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    Abstract
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    Acknowledgements
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    Table of Contents
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/00S~


J. Robert Strain


Economic Information
Report 163


Business Analysis of Foliage Plant
Nurseries in Central Florida, 1980



.... /


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


June 1982












ABSTRACT


Average sales, costs and returns information are presented for 17
wholesale foliage plant nurseries in Central Florida for the tax year of
1980. Average value of plant sales was $332,439. Cash costs averaged
$297,389. Non-cash costs and allowances including a 15 percent return
on investment amounted to another $58,221. Total costs were $355,610.
After adjustments for change in plant inventory value and additions for
miscellaneous income, net nursery income averaged $55,812, and return to
capital averaged 11.5 percent. Comparable information is also presented
for the average of the five larger and five smaller nurseries in the
study.
Key words: foliage nursery business analysis, income, costs, in-
vestment, efficiency measures, Central Florida.








ACKNOWLEDGEMENTS


This report was made possible by the 17 cooperating foliage plant
nurserymen who made available their production and accounting records on
a confidential basis for analysis and averaging. In addition, assist-
ance and encouragement were supplied by Extension Ornamental Horticul-
tural Agents Bruce Barmby, Michael Behnke, Bill Bodnaruk and Roger New-
ton. Susan Beverly did the typing. 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 and returns information are presented for 17
wholesale foliage plant nurseries in Central Florida for the tax year of
1980. Average value of plant sales was $332,439. Cash costs averaged
$297,389. Non-cash costs and allowances including a 15 percent return
on investment amounted to another $58,221. Total costs were $355,610.
After adjustments for change in plant inventory value and additions for
miscellaneous income, net nursery income averaged $55,812, and return to
capital averaged 11.5 percent. Comparable information is also presented
for the average of the five larger and five smaller nurseries in the
study.
Key words: foliage nursery business analysis, income, costs, in-
vestment, efficiency measures, Central Florida.








ACKNOWLEDGEMENTS


This report was made possible by the 17 cooperating foliage plant
nurserymen who made available their production and accounting records on
a confidential basis for analysis and averaging. In addition, assist-
ance and encouragement were supplied by Extension Ornamental Horticul-
tural Agents Bruce Barmby, Michael Behnke, Bill Bodnaruk and Roger New-
ton. Susan Beverly did the typing. 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


Page

ABSTRACT ... . . . . ... .
ACKNOWLEDGEMENTS . . . . ... ...... i
LIST OF TABLES . . . . ..... iii

INTRODUCTION . . . . ... . . 1
PROCEDURE . . . . . . 1
DEFINITIONS . . . . . . 3
DATA AND RESULTS .. .. . . . . .. .. 4
Size of Business . . . . ... .. .. 4
Rates of Production . . . . .. 6
Labor Efficiency . . . . .. .. 7
The Use of Space . . . .. ..... 8
Efficiency in the Use of Capital. ..... ......... 10
Dollar Costs by Expense CategoryI . . ... 12
Percent of Total Cost by Expense Category . . 14
Cost Per Square Foot of Total Bed and Bench Space. . 16
Cost Per Square Foot of Propagating and Finishing Space 18
Cost Per Dollar of Sales Adjusted for Inventory Change 20
Cost Per Dollar of Sales1 . . . ... 22
Income Summary . . .... ....... 24
Total Gain . . . .... ... 24
Net Nursery Income . . . .... 24
Return on Capital . . . .... 24
Factors Associated with Level of Profits . ... 26
Size of Business . . ..... . .. .26
Production Rate . . . . .. 26
Labor Efficiency . . . .28
Space Use Efficiency ... .. . . 28
Use of Captial . . . . . 29

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








TABLE OF CONTENTS (Continued)


Level of Costs . . . .. . 29
Cost Efficiency . . . . ... .. 30
Growth in the Business . . . . 30
Range of Figures . . . . ... . 31
CONCLUDING COMMENTS . . . . ... ...... 31

LIST OF TABLES

Table Page
1 Size of business. 17 wholesale foliage plant nurseries in
Central Florida, 1980 . . . ... .. 5
2 Rates of production, 17 wholesale foliage plant nurseries in
Central Florida, 1980 . . ... . . 6
3 Labor efficiency, 17 wholesale foliage plant nurseries in
Central Florida, 1980 . . . . 7
4 The Use of Space, 17 wholesale foliage plant nurseries in
Central Florida, 1980 . . . . 9
5 Efficiency in use of capital, 17 wholesale foliage plant
nurseries in Central Florida, 1980 . . ... .11
6 Dollar costs by expense category, 17 wholesale foliage plant
nurseries in Central Florida, 1980 . . ... .13
7 Percent of total costs by expense category, 17 wholesale fol-
iage plant nurseries in Central Florida, 1980 . 15
8 Costs per square foot of total bed and bench space, 17 whole-
sale foliage plant nurseries in Central Florida, 1980 17
9 Costs per square foot of propagating and finishing space,
17 wholesale foliage plant nurseries in Central Florida, 1980 19
10 Costs per dollar of sales adjusted for change in plant in-
ventory, 17 foliage plant nurseries in Central Florida, 1980 21
11 Costs per dollar of sales (no adjustment for change in plant
inventory), 17 foliage plant nurseries in Central Florida,
1980 . . . . . .. .. 23
12 Income summary, 17 wholesale foliage plant nurseries in Cen-
tral Florida, 1980 . . . . ... .. 25
13 Factors associated with level of profit, 17 wholesale foliage
plant nurseries in Central Flroida, 1980 . . 27
14 Range of figures on factors associated with level of profit,
17 wholesale foliage plant nurseries in Central Florida,
1980 . . . . . . . 32















BUSINESS ANALYSIS OF FOLIAGE PLANT NURSERIES IN CENTRAL FLORIDA, 1980


J. Robert Strain


INTRODUCTION

This publication contains information on sales, costs, returns and pro-
duction efficiency for foliage plant nurseries in Central Florida for 1980.
Other publications in this series includes reports on South Florida foliage
nurseries, container nurseries and potted flowering plant 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 poten-
tial; 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 17 nurserymen in the form of confidential production and account-
ing records. Their nurseries are all located in the Central Florida counties
of Hillsbourough, Lake, Orange, Polk and Seminole. They participated in the
program voluntarily and do not represent a statistically selected sample. In
fact, the nurserymen participating in the Florida Nursery Business Analysis

J. Robert Strain is an extension economist and professor of food and re-
source economics.













Program are thought to represent some of the more efficient foliage nurseries
in Central Florida, rather than being typical of the foliage plant nursery in-
dustry.
Data were collected for the 1980 tax year. In some cases, data were re-
ceived for a fiscal year that did not coincide with the 1980 calendar year.
Data for fiscal years ending after July 1, 1979 and before July 1, 1981 were
included with the 1980 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 the individual
nurserymen was excluded from the costs listed in this report. Instead, an in-
terest charge for the total owned investment was calculated at the rate of 15
percent per year and included as a non-cash cost.
The owned capital investment reflects the depreciated book value of
buildings, improvements, machinery and equipment. Growing plants are also in-
cluded as a part of the owned 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, some almost ready to sell, and others scattered in between.
A common practice is to value all plants, whether just started or almost fin-
ished, 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 invest-
ment was valued at the original purchase price. While this may not represent
the investment of a nurseryman if he were to buy it in 1980, it does represent
the investment he actually has in the operation.
The data from individual nurseries are averaged and presented in tabular
form. The tables present average values for all 17 nurseries, for the five
"larger" nurseries, and for the five "smaller" nurseries. The larger nurser-
ies had plant sales valued at $500,000 or more. The smaller nurseries had
less than $100,000.










