31 2.92
Inventory decrease in supplies 0.00 0.00 0.00
Interest on capital, 12% - 15.86 15.14 17.87
Total non-cash costs - 24.44 24.70 23.69
Total all costs - - 202.52 231.29 121.63








Costs Per Dollar of Sales Adjusted for Inventory Change (Table 10)

Costs per square foot of growing area are important for comparing costs
of production 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
value of plant inventory shows how well the business is doing in total, not
just cash-wise. These figures were developed by dividing the dollar costs
shown in Table 6 by the appropriate figure from Table 1B, "Value of own plants
sold adjusted for change in plant inventory value".

Salaries and Wages
Salaries and wages (includes operator) averaged 40.60 cents per dollar of
adjusted sales in the seven smaller nurseries. For the larger nurseries, they
were 35.14 cents, or about five and a half cents less than the smaller ones.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 38.37 cents in the seven smaller nurseries. For the four
larger nurseries, they averaged 34.74 cents, or another three and a half cents
less than the smaller nurseries.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") in the
seven smaller nurseries averaged 5.86 cents per dollar of sales after adjust-
ing for changes in plant inventory value. For the four larger nurseries, they
were4.47 cents, or one and a third cents less than the smaller nurseries.

Administrative and Overhead
These costs ("travel" through "other cash expenses") amounted to 9.96
cents per dollar of adjusted sales in the seven smaller nurseries. For the
larger nurseries, they averaged 15.09 cents, or about five cents more than the
costs of the smaller nurseries.

Total Cash Costs
In the smaller nurseries, the sum of all cash costs per dollar of sales
after adjusting for change in plant inventory value averaged 94.80 cents.
For the four larger nurseries, out-of-pocket costs were 89.41 cents, or
a full nickel less per dollar of adjusted sales.








Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") in the sev-
en smaller nurseries accounted for 22.93 cents per dollar of adjusted sales.
For the larger nurseries, they were 10.69 cents, or about half the costs of
the smaller ones. Again, most of this difference was for interest charged.

Total All Costs
Total costs per dollar of adjusted sales in the smaller nurseries were
117.73 cents, or about 18 cents more than receipts. For the larger nurseries,
costs totaled 100.10 cents, or about the same as revenue received.

Table 10.--Costs per dollar of sales adjusted for change in plant inventory,
11 wholesale foliage plant nurseries in South Florida, 1979
Average Average Average Your
Item all 11 4 larger 7 smaller
nurseries nurseries nurseries nursery


Cash costs
Operator's salary - -
Other wages & salaries - -
Plants & seeds to grow on -
Pots & growing containers -
Fuel for production heat - -
Peat, soil, shavings, etc -
Fertilizer & lime - -
Pesticides & other chemicals -
Packing boxes & supplies - -
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 - -


- - Cents - -


8.90
26.99
18,51
4.80
0.31
2.29
1.62
2.19
3.83
1.68
2.48
2.18
0.87
0.83
0.77
0.54
3.42
0.72
0.46
6.78
90.15


Non-cash costs
Depreciation: mach & equip - 1.97
Depreciation: bldgs, fences, wells 2.37
Inventory decrease in supplies 0.00
Interest on capital, 12% - 8.03
Total non-cash costs - 12.37
Total all costs - - 102.52


8.73
26.41
18.92
3.81
0.25
2.14
1.50
2.38
4.34
1.40
2.37
2.10
0.75
0.64
0.73
0.43
3.83
0.76
0.43
7.52
89.41


1.84
2.30
0.00
6.55
10.69
100.10


9.96
30.64
15.98
10.99
0.72
3.20
2.36
0.99
0.66
3.47
3.20
2.66
1.62
2.03
1.02
1.24
0.81
0.43
0.66
2.15
94.80


2.82
2.82
0.00
17.29
22.93
117.73


=








Costs Per Dollar of Sales (Table 11)


While total business position is indicted by costs per dollar of sales
adjusted for change in plant inventory value, bill paying ability depends upon
costs relative to cash received. These figures were developed by dividing
the dollar cost figures shown in Table 6 by the appropriate sales figure from
Table 1A, "Value of own plants sold".

