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Business analysis of foliage plant nurseries in Central Florida
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 Material Information
Title: Business analysis of foliage plant nurseries in Central Florida
Series Title: Economic information report
Portion of title: Foliage plant nurseries in Central Florida
Physical Description: v. : ; 28 cm.
Language: English
Creator: University of Florida -- Food and Resource Economics Dept
Florida Cooperative Extension Service
Publisher: Food and Resource Economics Dept., Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Creation Date: 1981
Frequency: annual
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Subjects / Keywords: Foliage plant industry -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Nurseries (Horticulture) -- Economic aspects -- Periodicals -- Florida   ( lcsh )
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General Note: Description based on 1980: 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.
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 Related Items
Preceded by: Business analysis for foliage and potted flowering plant nurseries in Central Florida

Table of Contents
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Full Text

J. Robert Strain


Economic Information
Report 182


Business Analysis of Foliage Plant
Nurseries in Central Florida, 1981


[2.' IJ 1.1. OT r 10o i
LFA 2. Unit, of Florida


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


April 1983

















ABSTRACT


Average sales, costs and returns information are presented for 16 whole-
sale foliage plant nurseries in Central Florida for the tax year of 1981. Av-
erage value of plant sales was $345,262. Cash costs averaged $288,153. Non-
cash costs and allowances including a 15 percent return on investment amounted
to another $62,283. Total costs were $350,436. After adjustments for change
in plant inventory value and additions for miscellaneous income, net nursery
income averaged $94,342, and return to capital averaged 25.2 percent. Compar-
able information is presented also for the average of the six larger and five
smaller nurseries in the study.

KEY WORDS: Foliage nursery business analysis, income, costs, investment,
efficiency measures, Central Florida.











ACKNOWLEDGEMENTS


This report was made possible by the cooperating 16 foliage plant nurs-
ery operators who made available their production and accounting records on a
confidential basis for analysis and averaging. In addition, assistance and
encouragement were supplied by Extension Ornamental Horticultural Agents Bruce
Barmby, Bill Bodnaruk and Roger Newton. A special thanks goes to my daughter,
Shari, for her help in typing this manuscript. Acknowledgement and apprecia-
tion 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.......................................................... ii
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 Categorya................................... 12
Percent of Total Costs by Expense Categorya ......................... 14
Cost Per Square Foot of Total Bed and Bench Spacea................... 16
Cost Per Square Foot of Propagating and Finishing Spacea. ..... 18
Cost Per Dollar of Sales Adjusted for Inventory Changea.............. 20
Cost Per Dollar of Salesa.......................................... 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 Capital.................................. .............. 29


a 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









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, 16 wholesale foliage plant nurseries in
Central Florida, 1981 ............................................... 5
2 Rates of production, 16 wholesale foliage plant nurseries in
Central Florida, 1981 ............................................... 6
3 Labor efficiency, 16 wholesale foliage plant nurseries in
Central Florida, 1981 ................................................. 7
4 The Use of Space, 16 wholesale foliage plant nurseries in
Central Florida, 1981 ............................................... 9
5 Efficiency in use of capital, 16 wholesale foliage plant
nurseries in Central Florida, 1981........................... ......11
6 Dollar costs by expense category, 16 wholesale foliage plant
nurseries in Central Florida, 1981................................... 13
7 Percent of total costs by expense category, 16 wholesale fol-
iage plant nurseries in Central Florida, 1981......................15
8 Costs per square foot of total bed and bench space, 16 whole-
sale foliage plant nurseries in Central Florida, 1981...............17
9 Costs per square foot of propagating and finishing space,
16 wholesale foliage plant nurseries in Central Florida, 1981.......19
10 Costs per dollar of sales adjusted for change in plant in-
ventory, 16 foliage plant nurseries in Central Florida, 1981........21
11 Costs per dollar of sales (no adjustment for change in plant
inventory), 16 foliage plant nurseries in Central Florida,
1981 ........................................ ........... .......... 23
12 Income summary, 16 wholesale foliage plant nurseries in Cen-
tral Florida, 1981.................................................. 25
13 Factors associated with level of profit, 16 wholesale foliage
plant nurseries in Central Florida, 1981..........................27
14 Range of figures on factors associated with level of profit,
16 wholesale foliage plant nurseries in Central Florida,
1981 ........................ ............. ...........................32



















BUSINESS ANALYSIS OF FOLIAGE PLANT NURSERIES IN CENTRAL FLORIDA, 1981


J. Robert Strain


INTRODUCTION


This publication contains information on sales, costs, returns and pro-
duction efficiency for foliage plant nurseries in Central Florida for 1981.
Other publications in this series includes reports on South Florida foliage
nurseries, and container nurseries.
Purposes of the nursery business analysis series include:
1) Furnishing nurserymen with various physical and economic measure 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 requirement 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 16 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 1981 tax year. In some cases, data were re-
ceived for a fiscal year that did not coincide with the 1981 calendar year.
Data for fiscal year ending after July 1, 1980 and before July 1, 1982 were
included with the 1981 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 finished, 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 purchase price. While this may
not represent the investment of a nurseryman if he were to buy it in 1981, 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 16 nurseries, for the six
"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.