DEFINITIONS

In general, the terms used in this report are thought to be self explana-
tory. However, experience indicates that some of the terms used here are less
familiar 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 hours 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 the number of family and management people not paid on an hourly basis.

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 the value of capital managed
in the nursery 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.

Total gain: the sum of plant sales, changes in plant and supply inven-
tories, and miscellaneous cash income. It represents the total effect of the
year's operation, be it in the form of cash received or in the form of change
in values of inventories.

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
cwned capital, It is .the rate earned on the capital invested.











DATA AND RESULTS


The data in the first 11 tables present various size -and efficiency mea-
sures. Data in Tables 12 through 14 relate to the profitability of nurseries.
In the first five tables, more than one measure of efficiency could be used.
The first item in each table has traditionally been presented as "The one best
measure". It is followed by other measures that also are useful for certain
purposes or are meaningful to many growers. Where.information in the tables
is presented to the nearest whole number, arithmetic errors from rounding may
be noted.


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 size of business, the one best measure selected was "Value of own
plants sold" (Table 1A). In other words, this is income from the sale of
plants grown in the nursery. This averaged $332,439 for the 17 nurseries.
For the five larger nurseries, it was $656,326, or about double the average.
The smaller ones had $57,972, or about 17 percent of the average. Adjusting
sales for change in value of plant inventory (Table 1B) did not alter materi-
ally these relationships.
Total bed and bench space (Table 1C) averaged 69,988 square feet for the
17 nurseries. For the five larger nurseries, it was 146,617 square feet, or
double the average. The five smaller nurseries had 18,731 square feet, or
about a quarter of the average.
Capital owned (Table IN) averaged $264,668 for the 17 nurseries. For the
five larger nurseries, it was $451,618, or 1.7 times the average. The five
smaller nurseries had $76,768, or 29 percent of the average.
Capital managed (Table 1T) averaged $285,084, or 8 percent more than the
capital owned by the nurserymen. The difference was in the value of land. For
the five larger nurseries, it was $454,018, or one percent more than they own-
ed. The five smaller nurseries managed seven percent more than the capital
-owned, which was $81,7681 Thr difference also was in the value for ldnd.










Table 1.--Size of business, 17 wholesale foliage plant nurseries in Central
Florida, 1980.

Average Average Average Your
Item Unit all 17 5 larger 5 smaller
nurseries nurseries nurseries nursery


The one best measure
A Value of own plants solda $ 332,439 656,326 57,972
Other useful indicators of size


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


343,345 676,857 58,716


C Total bed & bench space -

D Propagating & finishing
bed & bench space


E Stock plant bed &
bench space


F Total nursery area
G Total nursery area


- sq ft 69,988

- sq ft 51,222


- - sq ft


- - sq ft
- - acres


18,766

109,642
2.5


146,617 18,731

100,229 15,093


46,389


3,638


213,575 23,908
4.9 0.55


H Average fulltime -
equivalent employees


Capital ownedc 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 -


- -number 12.31


95,510
99,987
24,958
19,313
24,900
264,668


95,510
99,987
24,958
39,729
24,900
285,084


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


total plant sales minus the
The costs of plants purchased


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


24.9


179,677
115,180
54,567
28,206
73,989
451,61 8


179,677
115,180
54,567
30,606
73,989
454,018


18,342
35,199
6,778
14,850
1 600



18,342
35,199
6,778
19,850
1 600
81,768


------------

,,,-,-
----,~


- - --






6


Rates of Production (Table 2)


"Value of own plants sold per square foot of total bed and bench space"
(Table 1A 4 1C) is the traditional rate of production measure used among nur-
series. The average value for the 17 nurseries was $4.75. For the five lar-
der nurseries, it was $4.48, or about six percent less than the average. The
five smaller nurseries had $3.10, or 6.5 percent of the average sales per
square foot of total bed and bench space. When sales were adjusted for change
in inventory value (Table 1B i 1C), the relationships remained practically the
same.
Sales per square foot of propagating and finishing space (Table lA ; I1)
is a more accurate indicator of growing efficiency. Roads and isles grow no
plants. Output from stock plant areas may reduce costs, but pay no bills un-
less cuttings are sold. It is the plants grown on the propagating and finish-
ing space that pay the bills for the entire nursery operation. This amounted
to $6.49 per square foot for the 17 nurseries. For the five larger nurseries,
it was $6.55, or two percent greater than the average. The five smaller nur-
series had $3.84 which was 59 percent of the average.

Table 2.--Rates of production, 17 wholesale foliage plant nurseries In Central
Florida, 1980
Average Average Average Your
Item Unit all 17 5 larger 5 smaller nursery
nurseries nurseries nurseries nur
The one best measure

Value of own plants sold per
sq ft of total bed & bench sq ft 4.75 4.48 3.10
space - (Tablr lA 1 IC)
----- i------------------
Other useful indicators
-.----------------------
Value of own plants sold per
sq ft adjusted for inventory $ 4.91 4.62 3.13
change - (Table 1B 1IC)
Value of own plants sold per
sq ft of propagating & fin- $ 6.49 6.55 3.84
fishing space (Table 1A 4 1D)
--- adjusted for inventory 6.70 6.75 3.89
change - (Table IB 4 lD) $ 70 5 3
Value of own plants sold per
acre - (Table 1A i 1G) $ 132,075 133,862 105,626
--- adjusted for inventory
change - (Table 1B 4 1G) $ 136,408 138,049 106,981










Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A 4 1H) was selected as
the one best measure of labor efficiency. This averaged $26,940 per employee
for the 17 nurseries. For the five larger nurseries, sales averaged $26,348,
or two percent less than the average. The five smaller nurseries had $18,945,
or 70 percent of the average. Adjusting for change in inventory value (Table
1B 4 1H) increased the average by $884 to $27,824. For the five larger nur-
series, the increase was $824 per person to $27,172. The smaller nurseries
were up $243 per person to $19,188.
Total bed and bench space per employee (Table 1C ; 1H) averaged 5,672
square feet. For the five larger nurseries, it was 5,886 square feet, or four
percent more than the average. The five smaller nurseries had 6,121 square
feet per person, or eight percent above the average.
Propagating and finishing space per person (Table 1D ; 1H) averaged 4,151
square feet per employee. For the five larger nurseries, it was three percent
lower at 4,024 square feet. The smaller nurseries were 19 percent higher at
4,932 square feet. For total nursery area per employee (Table IF 4 1H), both
the larger and the smaller groups of nurseries were below average.