Salaries and Wages
Salaries and wages (includes operator) in the seven nurseries averaged
39.78 cents per dollar of cash received. For the four larger nurseries, they
were 35.75 cents, or about four cents less than the smaller nurseries.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") in the seven smaller nurseries averaged 37.61 cents per dollar. For
the four larger nurseries, they were 35.33 cents, or about two cents less than
the smaller nurseries.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") in the
seven smaller nurseries averaged 5.73 cents per dollar of cash received. For
the four larger nurseries, they were 4.55 cents, or about a cent less than the
seven smaller nurseries.

Administrative and Overhead
These costs ("travel" through "other cash expenses") in the seven smaller
nurseries averaged 9.75 cents per dollar of sales. For the four larger nurser-
ies, they were 15.34 cents, or five and a half cents higher than the smaller
nurseries.

Total Cash Costs
Total cash costs in the seven smaller nurseries averaged 92.88 cents per
dollar of cash received. For the four larger nurseries, they were about two
cents less at 90.97 cents.

Total All Costs
In terms of bill paying ability, both the larger and the smaller grouping
of nurseries averaged enough sales to pay the cash costs incurred during the
year. However, the seven smaller nurseries did not have enough left over to








cover all non-cash costs and allowances. Their non-cash costs averaged 22.47
cents per dollar of sales, or 15.3 cents more than the cash received. The
four larger nurseries averaged 10.88 cents in non-cash allowances per dollar
of sales, but had almost enough cash receipts to cover it. Table 9.presented
earlier indicated that larger nurseries had almost double the cost of smaller
nurseries per square foot of propagating and finishing space. But this factor
shows larger nurseries were more cost efficient than the smaller ones.


Table 11.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 11 wholesale foliage plant nurseries in South Florida, 1979

Average Average Average Your
Item all 11 4 larger 7 smaller
nurseries nurseries nurseries "''
- - Cents - -
Cash costs
Operator's salary - - 9.00 8.88 9.76
Other wages & salaries - 27,32 26.87 30.02
Plants & seeds to grow on - 18.74 19.24 15.65
Pots & growing containers - 4.85 3.88 10.77
Fuel for production heat - 0.32 0.25 0.71
Peat, soil, shavings, etc - 2.31 2.18 3.14
Fertilizer & lime - - 1.63 1.52 2.32
Pesticides & other chemicals 2.21 2.42 0.97
Packing boxes & supplies - 3.88 4.42 0.65
Other production supplies - 1.70 1.42 3.40
Repairs & maintenance - 2.51 2.41 3.13
Equipment operating costs - 2.21 2.14 2.60
Travel & entertainment - -- 0.88 0.76 1.58
Insurance - - - 0.84 0.65 1.99
Telephone - - - 0.78 0.74 1.00
Electricity - - 0.55 0.44 1.22
Taxes, licenses, bonds - 3.46 3.90 0.79
Advertising - - 0.72 0.77 0.42
Rent: land and/or buildings 0.46 0.43 0.64
Other cash expenses - 6.86 7.65 2.11
Total cash costs - - 91.24 90.97 92.88
Non-cash costs
Depreciation: mach & equip - 2.00 1.87 2.76
Depreciation: bldgs, fences, wells 2.40 2.34 2.76
Inventory decrease in supplies 0.00 0.00 0.00
Interest on capital, 12% - 8.12 6.67 16.94
Total non-cash costs - 12.52 10.88 22.47
Total all costs - - 103,75 101.84 115.34









Income Summary (Table 12)


This section concentrates on developing net nursery income and allocating
it between the time and effort of the owner-operator and a return on the money
invested 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
nurserymen 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, increase in supply inventory,
and miscellaneous income. Miscellaneous income refers to income to the nur-
sery from sources other than plant sales, such as rent income, interest in-
come, income from the sale of fertilizer and supplies, and boxing charges.
Total gain for the seven smaller nurseries averaged $160,505. Larger
nurseries averaged ten times that amount, or $1,707,773. For all 11 nurser-
ies, it averaged $723,148.

Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, subtract all cash costs shown in Table 6 (except
operator's salary), and all non-cash costs shown there (except interest on
capital) from total gain. The result is net nursery income, or income for the
time and capital investment supplied by the owner-operator.
For smaller nurseries, it averaged $20,500. For the four larger nurser-
ies, it was $263,493. This was more than 12 times that of the smaller nurser-
ies. Average for all 11 nurseries was $108,861.

Return to Capital
From net nursery income is subtracted the salary or time value of the
owner-operator to obtain that part of net nursery income attributable to cap-
ital. 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 operator and return to capital may not seem im-
portant. But when the owners are outside investors, then accurate division










is important. In either case, rate of return is a common indicator for
evaluating an investment or for selecting between alternative opportunities.
Return to capital for the seven smaller nurseries averaged $5,082, or
2.28 percent return on the capital invested. For the four larger nurseries,
return to capital was $114,926, or 12.36 percent. Average for all 11 nur-
series was $45,025, or 9.38 percent.




Table 12.--Income summary, 11 wholesale foliage plant nurseries in South
Florida, 1979

Average Average Average Your
Item Unit all 11 4 larger 7 smaller
nurseries nurseries nurseries n ry
Value of own plants sold $ 709,109 1,673,636 157,950
Plant inventory change - $ 8,538 29,090 ( 3,205)
Supply inventory change $ 2,652 0 4,167
Miscellaneous cash income $ 2,849 5 047 1,593

Total gain - - $ 723,148 1,707,773 160,505

Cash costs less operator salary $ (583,126) (1,373,860)(131,279)
Non-cash costs less 12% interest $ ( 31,161) ( 70,421) ( 8,726)
Total deductions - $ (614,287) (1,444,281)(140,005)

Net nursery incomeg- $ 108,861 263,493 20,500

Operator's salary or time value $ ( 63,836) ( 148,567)( 15,419)

Return to capitalh - $ 45,025 114,926 5,082
Rate of-return to capital' % 9.38 12.36 2.28


Total gain--the sum of plant
stories, and miscellaneous income.


sales, change in plant and supply inven-
It represents the total effect of the


year's operation, be it in the form of cash or change in inventory values.
gNet 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--is the portion of net nursery income that is left
after subtracting operator's salary or time value. It is what the owned
capital earned.
'Rate of return to capital--is 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 13)


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 foliage nursery. The factors are presented in the same sequence that
they appeared before. But here, the average for all 11 nurseries is compared
with the average for the four most profitable and the four least profitable 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 of performance in all the areas. Nevertheless, nurserymen analy-
zing their own operation may find this section especially valuable for indi-
cating the general area of their business needing additional study and analy-
sis.
Net nursery income from Table 12 was selected as the indicator for level
of profit. Average for all 11 nurseries was $108,861. The most profitable
third of the nurseries averaged over two and a half times this amount, or
$292,044. The least profitable third averaged a loss of $18,235. The follow-
ing compares the averages for these three groupings of foliage nurseries in
those factors generally associated with level of profit.

Size of Business
The indicator of size of business selected from Table 1 was "Value of
own plants sold". The 11 nurseries average was $709,109. The most profitable
third had $1,627,144 in sales, or two and a quarter times the volume of the
average. The least profitable group averaged $241,927, 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 volumes of business.

Production Rate
The indicator of rate of production selected from Table 2 was "Value of
own plants sold per square foot of total bed and bench space". In general,
other things being equal, increasing sales per square foot of total bed and
bench space should increase the profitability of a nursery operation, hence,
is desirable. The average for all 11 nurseries was $1.37 per square foot.
The most profitable third had 7 percent more, or $1.47, and the least profit-
able third had about 70 percent of the average, or 99 cents.









Lower sales per square foot of bed and bench space can result from a
number of things, such as devoting excessive space to stock plants, 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 place to start
growing again, selecting varieties that grow slower or are priced low relative
to their growing time and space requirements, and having disease and quality
problems that reduce 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 markets and marketing programs can alter
the returns received by two different nurseries for the same crop.