3

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 sume 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 of capital: return to capital divided by the value of
owned 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 $345,262 for the 16 nurseries.
For the six larger nurseries, it was $681,562, or about double the average.
The smaller ones had $69,778, or about 20 percent of the average. Adjusting
sales for change in value of plant inventory (Table IB) did not alter materi-
ally these relationships.
Total bed and bench space (Table 1C) averaged 72,973 square feet for the
16 nurseries. For the six larger nurseries, it was 124,257 square feet, or
1.7 times the average. The five smaller nurseries had 35,055 square feet, or
about a half of the average.
Capital owned (Table IN) averaged $284,353 for the 16 nurseries. For the
six larger nurseries, it was $498,878, or 1.8 times the average. The five
smaller nurseries had $128,420, or 45 percent of the average.
Capital managed (Table IT) averaged $309,862, or nine percent more than
the capital owned by the nurserymen. The difference was in the value of
land. For the six larger nurseries, it was $560,610, or 12 percent more than
they owned. The five smaller nurseries managed four percent more than the
capital owned, or $133,420. The difference also was in the value for land.











Table 1.--Size of business, 16 wholesale foliage plant nurseries in Central
Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
The one best measure


A Value of own plants solda.. $
- - - -te -useful
Other useful
Value of own plants sold
B adjusted for change in .... $
plant inventory value
C Total bed & bench space ... sq ft
D Propagating & finishing
bed & bench space ......... sq ft
E Stock plant bed &
bench space ............... sq ft
F Total nursery area ........ sq ft
G Total nursery area ........ acres
H Average fulltime
equivalent employeesb......number
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 $


345,262
indicators

375,474

72,973

55,716

17,258
129,585
3.0

11.6


110,070
93,863
26,353
28,594
25,472
284,353


110,070
93,863
26,353
54,103
25 472
309,862


681,562
of size


719,765 102,576


124,257

89,439

34,819
200,643
4.6

22.5


191,888
176,681
49,095
20,389
60 825
498,878


191,888
176,681
49,095
82,120
60,825
560,610


a Value of own plants sold--is the value of


total plant sales minus the


cost of plants purchased for immediate resale. The costs of plants purchased
for growing-on is not deducted.
b Fulltime equivalent employee--is the equivalent of one person working
40 hours a week for 52 weeks a year (2080 hours).
c Capital owned--is the net value (original cost less depreciation taken)
of capital assets used in the nursery operation.
d Capital managed--is the sume of capital owned plus the value of
additional capital items used and under the control of the manager (e.g.,
rented land).


69,778


35,055

32,878

2,177
54,030
1.2


3.0


60,508
26,368
11,748
25,638
4 158
128,420


60,508
26,368
11,748
30,638
4.158
133,420











Rates of Production (Table 2)


"Value of own plants sold per square foot of total bed and bench space"
(Table 1A + 1C) is the traditional rate of production measure used among nur-
series. The average value for the 16 nurseries was $4.73. For the six lar-
ger nurseries, it was $5.49, or about 16 percent more than the average. The
five smaller nurseries had $1.99, or 42 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 + 1C), the relationships remained practically the
same.
Sales per square foot of propagating and finishing space (Table 1A + 1D)
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 $6.20 per square foot for the 16 nurseries. For the six larger nurseries,
it was $7.62, or 23 percent greater than the average. The five smaller nur-
series had $2.12 which was 34 percent of the average.


Table 2.--Rates of production, 16 wholesale foliage plant nurseries in Central
Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
The one best measure
Value of own plants sold per
sq ft of total bed & bench $ 4.73 5.49 1.99
space - (Table 1A01C)
S--------------terF usefuIl ~in'dcatrs

Value of own plants sold per
sq ft adjusted for inventory $ 5.15 5.79 2.93
change- (Table 1B+1C)
Value of own plants sold per
sq ft of propagating & fin- $ 6.20 7.62 2.12
fishing space (Table 1AID)
--- adjusted for inventory
change - (Table 1B+1D) $ 6.74 8.05 3.12
Value of own plants sold per
acre - (Table 1A`IG) $ 116,060 147,968 56,256
--- adjusted for inventory
change - (Table 18~G) $ 126,215 156,215 82,699












Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A 1H) was selected as
the one best measure of labor efficiency. This averaged $29,815 per employee
for the 16 nurseries. For the six larger nurseries, sales averaged $30,346,
or two percent more than the average. The five smaller nurseries had $23,654,
or 79 percent of the average. Adjusting for change in inventory value (Table
18 + 1H) increased the average by $2,609 to $32,424. For the six larger nur-
series, the increase was $1,701 per person to $32,047. The smaller nurseries
were up $11,118 per person to $34,772.
Total bed and bench space per employee (Table 1C 1H) averaged 6,302
square feet. For the six larger nurseries, it was 5,532 square feet, or 13
percent less than the average. The five smaller nurseries had 11,883 square
feet per person, or 88 percent above the average.
Propagating and finishing space per person (Table ID + 1H) averaged 4,811
square feet per employee. For the six larger nurseries, it was 18 percent
lower at 3,982 square feet. The smaller nurseries were 132 percent higher at
11,145 square feet.