Table 3.--Labor efficiency, 17 wholesale foliage plant nurseries in Central
Florida, 1980
-I I- II I I II I I I
Average Average Average Your
Item Unit all 17 5 larger 5 smaller
nurseries nurseries nurseries y
The one best measure


Value of own plants sold per


employee (Table 1A Z 1H)
Other useful
Value of own plants sold per
employee adjusted for change $
in inventory (Table 1B 4 1H)
Total bed & bench space per ft
employee (Table IC I 1H) f
Propagating & finishing space ft
per employee (Table lD ; 1H) sq
Total nursery area per ft
employee (Table F 1H)sq


2) e 0l. l


LU TItU


26.348 18.945


Indicators
indicators


27,824


5,672

4,151

8,885


27,172 19,188


5,886


6,121

4,932


8,574 7,813


-










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 4 1I). This indi-
cates the number of times that funds tied up in plant inventory were repre-
sented 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 17 nurseries averaged
348 percent. This means that annual plant sales amounted to three and a half
(348 percent) times the value of plants in inventory. For the five larger
nurseries, turnover was 365 percent. Their annual plant sales were 3.65 times
the value of plants in inventory. The five smaller nurseries had a slightly
lower turnover rate. It was 216 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 to start growing. The average amount of
vacant space during the year divided by total bed and bench space (Table 1C)
shows the average percent of vacant space. This was 6.78 percent for the 17
nurseries. For the larger ones, it was 7.77 percent. The smaller nurseries
had 7.41 percent.
Other useful indicators to study are percent of total nursery area in-
cluding buildings and roadways that is bed and bench space, and the division
of bed and bench space between propagating and finishing space and stock plant
area. 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. However, other things are seldom equal, such as the cost of raising
rather than buying cuttings, and availability of quality material when needed.










The 17 nurseries averaged 69,988 square feet of bed and bench space,
which was 63.83 percent of their total nursery area. The five larger nurser-
ies averaged 68.65 percent of their total area in bed and bench space, while
the five smaller nurseries utilized 78.35 percent of their total nursery area
as bed and bench space.
Propagating and finishing area averaged 51,222 square feet for the 17
nurseries. This was 73.19 percent of the total bed and bench space (Table ID
4 1C). For the five larger nurseries, it was 100,229 square feet, or almost
double the average. However, this was only 68.36 percent of the total bed and
bench space, indicating that the five larger nurseries devoted more of their
space to stock plants than the average. The five smaller nurseries had 15,093
square feet for propagating and finishing, which was but 29 percent of the
average. However, this space represented 80.58 percent of the total bed and
bench space which was seven points higher than the average and over 12 points
above the larger five nurseries. This probably is natural, since smaller nur-
series, especially those just getting started, may not be able to afford the
luxury of maintaining as many stock plants as they would like.



Table 4.--The use of space, 17 wholesale foliage plant nurseries in Central
Florida, 1980

Average Average Average Your
Item Unit all 17 5 larger 5 smaller
nursery
nurseries nurseries nurseries
Intensity_of space use
Annual turnover of plant inven- % 348 365 316
tory value (Table 1A 11)
--- -- ------ -------*~Sl~0.S-3!3-^-----------------
Efficiency of_space use
Vacant bed & bench space sq ft 4,745 11,397 1,389
- (divided by Table IC) % 6.78 7.77 7.41
Other useful indicators
Total nursery area incl bldgs 109,642 213,575 23,908
& roadways (same as Table 1F) q ft 1 2 2
Total bed & bench space - sq ft 69,988 146,617 18,731
- (Table IC 4 IF) % 63.83 68.65 78.35
Propagating & finishing bed sq ft 51,222 100,229 15,093
& bench space (Table ID 1 IC) % 73.19 68.36 80.58
Stock plant bed & bench space sq ft 18,766 46,389 3,638
- (Table IE T IC) % 26.81 31.64 19.42
,. ,= .-- ,, ,, , .... .










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 4 IN).
Annual turnover averaged 125.61 percent for the 17 nurseries. This means that
sales for the year equaled one and a quarter times the capital invested. For
the five larger nurseries, it was 145.33, which was a 16 percent faster turn-
over rate than the average. The five smaller nurseries had 75.52, which was a
third slower than the average turnover rate.
Managed capital turnover averaged 116.61 percent for the 17 nurseries.
Thus, there was enough additional capital being managed to reduce the turnover
rate about nine percent. For the five larger nurseries, it was 144.56 meaning
there was only enough additional capital involved in the operation to reduce
the turnover rate by .77 percent. The five smaller nurseries had enough addi-
tional capital to manage to reduce turnover by 4.5 percent.
Capital invested per employee (Table 1N 1 1H) averaged $21,448 for the 17
nurseries. For the five larger nurseries, it was $18,130, or about 85 percent
of the average, indicating more efficient use of owned capital. The five
smaller nurseries had $25,088 which was 17 percent higher than the average.
Average capital investment per acre of nursery area (Table 1N i 1G) aver-
aged $105,150 for the 17 nurseries. For the five larger nurseries, it was
$92,110, or only around 88 percent of the average. The five smaller nurseries
had $739,873, or over a'third more than the average. Calculations for managed
capital show a similar relationship, with the larger nurseries managing about
82 percent of the average capital per acre, and the smaller nurseries having
about 16 percent more than the average.
Growing plants represented 33.50 percent of the capital managed by the 17
nurseries. For the larger nurseries, it was 39.57 percent. The smaller nur-
series had 22.43 percent of their capital tied up in plants.
Buildings took the largest share of capital, averaging 35.07 percent of
the total. For the five larger nurseries, it was less at 25.37 percent. The
five smaller nurseries had 43.05 percent of their capital in buildings. For
the larger nurseries, machinery and equipment took more than the average share






11



of capital. The smaller nurseries used more than the average for land. The
larger nurseries show more than the average investment in supplies, while the
smaller nurseries had a very small portion of their total capital invested in
supplies.