Labor Efficiency
The indicator of efficiency in the management and use of labor selected

Table 13.--Factors associated with level of profit, 11 wholesale foliage
plant nurseries in South Florida, 1979

Average Most Least
Item Unit all 11 profitable profitable ur
nurseries third (4) third (4) nursery
-Level of profit
Net nursery income (Table 12) $ 108,861 292,044 ( 18,235)
---------------------------------------
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 709,109 1,627,144 241,927
Production rate (Table 2)


Sales/sq ft of total
-o -a -
bed & bench space
Labor efficiency (Table 3)
Own plant sales/employee -


$ 1.37


$ 34,863


Space use intensity(Table 4)


Annual turnover of plant 367
inventory value
Use of capital (Table 5)
Annual turnover of owned
-- % 147.70
capital value
Level of costs (Table 8)
Cost/sq ftof total bed space $ 1.42
Cost efficiency (Table 10)
Cost/$ sales adjusted for
cents 102.52
change in inventory value
Growth in the business
Increase in sales & plant
inventory over last year $ 13,444


1.47 0.99


38,512 24,290


531 140


179.95 84.09


1.51 1.02


98.38 135.41


8,270 16,401








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 11 nurseries was $34,863. Sales were 10 percent higher at $38,512 for the
most profitable third, and 30 percent lower at $24,290 for the least profit-
able third of the nurseries.
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 be-
gin reaching salable size. Or it 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 cap-
ital 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 use of labor.

Space Use Intensity
The indicator of intensity in the use of space selected from Table 4 was
"Annual turnover of plant inventory value". In general, larger percentage
numbers are desirable, because they indicate that the value of money tied up
in inventory is being revolved faster. Average turnover was 367 percent,
meaning that the value of own plants sold was 3.67 (367 percent) times the in-
vestment in plant inventory. For the most profitable third, it was 531 per-
cent, or near one and a half times the average. For the least profitable
third, it was less than half the average at 140.
Reduced intensity of space use may be the result of things that increase
the amount of money invested in inventory such as excessive numbers of stock
plants, rapid expansion of the business so that plant numbers are up although
accompanying sales have not yet started, selecting varieties that grow slow
relative to the price they receive, or holding plants too long after they
reach salable size. Or it can be the result of any of the items that reduce
sales volume for a given nursery as mentioned earlier. Either over or under
valuing inventory can also change the intensity of use figure. However, var-
iations in the indicator for this reason are illusionary, and do not provide
a sound basis for management evaluations or decisions.

Use of Capital
The indicator for efficiency in the use of capital selected from Table 5
was "Annual turnover of owned capital value". This is expressed in percent.
Larger percentage numbers are desirable, for they indicate greater sales per








dollar of investment in the nursery.
Annual turnover of owned capital averaged 147.70 percent, meaning that
the value of own plants sold during the year amounted to 1.477 (147.7 percent)
times the value of the capital invested in the operation. For the most pro-
fitable third, itwas 32 percent higher at 179.95. The rate for the least
profitable third was close to half the average, or 84.09. Hence, this
group had about twice the nursery investment per dollar of sales as the most
profitable third.
Problems that lower rate of turnover include any of the items already
mentioned that lower production rate (hence sales volume) for a given
nursery investment. 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 unnecessary) niceties will also tend to lower the capital
turnover rate for given nursery.

Level of Costs

The indicator of level of cost selected was "Cost per square foot of tot-
al bed and bench space" from Table 8. This is the traditional indicator for
comparing costs between nurseries. In general, a lower cost per square foot
is desirable, if other things are equal.
Costs for total bed and bench space averaged $1.42, five cents higher
than sales per square foot before adjusting for changes in plant inventory.
This means sales did not cover all cash costs plus all non-cash costs and
allowances noted in Table 8. For the most profitable third, they were $1.48,
or four cents below sales per square foot. The least profitable third aver-
aged 99 cents, which was 19 cents higher than sales per square foot of total
bed and bench space.
Problems that cause costs per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor saving
capital items, destruction and loss or theft of supplies and plants or seeds,
not checking for best price before purchasing needs, and not carefully manag-
ing the nursery operation. Other causes of increased cost may not be a
problem if they are compensated for by increased revenue. One example might
be choosing to grow varieties whose cuttings are unusually expensive in order
to capitalize upon a specialized premium market.