Table 3.--Labor efficiency, 16 wholesale foliage plant nurseries in Central
Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
The one best measure
Value of own plants sold per
employee (Table 1A+1H) $ 29,815 30,346 23,654
Other useful indicators
Value of own plants sold per
employee adjusted for change $ 32,424 32,047 34,772
in inventory (Table IB+1H)
Total bed & bench space per sq ft 6,302 5,532 11,883
employee (Table IC1H)
Propagating & finishing space sq ft 4,811 3,982 11,145
per employee (Table IDI+H)
Total nursery area per sq ft 11,190 8,933 18,315
employee (Table IFIH)










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 + 11). 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 16 nurseries averaged 314
percent. This means that annual plant sales amounted to more than three (314
percent) times the value of plants in inventory. For the six larger
nurseries, turnover was 355 percent. Their annual plant sales were 3.55 times
the value of plants in inventory. The five smaller nurseries had a much lower
turnover rate. It was 115 percent.
Vacant bed and bench space is the measure used for efficiency of space
use. Generally, reducing the percent of space vacant in 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 6.27 percent for the 16
nurseries. For the larger ones, it was 6.18 percent. The smaller nurseries
had 9.06 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 16 nurseries averaged 72,973 square feet of bed and bench space,
which was 56.31 percent of their total nursery area. The six larger nurser-
ies averaged 61.93 percent of their total area in bed and bench space, while
the five smaller nurseries utilized 64.88 percent of their total nursery area
as bed and bench space.
Propagating and finishing area averaged 55,716 square feet for the 16
nurseries. This was 76.35 percent of the total bed and bench space (Table ID
+ 1C). For the six larger nurseries, it was 89,439 square feet, or 160
percent of the average. However, this was only 71.98 percent of the total bed
and bench space, indicating that the larger nurseries devoted more of their
space to stock plants than the average. The five smaller nurseries had 32,878
square feet for propagating and finishing, which was but 59 percent of the
average. However, this space represented 93.79 percent of the total bed and
bench space which was 17 percent higher than the average and almost 22 percent
above the larger 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, 16 wholesale foliage plant nurseries in Central
Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
Intensity of space use
Annual turnover of plant inven- % 314 355 115
tory value (Table 1A11I)
-- ----------- ficiency o space use
Vacant bed & bench space sq ft 4,577 7,679 3,175
- (divided by Table IC) % 6.27 6.18 9.06
S-ther usef3 l -i nd rcators
Total nursery area incl bldgs sq ft 129,585 200,643 54,030
& roadways (same as Table 1F)
Total bed & bench space sq ft 72,973 124,257 35,055
-------- (Table 1C1F) % 56.31 61.93 64.88
Propagating & finishing bed sq ft 55,716 89,439 32,878
& bench space (Table 1D41F) % 76.35 71.98 93.79
Stock plant bed & bench space sq ft 17,258 34,819 2,177
-------- (Table 1E1C) % 23.65 28.02 6.21









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 1N).
Annual turnover averaged 121.4 percent for the 16 nurseries. This means that
sales for the year equaled one and a fifth times the capital invested. For
the six larger nurseries, it was 136.6, which was a 15 percent faster turn-
over rate than the average. The five smaller nurseries had 54.3, which was
but a third of the average turnover rate.
Managed capital turnover averaged 111.4 percent for the 16 nurseries.
Thus, there was enough additional capital being managed to reduce the turnover
rate about 10 percent. For the six larger nurseries, it was 121.6 meaning
there was enough additional capital involved in the operation to reduce the
turnover rate by 15 percent. The five smaller nurseries had enough addi-
tional capital to manage to reduce turnover by two percent.
Capital invested per employee (Table 1N +1H) averaged $24,556 for the 16
nurseries. For the six larger nurseries, it was $22,212, or about 90 percent
of the average, indicating more efficient use of owned capital. The five
smaller nurseries had $43,532 which was 77 percent higher than the average.
Average capital investment per acre of nursery area (Table 1N HlG) aver-
aged $95,585 for the 16 nurseries. For the six larger nurseries, it was
$108,307, or 13 percent higher than the average. The five smaller nurseries
had $103,534, or eight percent more than the average. Calculations for
managed capital show a similar relationship, with the larger nurseries
managing about 16 percent more than average capital per acre, and the smaller
nurseries having about 36 percent more than the average.
Growing plants represented 35.5 percent of the capital managed by the 16
nurseries. For the larger nurseries, it was 34.2 percent. The smaller nur-
series had 45.3 percent of their capital tied up in plants.
Buildings and installations averaging 30.3 percent of the total. For the
six larger nurseries, it was about the same at 31.5 percent. The five smaller
nurseries had 19.8 percent of their capital in buildings. For all three
groups, machinery and equipment took between 8 and 9 percent of the 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, 16 wholesale foliage plant nurseries
in Central Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
The one best measure
Annual turnover of owned % 121.4 136.6 54.3
capital value (Table 1AIN)
Other useful indicators
Annual turnover of managed % 111.4 121.6 52.3
capital value (Table IAUIT)
Per employee:
Capital owned (Table 1NI-H) $ 24,556 22,212 43,532
--- managed (Table 1T-1H) $ 26,758 24,960 45,227