Table 5.--Efficiency in use of capital, 17 wholesale foliage plant nurseries
in Central Florida, 1980
Average Average Average Your
Item Unit all 17 5 larger 5 smaller
nursery
nurseries nurseries nurseries nu
The one best measure
------------------------------------------------------
e
Annual turnover of owned % 12.61 1
capital value (Table lA 1 1N) 1 1
-------O---- ------------------l --ii---
Other useful indicators
--------------------------------------------------


e
Annual turnover of managed
capital value (Table 1A 7 1T)
Per employee:
Capital owned (Table IN 7 1H)
--- managed (Table IT 4 1H)
Per acre:


Capital owned
--- managed


(Table IN I 1G)
(Table IT 1IG)


Managed capital/employee in:
Plants - (Table 10 4 1H)
Buildings (Table IP 1H)
Mach & equip (Table 1Q I 1H)
Land - (Table 1R 1H)
Managed capital per acre in:


Plants -
Buildings -
Mach & equip
Land -


(Table
(Table
(Table
(Table


Percent of capital managed in:
Plants - (Table 10 i 1T
Buildings (Table 1P 4 1T
Mach & equip (Table 1Q 1IT,
Land - (Table 1R 1IT,
Supplies (Table 1S 1T:
Total nursery(Table 1T I1T


% 116.61 144.56


21,448
23,102

105,150
113,262

7,740
8,103
2,023
3,220

37,945
39,724
9,916
15,784

33.50
35.07
8.75
13.94
8.73
100.00


18,130
18,226

92,110
92,600


7,213
4,624
2,191
1,229

36,646
23,492
11,129
6,242

39.57
25.37
12.02
6.74
16.30
100.00


70.90


25,088
26,722

139,873
148,983

5,994
11,503
2,215
6,487

33,419
64,132
12,349
36,167

22.43
43.05
8.29
24.28
1.96
100.00


100.00


eAnnual turnover of capital


dividing the value of own plants
(Table 1N or IT).


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


-~ --










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 expenses. Dollar costs
should be useful for comparing the relative magnitude of the various cost
items, and as a guide to persons interested in Central Florida foliage nurser-
ies as an investment, either as buyers or as lenders.

Salaries and Wages
The salary and wage group includes operator salary or time value. Aver-
age was $130,486 for the 17 nurseries. For the five larger nurseries, they
were $265,084, or twice the average. The five smaller nurseries had $428,137,
or about 22 percent of the average.

Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". They averaged $123,236 for the 17 nur-
series. For the larger nurseries, they were $236,725, or 1.9 times the aver-
age. The smaller nurseries had $21,358, or 17 percent of the average.

Other Production Costs
Other production costs include "repairs" and "equipment operating costs".
They averaged $14,746 for the 17 nurseries. For the five larger nurseries,
they were $26,118, or 1.7 times the average. The smaller nurseries had $5,067
or a little over a third of the average.

Administrative and Overhead
Administrative and overhead expenses usually cannot be assigned to any
particular crop or growing activity, yet must be covered in order to remain
in business. They include the group starting with "travel and entertainment"
through "other cash expense". They averaged $28,873 for the 17 nurseries.
for the larger nurseries, they were $48,789, or one and a half times the aver-
age. The smaller nurseries had $4,889, or about 20 percent of the average.

Total Cash Costs
Total cash costs averaged $297,343. For the larger nurseries, they were
$576,717, or almost double the average. The smaller ones had cash costs of
$59,451, or 20 percent of the average.










Non-Cash Costs
Non-cash costs include depreciation allowances, decreases in the supply
inventory (using supplies purchased during a previous time period), and an in-
terest charge for the use of the capital invested in the nursery. These costs
averaged $58,553. For the larger nurseries, they were $101,018, one and three
quarters average. The smaller ones had $17,693, or a third of the average.

Total All Costs
Total costs averaged $355,897. Larger nurseries averaged $677,735 (1.9
times the average), and smaller ones had $77,145 (22 percent of the average).

Table 6.--Dollar costs by expense category, 17 wholesale foliage plant
nurseries in Central Florida, 1980
Average Average Average Your
Item all 17 5 larger 5 smaller
-i nursery
nurseries nurseries nurseries
- - Dollars - -
Cash Costs
Operator's salary - - 22,066 30,580 15,885
Other wages & salaries - 108,420 234,504 12,252
Plants & sees to grow on - 47,111 78,548 7,030
Pots & growing containers - 22,975 50,228 4,675
Fuel for production heat - 20,328 42,816 3.026
Peat, soil, shavings, etc - 13,005 28,921 2,375
Fertilizer & lime - - 2,981 4,550 841
Pesticides & other chemicals 3,740 6,488 1,499
Packing boxes & supplies - 10,293 20,656 961
Other production supplies - 2,803 4,518 951
Repairs & maintenance - 9,872 21,194 2,667
Equipment operating costs - 4,874 4,924 2,400
Travel & entertainment - 1,218 2,152 12
Insurance - - - 5,111 9,454 1,176
Telephone - - - 3,250 5,362 822
Electricity - - - 4,492 6,973 906
Taxes, licenses, bonds - 3,808 3,478 560
Advertising - - - 984 2,028 231
Rent: land and/or buildings 1,244 2,752 100
Other cash expenses - - 8,766 16,590 1 082
Total cash costs - - 297,343 576,717 59,451
Non-cash costs
Depreciation: mach & equip - 5,058 9,035 1,506
Depreciation: bldgs, fences, wells- 13,464 23,110 4,671
Inventory decrease in supplies 0 0 0
Interest on capital, 15% - 39 878 68,349 11,515
Total non-cash costs 58,553 101,018
Total all costs - --- 355,897 677,735 77,145










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 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 6 by the corresponding "Total all costs"
figure at the bottom of the table.

Salaries and Wages
Salaries and wages (includes operator) averaged 36.66 percent of all
costs for the 17 nurseries. For the five larger ones, they were 39.11 per-
cent, or 2.5 percent more than the average. The five smaller nurseries had
36.47 percent, or 0.2 percent less than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 34.63 percent for the 17 nurseries. For the larger nurseries
they were 34.94 percent, or 0.3 percent above average. The smaller nurseries
averaged 27.68 percent of total costs, or 7.0 percent below average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 4.14 percent for the 17 nurseries. For the five larger ones, they were
3.86 percent, or 0.3 percent under the average. The five smaller nurseries
had 6.57 percent, or 2.4 percent higher than the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 8.11 per-
cent of all costs for the 17 nurseries. For the five larger ones, they were
7.20 percent, or 0.9 percent less than the average. The smaller nurseries had
6.34 percent, or 1.8 percent under the average.

Total Cash Costs
Total cash costs represented 83.55 percent of all costs and allowances
for the 17 nurseries. For the larger ones, it was 85.09 percent, or 1.5 per-
cent more than the average. The smaller ones had 77.06 percent, or 6.5 per-
cent less total expense in the form of cash costs.

Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") are the ad-









ditional costs: that ,eed to be covered eventually, though not necessarily with
cash during this accounting period. They averaged 16.45 percent of total
,,costs for theq17, nurseries, Fr ,the two larger ones, they averaged 14.91, or
i:.l.5 r percgt ,1jss ,~has a the average, Hence, the larger nurseries had a higher
percent of their total operating expense in the form of cash costs. The five
;sqall,qr nurseres hacd 22,.94 percent of their total as non-cash costs. This
,waSc 6.5 gperent mrirezthan the average, and one and a half times the rate of
thle :.l~ger, nrqrseriesj The, largest. differences were in the percentages of
total costs represented by depreciation and in return on capital.