Cost Efficiency
The indicator of cost efficiency selected was "Costs per dollar of sales
adjusted for change in plant inventory" from Table 10. Other things being the
same, lower costs per dollar of sales are desirable.
Average costs were 102.52 cents. Thus, not all cash costs and non-cash
allowances were covered. For the most profitable third, costs were 95.88
cents, leaving a little over four cents per dollar of sales after all costs
were paid. The least profitable third had 132.91 cents per dollar received.
Thus, this group lacked almost 33 cents per dollar of.sales of being able to
cover all cash plus non-cash costs and allowances incurred during the year.
Rising costs per dollar of sales are common during periods of rapid ex-
pansion. But this can also occur as a result of the things mentioned earlier
that affect rates of production, level of costs, and labor efficiency. It can
be an outgrowth of some combination of insufficient sales for the size of nur-
sery being operated and lack of attention to cost control and efficient nur-
sery operation.

Growth in the Business
The indicator selected was the sum of the increase in plant sales and in-
crease in plant inventory value. In general, a steady growth in the business
is desirable.
On the average, growth was valued at $13,444. This was less than 2 per-
cent of the annual sales volume of $709,109. Both the most profitable and the
least profitable third of the nurseries increased less ($8,270 and $3,398).
Growth in sales of a business can, of course, be due partially to infla-
tionary price increases. It can also be the result of all the things already
mentioned that increase sales volume or plant inventory 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 it contributes to the profitability of an operation. By way of contrast,
expanding too rapidly can result in excessive increases in costs, and a strong
need for cash before the new plants have reached salable size. The growth
indicator may look good on paper, but tomorrow's potential sales (plant inven-
tory) may not be satisfactory for paying today's bills. Thus, growth, though
desirable in an economic sense, needs to be carefully planned and executed.









Range of Figures (Table 14)


In this section, the average for all 11 nurseries is repeated for ease of
comparison. The remainder of the table differs from the previous section in
that the three best and the three worst numbers for each factor were averaged
to provide the range of high-low figures shown here for each factor. In the
previous section, figures for all factors were for the same group of high or
low profit nurseries. This section shows the average for the best three and
worst three numbers regardless of the nursery or profit level involved.
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 earlier also apply here.
Table 14.--Range of figures on factors associated with level of profit, 11
wholesale foliage plant nurseries in South Florida, 1979

Average 3 best 3 poorest Your
Item Unit all 11 factor factor
nursery
nurseries average average nursery
Level of profit
Net nursery income (Table 12) $ 108,861 369,867 ( 28,002)
--------------------------------------
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 709,109 2,114,848 104,861
Production rate (Table 2)
Sales/sq ft of total- - $ 1.37 3.92 0.73
bed & bench space
Labor efficiency (Table 3)
Own plant sales/employee $ 34,863 37,351 19,603
Space use intensity (Table 4)
Annual turnover of plant % 367 567 109
inventory value
Use of capital (Table 5)
Annual turnover of owned
% 147.70 165.70 46.83
capital value
Level of costs (Table 8)
Cost/sq ft of total bed space $ 1.42 0.78 3.54
Cost efficiency (Table 10)
Cost/$ sales adjusted for c 84.52 140.98
cents 102.52 84.52 140.98
change in inventory
Growth in the business
Increase in sales & plant $ 13,444 85,721 ( 7,853)
inventory over last year













CONCLUDING COMMENTS


Nurserymen who are interested in seeing how they compare with those par-
ticipating in the Nursery Business Analysis Program may calculate their own
numbers and write them on the lines of each table provided for this purpose.
Doing so should provide some valuable insight into the business side of oper-
ating a foliage nursery. It should improve management decisions concerning
things that affect the profitability of the nursery operation.
Nurserymen who find this kind of information to be useful, but have dif-
ficulty 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 Ornamental Horticultural Agent in your
nearby Extension office, or contact the author in Gainesville.