Per acre:
Capital owned (Table 1N:IG) $ 95,585 108,307 103,534
--- managed (Table 1TitG) $ 104,160 121,709 107,566

Managed capital/employee in:
Plants (Table 10-1H) $ 9,505 8,544 20,511
Buildings (Table 1P-1H) $ 8,106 7,866 8,938
Mach & equip- (Table 1Q-1H) $ 2,276 2,186 3,982
Land - (Table 1R:lH) $ 4,672 3,656 10,386
Managed capital per acre in:
Plants (Table 10:1G) $ 37,000 41,659 48,783
Buildings (Table IPUIG) $ 31,552 38,358 21,258
Mach & equip- (Table IQ-1G) $ 8,859 10,659 9,471
Land - (Table IR1G) $ 18,187 17,828 24,701
Percent of capital managed in:
Plants (Table 101IT) % 35.5 34.2 45.3
Buildings (Table 1P-1T) % 30.3 31.5 19.8
Mach & equip- (Table 1QI1T) % 8.5 8.8 8.8
Land - (Table 1R1T) % 17.5 14.6 23.0
Supplies (Table 1Si1T) % 8.2 10.9 3.1
Total nursery (Table ITSIT) % 100.0 100.0 100.0 100.0


e Annual turnover of capital


value--is the


dividing the value of own plant sold (Table 1A)
IN or IT).


percentage that results from
by the value of capital (Table










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 nurseries as an
investment, either as buyers or as lenders.

Salaries and Wages
The salary and wage group includes operator salary or time value. Average
was $119,326. For the larger nurseries, they were $239,043, or twice the
average. The smaller nurseries had $30,520, or 26 percent of the average.

Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". They averaged $125,677 for the 16 nur-
series. For the larger nurseries, they were $241,988, or 1.9 times the aver-
age. The smaller nurseries had $38,876, or 31 percent of the average.

Other Production Costs
Other production costs include "repairs" and "equipment operating costs".
They averaged $16,009 for the 16 nurseries. For the six larger nurseries,
they were $28,248, or 1.7 times the average. The smaller nurseries had $5,635
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 $27,142 for the 16 nurseries. For
the larger nurseries, they were $46,692, or almost one and three quarters times
the average. The smaller nurseries has $7,554, or 27 percent of the average.

Total Cash Costs
Total cash costs averaged $288,154. Larger nurseries averaged $555,971,
almost double. Smaller ones had $82,585, or 28 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 $62,283. For the larger nurseries, they were $107,029. one and three
quarters average. The smaller ones had $25,806, or 41 percent of the average.


Total All Costs
Total costs averaged $350,437.


Larger nurseries averaged $663,000 (1.9


times the average), and smaller ones had $108,391 (31 percent of the average).
Table 6.--Dollar costs by expense category, 16 wholesale foliage plant nurseries
in Central Florida, 1981

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - Dollars - -


Cash costs
Operator's salary................... 22,773
Other wages & salaries.............. 96,553


Plants & seeds to grow on...........
Pots & growing containers...........
Fuel for production heat............
Peat, soil, shavings, etc...........
Fertililizer & 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.........


48,648
25,214
18,311
8,159
3,159
4,419
12,028
5,739
10,246
5,763
965
4,767
2,973
4,442
2,225
1,204
1,597


Other cash expenses................. 8,969
Total cash costs...................288,154
Non-cash costs
Depreciation: mach & equip......... 6,699
Depreciation: bldgs, fences, wells. 12,931
Inventory decrease in supplies...... 0
Interest on capital, 15%............ 42,653
Total non-cash costs............... 62,283
Total all costs......................350,437


29,700
209,343
90,017
46,457
37,272
14,905
6,041
8,205
26,929
12,162
19,562
8,686
1,359
8,441
5,893
7,604
3,827
1,576
2,800
15,192
555,971


11,356
20,841

74,832
107,029
663,000


19,997
10,523
17,857
12,127
2,825
2,989
689
1,064
683
642
2,344
3,291
193
1,360
928
1,406
1,118
374
321
1,854
82,585


2,906
3,637
0
19,263
25,806
108,391











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 34.05 percent of all
costs for the 16 nurseries. For the six larger ones, they were 36.06 percent,
or two percent more than the average. The five smaller nurseries had 28.16
percent, or almost six percent less than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 35,87 percent for the 16 nurseries. For the larger nurseries
they were 36.50 percent, or 0.6 percent above average. The smaller nurseries
averaged 35.87 percent of total costs, or the same as the average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 4.56 percent for the 16 nurseries. For the six larger ones, they were
4.26 percent, or 0.3 percent under the average. The five smaller nurseries
had 5.20 percent, or 0.6 procent higher than the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 7.75 per-
cent of all costs for the 16 nurseries. For the six larger ones, they were
7.04 percent, or 0.7 percent less than the average. The smaller nurseries had
6.98 percent, or 0.8 percent under the average.