;, .> f-. y: "' -," "
Table 7.--cPercent of total .costs by expense category, 17 wholesale foliage
,;, ,plant nurseries in Central Florida, 1980
Average Average Average our
Item all 17 5 larger 5 smaller
nurseries nurseries .ureries nursery
- -- Percent--- -

.. b^^p~r~a ^Sat if...iw. "r-s .vf-gr!.i '- .0 c-'4.^ .t 5 6 "r: 2059'vfc "{'' if'
. dp &A t h g rtba s a l*0 94eda W ej Yv 3k.604 _15_8 4 5_,2

Plants & seeds to grow on - 1 -. 1.59 ) ..
Pots & growing containers - 46 7.41 '"'.
Fuel for production heat - 5.71 6.32 ',.92,
Peat, soil, shavings, etc - 3.65 4.2 -- -:3.0.- -
ovpe(#R~vS)r Bfttgq4 A qiT"?- (@-&4- 067, c 1,;;0996 J0"C;
'I^^ ^ W ; ;. J 'I p- 25,
Packing boxes & supplies- - .89 3.05 1.5 -
01%P 1 SPuioRfse.ae-. 0i J7.9 A -7?s0G67 1 .23 -_ _.ii--
Repairs & maintenance - 2.77 :3.t 3 ',3 : 3i46 -,. i
Equipment operating costs - 1.37 0.73 3.11
Travel & entertainment ---- 0.34 .2-'-2 __l_
e- Ci'huihc sEaS^V-( x1 hs 1" 1.4 ; 39 ; L.52Q2 ~
.lp f4,T4 i -,-0- z .v^ ;79, 1? *. ri--97,
Electricity - 1.03 .17

Advertising - - - 0.28 0.30 0.30
Rent: land and/or buildings 0.35 0.41 0Q.i03Mi ,;Fo
-to r. ba ano -fre s-: T 2.46 2.45 1.r -. _i,.
p.. L T9,t -i -oss ,',83.55. .-.18509 7 06


Depreciation: mach & equip - 1.46 1.40 1.95
Depreciation: bldgs, fences, wells- f i 3. 42 .6 _'06-
Inventory decrease in supplies 0.00 0.00 0.00
Interest on capital, 15% - 11.21 10.08 14.93 ....
otl al cots - --1.91 22 94 1 1
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 relative growing costs be-
tween nurseries. But costs per square foot do. The traditional basis for
comparison is costs per square foot of total bed and bench space. These were
obtained by dividing each of the dollar cost figures in Table 6 by the appro-
priate 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 186.4 cents for the 17 nurseries. For the larger ones,
they were 180.8 cents, or about six cents less than the average. The smaller
ones had 150.2 cents, or 36 cents below the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 176.1 cents. For the five larger nurseries, they were 161.5
cents, or 14.6 cents less than the average. The smaller nurseries had 113.1
cents, or 63 cents under the average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 21.1 cents in the 17 nurseries. For the five larger ones, they were 17.9
cents, or three cents below average. The smaller nurseries had 27.0 cents, or
six cents above the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 41.1 cents
per square foot. For the five larger nurseries, they were 33.4 cents, almost
eight cents lower. The smaller ones had 26.1 cents, 15 cents below average.

Total Cash Costs
Total out-of-pocket costs per square foot of total bed and bench space
averaged 424.9 cents ($4.25). For the five larger nurseries, they were 393.4
cents, or 31.5 cents below the average. The smaller ones had 317.4 cents, or
more than a dollar below the average.

Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") amounted to









83.6 cents in the 17 nurseries. For the larger ones, they were 68.9 cents, or
14 cents below the average. The smaller nurseries had 94.5 cents, or 10 cents
more than the average.

Total All Costs
The total for all costs and allowances averaged 508.5 cents ($5.08) in
the 17 nurseries. For the five larger ones, they were 462.3 cents, or 46
cents below average. The smaller nurseries had 144.9 cents, or about 96 cents
under the average cost per square foot of total bed and bench space.


Table 8.--Costs per square foot of total bed & bench space, 17 wholesale
foliage plant nurseries in Central Florida, 1980

Average Average Average Your
Item all 17 5 larger 5 smaller
nurseries nurseries nurseries nursery
nurseries


Cash Costs
Operator's salary - - 31.5
Other wages & salaries - 154.9
Plants & seeds to grow on - 67.3
Pots & growing containers - 32.8
Fuel for production heat - 29.0
Peat, soil, shavings, etc - 18.6
Fertilizer & lime - - 4.3
Pesticides & other chemicals 5.3
Packing boxes & supplies - 14.7
Other production supplies - 4.0
Repairs & maintenance - 14.1
Equipment operating costs - 7.0
Travel & entertainment - 1.7
Insurance - --- - 7.3
Telephone - - - 4.6
Electricity - - - 6.4
Taxes, licenses, bonds - 5.4
Advertising - - - 1.4
Rent: land and/or buildings 1.8
Other cash expenses - - 12.5
Total cash costs - - 424.9


Non-cash costs
Depreciation: mach & equip -
Depreciation: bldgs, fences, we
Inventory decrease in supplies
Interest on capital, 15% -
Total non-cash costs---
Total all costs - -- -


7.4
lls- 19.2
- 0.0
57.0
83.6
-- -508.5


20.9
159.9
53.6
34.3
29.2
19.7
3.1
4.4
14.1
3.1
14.5
3.4
1.5
6.4
3.7
4.8
2.4
1.4
1.9
11.3
393.4


6.5
15.8
0.0
46.6
68.9
462.3


84.8
65.4
37.5
25.0
16.2
12.7
4.5
8.0
5.1
5.1
14.2
12.8
0.1
6.3
4.4
4.8
3.0
1.2
0.5
5.8
317.4


8.0
24.9
0.0
61.5
94.5
411.9


n s L








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


Costs 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".

Salary and Wages
Salaries and wages (includes operator) per square foot amounted to 254.8
cents ($2.55) in the 17 nurseries. For the five larger ones, they averaged
264.5 cents, or about 10 cents above the average. The smaller nurseries had
786.4 cents, or 68 cents less than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 240.6 cents ($2.41) per square foot. For the larger nur-
series, they were 236.1, or four cents below the average. The smaller ones
had 141.5 cents, or 99 cents below the average.

Other Production Costs
Other production costs ("repairs" and "equipment operation") averaged
28.8 cents. For the larger nurseries, they were 26.1 cents. The five smal-
ler nurseries had 33.6 cents, or almost five cents over the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 56.4 cents.
for the larger nurseries, they were 48.9 cents, down 7, cents. The five smal-
ler nurseries had 32.4 cents, or 24 cents below the average.

Total Cash Costs
Total cash costs in the 17 nurseries averaged 580.5 cents ($5.80) per
square foot of propagating and finishing space. For the five larger nurseries
they were 575.4 cents, down a nickel. The five smaller nurseries had 393.9
cents, or $1.87 below the average. Thus, it follows that the middle sized
nurseries of this group averaged higher out-of-pocket costs per square foot
than either the larger or smaller groups of nurseries.








Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged
114.3 cents. The larger nurseries had 100.8 cents, or 13 cents below average
and smaller nurseries had 117.2 cents, or three cents higher than average.

Total All Costs
Total costs per square foot of propagating and finishing space averaged
$6.95. For the larger nurseries, they were $6.76, or 19 cents below average.
the smaller ones had $5.11 or $1.84 below the average. Again, it follows that
the seven middle sized nurseries had above average costs per square foot.

Table 9.--Costs per square foot of propagating and finishing space, 17 whole-
sale nurseries in Central Florida, 1980

Average Average Average Your
Item all 17 5 larger 5 smaller
nurseries nurseries nurseries rsery
- - Cents - -


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 expenses - -
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 - - -


43.1
211.7
92.0
44.8
39.7
25.4
5.8
7.3
20.1
5.5
19.3
9.5
2.4
10.0
6.4
8.8
7.4
1.9
2.4
17. 1
580.5


10.2
26.3
0.0
77.8
114.3
694.8


30.5
234.0
78.4
50.1
42.7
28.8
4.5
6.5
20.6
4.5
21.2
4.9
2.2
9.4
5.4
7.0
3.5
2.0
2.8
16.6
575.4


9.5
23.1
0.0
68.2
100.8
676.2


105.2
81.2
46.6
31.0
20.0
15.7
5.6
9.9
6.4
6.3
17.7
15.9
0.1
7.8
5.4
6.0
3.7
1.5
0.7
7.2
393.9


10.0
31.0
0.0
76.3
117.2
511.1








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


Costs per square foot of growing area are important for comparing rela-
tive costs between nurseries, and for estimating individual plant growing
costs. However, they do not indicate the profit potential of a nursery oper-
ation as well as do costs per dollar of sales. Adjusting sales for changes in
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 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 38.0 cents per dollar of
sales after adjusting for changes in inventory. For the five larger nurser-
ies, they were 39.1 cents, or a cent more than the average. The smaller nur-
series had 47.9 cents, almost nine cents over average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 35.9 cents. For the five larger nurseries, they were 35.0
cents, again almost a cent below the average. The smaller nurseries had a
half cent above average, or 36.4 cents.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 4.3 cents per dollar of adjusted sales. For the five larger nurseries,
they were 3.8 cents, or a half a cent less than average. The smaller nurser-
ies had 8.6 cents, or double the average.

Administrative and Overhead
These costs ("travel" and "other cash expense") amounted to 9.6 cents per
dollar of adjusted sales. For the five larger nurseries, they were 7.1 cents,
or two and a half cents below average. The smaller nurseries had a cent less
than the average, or 8.3 cents.

Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 86.6 cents. For
the five larger nurseries, they were 85.2 cents, or one and a half cents below
average per dollar of adjusted sales. The smaller nurseries had 101.2 cents,
or more than 14 cents above average.










Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged
17.0 cents. For the five larger nurseries, they were 14.8 cents, or two cents
below average. The smaller ones had 30.2 cents, or 13 cents over average.


Total All Costs
Total costs per dollar
nurseries, they were $1.00.


of adjusted sales averaged $1.04. For the larger
The smaller ones had $1.31.


Table 10.--Costs per dollar of sales adjusted for change in plant inventory,
17 foliage plant nurseries in Central Florida, 1980

Average Average Average Your
Item all 17 5 larger 5 smaller
nursery
nurseries nurseries nurseries
- - Cents - - -
Cash costs
Operator's salary - - 6.4 4.5 27.0
Other wages & salaries - 31.6 34.6 20.9
Plants & seeds to grow on - 13.7 11.6 12.0
Pots & growing containers - 6.7 7.4 8.0
Fuel for production heat - 5.9 6.3 5.2
Peat, soil, shavings, etc - 3.8 4.3 4.0
Fertilizer & lime - - 0.9 0.7 1.4
Pesticides & other chemicals 1.1 1.0 2.6
Packing boxes & supplies - 3.0 3.0 1.6
Other production supplies - 0.8 0.7 1.6
Repairs & maintenance - 2.9 3.1 4.5
Equipment operating costs - 1.4 0.7 4.1
Travel & entertainment - -- 0.4 0.3 0.0
Insurance - --- - 1.5 1.4 2.0
Telephone - - - 1.0 0.8 1.4
Electricity - - - 1.3 1.0 1.5
Taxes, licenses, bonds - 1.1 0.5 1.0
Advertising - - - 1.3 0.3 0.4
Rent: land and/or buildings 0.4 0.4 0.2
Other cash expenses - - 2.6 2.4 1.8
Total cash costs - - 86.6 85.2 101.2
Non-cash costs
Depreciation: mach & equip - 1.5 1.4 2.6
Depreciation: bldgs, fences, wells- 3.9 3.4 8.0
Inventory decrease in supplies 0.0 0.0 0.0
Interest on capital, 15% -- 11.6 10.1 19.6
Total non-cash costs - 17.0 14.9 30.9
Total all costs ------ -- 103.6 100.1 131.4
Total all costs 103.6 100.1 131.4









Costs Per Dollar of Sales (Table 11)


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

Salaries and Wages
Salaries and wages (includes operator) amounted to 39.2 cents per dollar
of cash received. For the five larger nurseries, they were 40.4 cents, or a
cent more than the average. The smaller nurseries had 48.7 cents, or 9.5
cents over average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 37.0 cents per dollar of cash sales. For the five larger
nurseries, they were 36.1 cents, or about a cent less than average. The smal-
ler nurseries had 36.8 cents, or 0.2 cents below average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 4.5 cents per dollar of cash received. For the five larger nurseries,
they were 4.0 cents, or a half cent lower. The smaller nurseries had 8.7
cents, almost double the average.

Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 8.8 cents
per dollar of sales. For the five larger nurseries, they were 7.3 cents, or
one and a half cents lower. The smaller nurseries had 8.5 cents, or 0.3 cents
less than the average.

Total Cash Costs
Total cash costs averaged 89.4 cents per dollar of cash received. For
larger nurseries, they were 87.9 cents, or one and a half cents lower than
average. The smaller ones had 102.6 cents, or three cents over average costs.

Non-Cash Costs
In terms of bill paying ability, the five smaller nurseries average did
not show enough sales to pay the cash costs incurred during the year. None of
the averages had enough sales to cover all non-cash allowances for the year.










The 17 nurseries averaged 17.6 cents per dollar of sales, which was seven
cents in excess of the funds remaining after paying cash costs. For the five
larger nurseries, non-cash costs amounted to 15.4 cents per dollar of sales,
or over 3 cents more than the cash received. The smaller nurseries had 30.5
cents non-cash costs. Hence, total costs exceeded cash costs received by 33.1
cents.