Total Cash Costs
Total cash costs represented 82.23 percent of all costs and allowances
for the 16 nurseries. For the larger ones, it was 83.86 percent, or 1.6 per-
cent more than the average. The smaller ones had 76.19 percent, or six 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 need to be covered eventually, though not necessarily with
cash during this accounting period. They averaged 17.77 percent of total
costs for the 16 nurseries. For the six larger ones, they averaged 16.14, or
1.6 percent less than the average. Hence, the larger nurseries had a higher
percent of their total operating expense in the form of cash costs. The five
smaller nurseries had 23.81 percent of their total as non-cash costs. This
was six percent more than the average, and almost one and a half times the
rate of the larger nurseries. The largest differences were in the percentages
of total costs represented by interest on capital.

Table 7.--Percent of total costs by expense category, 16 wholesale foliage
plant nurseries in Central Florida, 1981

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - Percent - -
Cash costs
Operator's salary......................6.50 4.48 18.45
Other wages & salaries................27.55 31.58 9.71
Plants & seeds to grow on.............13.88 13.58 16.47
Pots & growing containers..............7.20 7.01 11.19
Fuel for production heat...............5.23 5.62 2.61
Peat, soil, shavings, etc..............2.33 2.25 2.76
Fertililizer & lime....................0.90 0.91 0.64
Pesticides & other chemicals............1.26 1.24 0.98
Packing boxes & supplies...............3.43 4.06 0.63
Other production supplies..............1.64 1.83 0.59
Repairs & maintenance..................2.92 2.95 2.16
Equipment operating costs............... 1.64 1.31 3.04
Travel & entertainment.................0.28 0.20 0.18
Insurance.............................1.36 1.27 1.25
Telephone..............................0.85 0.89 0.86
Electricity............................1.27 1.15 1.30
Taxes, licenses, bonds.................0.63 0.58 1.03
Advertising............................0.34 0.24 0.35
Rent: land and/or buildings...........0.46 0.42 0.30
Other cash expenses................... 2.56 2.24 1.71
Total cash costs.....................82.23 83.86 76.19
Non-cash costs
Depreciation: mach & equip............. 1.91 1.71 2.68
Depreciation: bldgs, fences, wells....3.69 3.14 3.36
Inventory decrease in supplies........0.00 0.00 0.00
Interest on capital, 15%............. 12.17 11.29 17.77
Total non-cash costs................ 17.77 16.14 23.81
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 IC, "Total bed and bench space".

Salaries and Wages
Salaries and wages (includes operator) per square foot of total bed and
bench space averaged 163.5 cents for the 16 nurseries. For the larger ones,
they were 192.4 cents, or about 30 cents more than the average. The smaller
ones had 87.0 cents, or 76 cents below the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 172.4 cents. For the six larger nurseries, they were 194.8
cents, or 22.4 cents more than the average. The smaller nurseries had 110.9
cents, or 62 cents under the average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 21.9 cents in the 16 nurseries. For the six larger ones, they were 22.7
cents, or almost a cent above average. The smaller nurseries had 16.1 cents,
or almost six cents below the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 37.1 cents
per square foot. For the six larger nurseries, they were 37.5 cents, almost
the same. The smaller ones had 21.6 cents, 15 cents below average.

Total Cash Costs
Total out-of-pocket costs per square foot of total bed and bench space
averaged 394.9 cents ($3.95). For the six larger nurseries, they were 447.4
cents, or 52.5 cents above the average. The smaller ones had 235.6 cents, or
more than a dollar and a half below the average.

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










85.3 cents in the 16 nurseries. For the larger ones, they were 86.1 cents, or
a cent higher than the average. The smaller nurseries had 73.6 cents, or 12
cents less than the average.

Total All Costs
The total for all costs and allowances averaged 480.2 cents ($4.80) in
the 16 nurseries. For the six larger ones, they were 533.5 cents, or 53 cents
above the average. The smaller nurseries had 309.2 cents, or $1.71 under the
average cost per square foot of total bed and bench space.

Table 8.--Costs per square foot of total bed & bench space, 16 wholesale
foliage plant nurseries in Central Florida, 1981

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - 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............
Fertililizer & 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, 15%.............
Total non-cash costs................
Total all costs.......................


31.2
132.3
66.7
34.6
25.1
11.2
4.3
6.1
16.5
7.9
14.0
7.9
1.3
6.5
4.1
6.1
3.0
1.6
2.2
12.3
394.9


9.2
17.7
0.0
58.4
85.3
480.2


23.9
168.5
72.4
37.4
30.0
12.0
4.9
6.6
21..7
9.8
15.7
7.0
1.1
6.8
4.7
6.1
3.1
1.3
2.2
12.2
447.4


9.1
16.8
0.0
60.2
86.1
533.5


57.0
30.0
50.9
34.6
8.1
8.5
2.0
3.0
2.0
1.8
6.7
9.4
0.6
3.9
2.6
4.0
3.2
1 .1
0.9
5.3
235.6


8.3
10.4
0.0
54.9
73.6
309.2









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 214.2
cents ($2.14) in the 16 nurseries. For the six larger ones, they averaged
267.3 cents, or about 53 cents above the average. The smaller nurseries had
92.8 cents, or 121 cents less than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 225.5 cents ($2.25) per square foot. For the larger nur-
series, they were 270.5, or 45 cents above the average. The smaller ones had
118.3 cents, or 107 cents below the average.