Table 11.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 17 foliage plant nurseries in Central Florida, 1980

Average Average Average Your
Item all 17 5 larger 5 smaller
nurseries nurseries nurseries nursery
- - Cents - - -
Cash costs
Operator's salary - - 6.6 4.7 27.4
Other wages & salaries - 32.6 35.7 21.3
-Plants & seeds to grow on - 14.2 12.0 12.1
Pots & growing containers - 6.9 7.6 8.1
Fuel for production heat - 6.1 6.5 5.2
Peat, soil, shavings, etc - 3.9 4.4 4.1
Fertilizer & lime - -- 0.9 0.7 1.4
Pesticides & other chemicals 1.1 1.0 2.6
Packing boxes & supplies - 3.1 3.2 1.7
Other production supplies - 0.8 0.7 1.6
Repairs & maintenance - 3.0 3.2 4.6
Equipment operating costs - 1.5 0.8 4.1
Travel & entertainment - 0.4 0.3 0.0
Insurance - - - 1.5 1.4 2.0
Telephone - - - 1.0 0.8 1.4
Electricity - - - 1.4 1.1 1.6
Taxes, licenses, bonds - 1.2 0.5 1.0
Advertising - - - 0.3 0.3 0.4
Rent: land and/or buildings 0.4 0.4 0.2
Other cash expenses - - 2.6 2.5 1.9
Total cash costs - - 89.4 87.9 102.6
Non-cash costs
Depreciation: mach & equip - 1.6 1.5 2.6
Depreciation: bldgs, fences, wells- 4.0 3.5 8.1
Inventory decrease in supplies 0.0 0.0 0.0
Interest on capital, 15% - 12.0 10.4 19.8
Total non-cash costs - 17.6 15.4 30.5
Total all costs - - 107.0 103.3 133.1








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 on
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 and supply inventory values, and miscel-
laneous income. Miscellaneous income refers to income, interest income de-
livery sources other than plant sales, such as rent income, interest income,
delivery income, income from the sale of fertilizer and supplies, and boxing
charges
Total gain for the 17 nurseries averaged $346,385. Larger nurseries aver-
aged double that amount, or $686,068. Smaller nurseries had 17 percent of the
average, or $59,116.

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 it, all cash costs from Table 6 except the operator's salary, and all
non-cash costs shown there except interest on capital, are subtracted from total
gain. The result is net nursery income, or income for all the time andcaptial
investment supplied by the owner-operator.
For the 17 nurseries, it averaged $52,433. For the five larger nurseries
it was $107,261, or twice the average. Smaller nurseries had $9,371, or 18
percent of the average.

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 invest-
ment. When the owner and operator are the same person, dividing net nursery
income between the operator and return to capital may not seem important. But
when the owners are outside investors, the accurate division is important.










In either case, rate of return is a common indicator for evaluating an invest-
ment or for selecting between alternative investment opportunities.
Return to capital for the 17 nurseries amounted to $30,367, or a return
of 11.4 percent. For the five larger nurseries, it was $76,681 for a 16.8
percent return on the capital investment. The smaller nurseries averaged a
loss of $6,514. This means they received no return on their capital invest-
ment and failed to recover fully what they allocated for their own salary.




Table 12.--Income summary, 17 wholesale foliage plant nurseries in Central
Florida, 1980
Average Average Average Your
Item Unit all 17 5 larger 5 smaller our
nurseries nurseries nurseries nursery
Value of own plants sold $ 332,439 656,326 57,972
Plant inventory change - $ 10,906 20,530 743
Supply inventory change - $ 2,080 6,540 400
Miscellaneous cash income $ 961 2,671 0
f
Total gain $ 346,385 686,068 59,116
Deduct cash costs less op salry $ ( 275,277) ( 546,137)( 43,567)( )
Deduct non-cash costs less int- $ ( 18,675) ( 32,669)( 6,178)( )
Total deductions - $ ( 293,952) ( 578806)( 49,745)( )
-Net nursery income - $ 52,433 107,261 9,371
Deduct op salary or time value- $ ( 202066) ( 30,580)( 15 885)( )
h
Return to capital ----- $ 30,367 76,681 ( 6,514)
Rate of return to capital -% 11.4 16.8 ( 8.5 )

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.
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,
h
Return to capital--the portion of net nersery 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 13)

In this section, information presented earlier is re-grouped to concentrate
attention on factors that are generally deemed related to level of profit in a
foliage nursery. The factors are presented in the same sequence that they
appeared before. But here, the average for all 17 nurseries is compared with
the average for the six most profitable and the six 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 areas. Nevertheless, nursery 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 12 was selected as the indicator for level
of profit. Average for all 17 nurseries was $52,433. The mostprofitable third
of the nurseries averaged almost double this amount, or $100,471. The least
profitable third averaged $5,499. The following compares the average for these
three groupings of foliage nurseries using one indicator from most of the pre-
ceeding tables. A more complete analysis would use all the indicators listed
for each table. For in most cases, each indicator measures things from little
different angle.

Size of Business
The indicator of size of business selected from Table 1 was "Value of own
plants sold". The 17 nurseries averaged was $332,439.' The most profitable third
has $473,341 in sales, or over 42 percent more. The least profitable group
averaged $68,375 or about 20 percent of the average. This does not mean that
small businesses cannot be profitable, but it does indicate thatlarger profits
tend to be associated with higher dollar volumes of business.

Production Rate
The indicator of rate of production selected from Table 2was "Value of own
plant 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 nrusery operation, hence is de-
sirable. The average for all 17 nurseries was $4.75 per square foot. The most
profitable third had 15 percent more, or $5.48, and the least profitable third
had $3.90, or aroudn 80 percent of the average.










Lower sales per square foot of total 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 yields 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 pro-
grams can alter the returns received by two different nurseries for the same
crop.

Table 13.--Factors associated with level of profit, 17 wholesale foliage plant
nurseries in Central Florida, 1980

Average Most Least
Item Unit all 17 profitable profitable Your
nurseries third (6) third (6) nursery
-- Level of profit
Net nursery income (Table 12) $ 52,433 100,471 5,449
Fac------rs socat with lvl of--- roft--


(Table 1)


Value of own plants sold -
Production rate (Table
Sales/sq ft of total
bed & bench space
Labor efficiency (Table
Own plant sales/employee -
Space use intensity (Table
Annual turnover of plant
inventory value
Use of capital (Table
Annual turnover of owned
capital value
Level of costs (Table 8
Cost/sq ft of total bed space
Cost efficiency (Table 1C
Cost/$ sales adjusted for
change in inventory value
Growth in the business
Increase in sales & plant
inventory over last year


- $ 332,439
2)
$ 4.75

3)
- $ 26,940
4)
- % 348

5)
- % 125

)
:e $ 5.09

$ ).
- $ 1.04


473,341 68,375


5.48


3.90


30,226 11,954


354


152


5.56


0.97


276


66


8.29


1.23


62,657 16,040


Size of business


$ 28,608










Labor Efficiency
The indicator of efficiency in the management and use of labor selected
from Table 3 was "Value ow own plants sold per employee". If all other things
are equal, then higher sales per person involved in desirable. Average for all
17 nurseries was $26,940 per person. Sales were 12 percent higher than average
at $30,226 for the most profitable third, and less than half at $11,954 for the
least profitable third of the nurseries. Higher sales peremployeeviewedalone
at this point in time might seem to indicate true efficiency. On the other
hand, if viewed together with other indicators, it might instead show less than
optimum number of number of employees for volume of plants being handled. This
could result in tardy or untimely plant care, hence, slower growth and lower
quality plus a failure to restock empty space promptly. In this case, bther
indicators such as production rate, space use intensity, capital turnover, and
costs per square foot would not support the labor efficiency indicator.
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. For 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 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-planningand utilization
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". Generally speaking, larger percentage
turnover numbers are desirable, beacuse they indicate that the value of money
tied up on inventory is being revolved faster. Average turnover was 348
percent, meaning that the value of own plants sold was 3.48 (348 percent)times
the average investment in plant inventory. For the most profitable third, it
was 354 percent, or near two percent more than the average. For the least pro-
fitable third, it was 80 percent more than the average. For the least pro-
fitable third, it was 80 percent of the average at 276.
Reduced intensity of space use may be the result of.thbinigs that increase









the amount of money invested in inventory such as excessive investment in stock
plants, rapid expansion of the business so that plant values are up although
accompanying sales have not yet started, poor labor management so there is not
enough labor at crucial times for rapidly refilling empty ;space, selecting
varieties that grow slowly relative to the price they receive, inadequate fer-
tilization program resulting in slow plant growth, or holding plants too long
after they reach salable size. Or it can be the result of anyof 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,
variations in the indicator for this reason are ficticious, and do not provide
a sound basis for management evaluations of decisions.

Use of Capital
The indicator for efficiency in the use of captial selected from Table 5
was "Annual turnover of owned capital value". This is expressed in percent. In
general, larger percentage turnover numbers are desirable, for they indicate
greater sales per dollar of investment in the nursery.
Annual turnover of owned capital averaged 12.5 percent, meaning that the
value of own plants sold during the year amounted to one and a quarter times:the
capital invested. For the most profitable third, it was higher at 152. The
rate for the least profitable third was almost half the average.
Probelms thatlower turnover rate include :any of the items already men-
tioned that lower production rate (hence sales volume) for a given nursery in-
vestment. Low capital turnover is particular 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 un-
necessary) niceties will also tend to lower capital turnover rate.

Level of Costs
The indicator of level of costs selected was "Costs per .square foot of
total bed and bench space" from Table 8. This is traditional indicator for
comparing costs between nurseries. Other things being equal, a lower cost per
square foot is desirable.
Costs for total bed and bench space averaged $5.09, or 34 centshigher than
sales per square foot before adjusting for changes in plant inventory value.
This means that sales did not cover all cash costs plus all .non-cash. ..allow-









ances noted in Table 8. For the most profitable third, they were $5.56 or
eight cents more than the average. The least profitable third averaged $8.29
cents, which was over double sales per square foot.
Problems that cause costs per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor savings
capital items, destruction or theft of supplies and plants, not checking for
best price before purchasing needs, and not carefullymanaging the nursery oper-
ation. Other causes of increased costs may not be a problem if they result in
increased revenue. One example might be increased costs for sleeves and pack-
aging in order to satisfy.the requirements of a premium market.

Costs Efficiency
The indicator of costs efficiency selected was "Cost per dollar of sales
adjusted for change in plant inventory". This shows how well the nursery did inn
total, cash plus change in inventory values. In general, lower costs per :dollar
of sales are desirable.
Average costs were $1.04. Thus, theylacked for cents of recovering all cash
and non-cash costs incurred. For the most profitable third, costs were82 cents
leaving about 12 cents per dollar of sales after all costs were paid. The least
profitable third had $1.57. They lacked 57 cents of being able to cover all
cash plus non-cash costs of the year.
Rising costs per dollar of sales are common during periods of rapid ex-
pansion, because extra costs of a larger operation are incurred before the
nursery can experience the accompanying sales. During inflationay times,
failure to get price increases at the rate that costs are going up will also
result in higher costs per dollar of sales. While prices received are not
always under the direct control of the nurseryman, other things mentioned,
earlier are under this direction. These include things that affect rates of
production, level of costs, and labor efficiency.

Growth in the Business
The indicator selected was the sum of the increase in plant salesand value
of plant inventory over last year. In general, a steady growth in the business
is desirable.
On the average, growth was valued $28,608. This was about nine percent of the
annual sales volume of $332,439. The most profitable third increased $98,100








or over 13 percent of annual sales. The least profitable third ofthe nurseries
increased $29,593, or about 71 percent of sales.
Growth in sales of a business can, of course, be due in part to inflationary
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 con-
tributes to the profitability of an operation. By way of contrast, too rapid of
an expansion program can result in excessive increases in costs and strong needs
for cash before the new plants have reached salable size. The growth through
desirable in an economic sense, needs to be carefully planned an executed.

Range of Figures (Table 14)

In this section, the average for all 17 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 highlow figures shown. In the previous section, figures
for all factors were for the same group of high profitand low profit nurseries
This section shows the average for the best three and worst three numbers re-
gardless of the nursery or profit level to which they belong.
As can be seen in Table 14, quite a range of figures was found formostof
the factors. Nurserymen analyzing their own operation should be suspicious
about any of their figures that fall outside these ranges. The discussion of
things that contribute to variations in the figures in the previous section
would also apply here.

CONCLUDING COMMENTS

Nurserymen who are interested inseeing how they compare with those par-
ticipating in the Florida Nursery Business Analysis Programmaycalculate their
own numbers as shown 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 operating a foliage nursery. It should improve management decisions con-
cerning things that affect the profitability of the nursery operation.
Nurserymen who find this kind of information to be useful, but have









Table 14.--Range of figures on factors associated with level of profit, 17
wholesale foliage plant nurseries in Central Florida,. 1980
Average 3 best 3 poorest Your
Item Unit all 17 factor factor
nurseries average average
Level of profit _
Net nursery income (Table 12) $ 52,433 142,322 ( 1,267)
-------------------------------------
Factors associated with level of -rofit -- --
Size of business (Table 1)
Value of own plants sold $ 332,439 730,196 41,361
Production rate (Table 2)
Sales/sq ft of total $ 4.75 9.46 2.81
bed & bench space
Labor efficiency (Table 3)
Own plant sales/employee $ 26,940 44,489 15,243
Space use intensity (Table 4)
Annual turnover of plant 348 669 237
inventory value
Use of capital (Table 5)
Annual turnover of owned 125 223 64
capital value
Level of costs (Table 8)
Cost/sq ft of total bed space- $ 5.09 2.96 9.76
Cost efficiency (Table 10)
Cost/$ sales adjusted for $ 1.04 0.82 1.57
change in inventory value
Growth in the business
Increase in sales & plant $ 28,608 98,100 29,593
inventory over last year


difficulty finding the time or energy to engage in the tedium of doing their
own calculation may wish to consider becoming a participant in the program.
If you would like to do so, contact your ornamental agent in your nearby
county Extension office, or contact the author in Gainesville.