Other Production Costs
Other production costs ("repairs" and "equipment operation") averaged
28.7 cents. For the larger nurseries, they were 31.6 cents. The five smal-
ler nurseries had 17.1 cents, or almost 12 cents below the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 48.8 cents
for the larger nurseries, they were 52.2 cents, or 3.7 cents. The five smal-
ler nurseries had 23.0 cents, or 29 cents below the average.

Total Cash Costs
Total cash costs in the 16 nurseries averaged 517.2 cents ($5.17) per
square foot of propagating and finishing space. For the six larger nurseries
they were 621.6 cents, up a dollar. The five smaller nurseries had 251.2
cents or about half of the average.










Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged
111.8 cents. The larger nurseries had 119.7 cents, or about eight cents above
the average and smaller nurseries had 78.5 cents, or 33 cents below the
average.

Total All Costs
Total costs per square foot of propagating and finishing space averaged
$6.29. For the larger nurseries, they were $7.41, or $1.12 cents above the
average. The smaller ones had $3.29 or about half the average.

Table 9.--Costs per square foot of propagating and finishing space, 16 whole-
sale nurseries in Central Florida, 1981.

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - Cents - - -
Cash costs
Operator's salary.................... 40.9 33.2 60.8
Other wages & salaries............... 173.3 234.1 32.0
Plants & seeds to grow on............ 87.3 100.6 54.3
Pots & growing containers............ 45.2 51.9 36.9
Fuel for production heat............. 32.9 41.7 8.6
Peat, soil, shavings, etc............ 14.6 16.7 9.1
Fertililizer & lime.................. 5.7 6.7 2.1
Pesticides & other chemicals......... 7.9 9.2 3.2
Packing boxes & supplies............ 21.6 30.1 2.1
Other production supplies............ 10.3 13.6 2.0
Repairs & maintenance................ 18.4 21.9 7.1
Equipment operating costs............ 10.3 9.7 10.0
Travel & entertainment............... 1.7 1.5 0.6
Insurance ............................ 8.6 9.4 4.1
Telephone............................ 5.3 6.6 2.8
Electricity.......................... 8.0 8.5 4.3
Taxes, licenses, bonds............... 4.0 4.3 3.4
Advertising.......................... 2.2 1.8 1.1
Rent; land and/or buildings.......... 2.9 3.1 1.0
Other cash expenses.................. 16.1 17.0 5.7
Total cash costs.................... 517.2 621.6 251.2
Non-cash costs
Depreciation: mach & equip.......... 12.0 12.7 8.8
Depreciation: bldgs, fences, wells.. 23.2 23.3 11.6
Inventory decrease in supplies....... 0.0 0.0 0.0
Interest on capital, 15%............. 76.6 83.7 58.6
Total non-cash costs................ 111.8 119.7 78.5
Total all costs....................... 629.0 741.3 329.7









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 31.8 cents per dollar of
sales after adjusting for changes in inventory. For the six larger nurseries,
they were 33.2 cents, or 1.4 cents more than the average. The smaller nurser-
ies had 29.8 cents, or two cents below average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 33.4 cents. For the six larger nurseries, they were 33.6
cents, or about the same as the average. The smaller nurseries had four and a
half cents above average, or 37.8 cents.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 4.2 cents per dollar of adjusted sales. For the six larger nurseries,
they were 3.9 cents, or 0.3 cents less than average. The smaller nurseries
had 5.5 cents, or 1.3 cents over the average.

Administrative and Overhead
These costs ("travel" through "other cash expense") amounted to 7.3 cents
per dollar of adjusted sales. For the six larger nurseries, they were 6.5
cents, or 0.8 cents below average. The smaller nurseries had almost the same
as the average, or 7.4 cents.

Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 76.7 cents. For
the six larger nurseries, they were 77.2 cents, or a half cent below average
per dollar of adjusted sales. The smaller nurseries had 80.5 cents, or more
than 3.8 cents above average.









Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged
16.6 cents. For the six larger nurseries, they were 14.9 cents, or near two
cents below average. Smaller ones had 25.2 cents, or 8.6 cents over average.

Total All Costs
Total costs per dollar of adjusted sales averaged 93.3 cents. For the
larger nurseries, they were 92.1 cents. The smaller ones had 105.7 cents.

Table 10.--Costs per dollar of sales adjusted for change in plant Inventory,
16 foliage plant nurseries in Central Florida, 1981

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - Cents - - -
Cash costs
Operator's salary................... 6.1 4.1 19.5
Other wages & salaries............... 25.7 29.1 10.3
Plants & seeds to grow on............ 12.9 12.5 17.4
Pots & growing containers........... 6.7 6.5 11.8
Fuel for production heat............ 4.9 5.2 2.7
Peat, soil, shavings, etc............ 2.2 2.1 2.9
Fertililizer & lime.................. 0.8 0.8 0.7
Pesticides & other chemicals......... 1.2 1.1 1.0
Packing boxes & supplies............. 3.2 3.7 0.7
Other production supplies............ 1.5 1.7 0.6
Repairs & maintenance................ 2.7 2.7 2.3
Equipment operating costs............ 1.5 1.2 3.2
Travel & entertainment............... 0.3 0.2 0.2
Insurance............................ 1.3 1.2 1.3
Telephone............................ 0.8 0.8 0.9
Electricity.......................... 1.2 1.1 1.4
Taxes, licenses, bonds............... 0.6 0.5 1.1
Advertising......................... 0.3 0.2 0.4
Rent: land and/or buildings......... 0.4 0.4 0.3
Other cash expenses................ 2.4 2.1 1.8
Total cash costs.................... 76.7 77.2 80.5
Non-cash costs
Depreciation: mach & equip.......... 1.8 1.6 2.8
Depreciation: bldgs, fences, wells.. 3.4 2.9 3.6
Inventory decrease in supplies....... 0.0 0.0 0.0
Interest on capital, 15%............. 11.4 10.4 18.8
Total non-cash costs................ 16.6 14.9 25.2
Total all costs...................... 93.3 92.1 105.7









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 34.6 cents per dollar
of cash received. For the six larger nurseries, they were 35.1 cents, or a
half cent more than the average. The smaller nurseries had 43.7 cents, or 9.1
cents over average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 36.3 cents per dollar of cash sales. For the six larger
nurseries, they were 35.5 cents, or 0.8 cents less than average. The smaller
nurseries had 55.7 cents, or 19.4 cents above average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
age 4.7 cents per dollar of cash received. For the six larger nurseries, they
were 4.2 cents, or a half cent lower. The smaller nurseries had 8.1 cents,
almost double the average.

Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 7.9 cents
per dollar of sales. For the six larger nurseries, they were 6.8 cents, or a
cent lower. The smaller nurseries had 10.8 cents, or 2.9 cents above average.
Total Cash Costs
Total cash costs averaged 83.5 cents per dollar of cash received. For
larger nurseries, they were 81.6 cents, or 1.9 cents lower than average. The
smaller ones had 118.3 cents, or almost 35 cents over the average.

Non-Cash Costs
In terms of bill paying ability, the five smaller nurseries did not
average enough sales to pay the cash costs incurred during the year. The 16
nursery average covered the cash costs but lacked a cent and a half of













covering total costs. Non-cash costs were 18.0 cents, but funds left after
paying cash costs were only 16.5 cents. For the six larger nurseries, non-
cash costs amounted to 15.7 cents per dollar of sales, which was 2.7 cents per
dollar of sales less than the cash received.





Table 11.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 16 foliage plant nurseries in Central Florida, 1981

Average Average Average
Item all 14 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
- - Cents - - -
Cash costs
Operator's salary.................... 6.6 4.4 28.6
Other wages & salaries............... 28.0 30.7 15.1
Plants & seeds to grow on............ 14.1 13.2 25.6
Pots & growing containers........... 7.3 6.8 17.4
Fuel for production heat............. 5.3 5.5 4.0
Peat, soil, shavings, etc............ 2.3 2.2 4.3
Fertillizer & lime................. 0.9 0.9 1.0
Pesticides & other chemicals......... 1.3 1.2 1.5
Packing boxes & supplies............. 3.5 3.9 1.0
Other production supplies............ 1.6 1.8 0.9
Repairs & maintenance................ 3.0 2.9 3.4
Equipment operating costs............ 1.7 1.3 4.7
Travel & entertainment............... 0.3 0.2 0.3
Insurance ............................ 1.4 1.2 1.9
Telephone... .................... 0.9 0.9 1.3
Electricity.......................... 1.3 1.1 2.0
Taxes, licenses, bonds.............. 0.6 0.6 1.6
Advertising. ........................ 0.3 0.2 0.5
Rent: land and/or buildings.......... 0.5 0.4 0.5
Other cash expenses.................. 2.6 2.2 2.7
Total cash costs..................... 83.5 81.6 118.3
Non-cash costs
Depreciation: mach & equip.......... 1.9 1.7 4.2
Depreciation: bldgs, fences, wells.. 3.7 3.0 5.2
Inventory decrease in supplies....... 0.0 0.0 0.0
Interest on capital, 15%............. 12.4 11.0 27.6
Total non-cash costs................ 18.0 15.7 37.0
Total all costs....................... 101.5 97.3 155.3









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 received by the nursery
from 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 16 nurseries averaged $379,352. Larger nurseries av-
eraged almost double that amount, or $728,282. Smaller nurseries had 27
percent of the average, or $103,491.

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 and
capital investment supplied by the owner-operator.
For the 16 nurseries, it averaged $94,342. For the six larger nurseries
it was $169,814, or one and three quarters the average. Smaller nurseries had
$34,360, or 36 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 in-
vestment. When the owner and operator are the same person, dividing net
nursery income between the operator and return to capital may not seem impor-
tant. But when the owners are outside investors, then accurate division Is












important. In either case, rate of return is a common indicator for evalua-
ting an Investment or for selecting between alternative investment opportun-
ities.
Return to capital for the 16 nurseries amounted to $71,568, or a return
of 25.2 percent. For the six larger nurseries, it was $140,114 for a 28.1


percent return on the capital investment.


The smaller nurseries averaged


$14,363 for a 11.2 percent return on the capital invested.


Table 12.--Income summary, 16 wholesale foliage plant nurseries in Central
Florida, 1981

Average Average Average
Item Unit all 16 6 larger 5 smaller Your
nurseries nurseries nurseries nursery
Value of own plants sold $ 345,262 681,562 69,778
Plant inventory change - $ 30,212 38,202 32,798
Supply inventory change - $ 1,009 2,072 715
Miscellaneous cash income $ 2,870 6,446 200
Total gainf- -- ---- $ 379,352 728,282 103,491
Deduct cash costs less op salry $ (265,381) (526,271) ( 62,589) ( )
Deduct non-cash costs less int- $ ( 19,630) ( 32,198) ( 6,542) ( )
Total deducations - $ (285,010) (558,468) ( 69,131) ( )
Net nursery incomeg- - $ 94,342 169,814 34,360
Deduct op salary or time value- $ 22,773) ( 29,700) ( 19,997) (_
Return to capitalh - $ 71,568 140,114 14,363
Rate of return to capitali- % 25.2 28.1 11.2

STotal gain--the sume 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 value.
9 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.
h 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.
i Rate of return to capital--return to capital divided by the value of
owned capital. It is the rate of return earned on the capital invested.









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 16 nurseries is compared with
the average for the five most profitable and the five 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, nurserymen analyzing their
own operations 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
or profit. Average for all 16 nurseries was $94,342. The most profitable third
of the nurseries averaged over double this amount, or $195,788. The least
profitable third averaged $30,873. 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 indicators listed for
each table. For in most cases, each indicator measures things from a little
different angle.

Size of Business
The indicator of size of business selected from Table 1 was "Value of own
plants sold". The 16 nurseries averaged was $345,262. The most profitable
third had $613,781 in sales, or 78 percent more. The least profitable group
averaged $129,087 or about 37 percent 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
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 nursery operation, hence is de-
sirable. The average for all 16 nurseries was $4.73 per square foot. The most
profitable third had 27 percent more, or $6.02, and the least profitable third
had $2.39, or half 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 programs can
alter the returns received by two different nurseries for the same crop.

Table 13.--Factors associated with level of profit, 16 wholesale foliage plant
nurseries in Central Florida, 1981

Average Most Least
Item Unit all 16 profitable profitable Your
nurseries third (5) third (5) nursery
Level of profit
Net nursery income (Table 12) $ 94,342 195,788 30,873
actors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 345,262 613,781 129,087
Production rate (Table 2)
Sales/sq ft of total - $ 4.73 6.02 2.39
bed & bench space
Labor efficiency (Table 3)
Own plant sale/employee $ 29,815 31,704 25,766
Space use Intensity (Table 4)
Annual turnover of plant % 314 339 193
inventory value
Use of capital (Table 5)
Annual turnover of owned 121 121 88
capital value
Level of costs (Table 8)
Cost/sq ft of total bed space $ 4.80 5.70 3.15
Cost efficiency (Table 10)
Cost/$ sales adjusted for $ .93 .87 1.08
change in inventory value
Growth in the business
Increase in sales & plant $ 63,803 151,422 26,974
inventory over last year









Labor Efficiency
The indicator of efficiency in the management and use of labor selected
from Table 3 was "Value of own plants sold per employee". If all other things
are equal, then higher sales per person involved is desirable. Average for all
16 nurseries was $29,815 per person. Sales were 6 percent higher than average
at $31,704 for the most profitable third, and around 86 percent of the average
at $25,766 for the least profitable third of the nurseries. Higher sales per
employee viewed alone at this point in time might seem to indicate true effi-
ciency. On the other hand, if viewed together with other indicators, it might
instead show less than optimum 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, other 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. 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 capital items,
the result of any or all of the factors noted above that lower production rate,
or the result of poor management practices in the planning and utilization of
labor.


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, because they indicate that the value
of money tied up on inventory is being revolved faster. Average turnover was
314 percent, meaning that the value of own plants sold was 3.14 (314 percent)
times the average investment in plant inventory. For the most profitable third,
it was 339 percent, or near 25 percent more than the average. For the least
profitable third, it was 61 percent of the average at 193.
Reduced intensity of space use may be the result of things that increase
the amount of money invested In inventory such as excessive investment 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 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,
variations in the indicator for this reason are ficticious, 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. 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 121 percent, meaning that the
value of own plants sold during the year amounted to one and a fifth times the
capital invested. For the most profitable third, it was the same (121). The
rate for the least profitable third was less than three-quarters of the average.
Problems that lower 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 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 un-
necessary) niceties will also tend to low 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 $4.80, or 7 cents higher 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 allowances
noted In Table 8. For the most profitable third, costs were $5.70 per square
foot or 90 cents more than the average but 32 cents less than sales per square
foot. The least profitable third averaged $3.14 cents, which was 75 cents per
square foot more than sales.









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 carefully managing 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 cost efficiency selected was "Cost per dollar of sales
adjusted for change in plant inventory". This shows how well the nursery did in
total, cash plus change in inventory values. In general, lower costs per dollar
of sales are desirable.
Average costs were $ .93. Thus, seven cents remained after paying all the
cash and non-cash costs incurred. For the most profitable third, costs were 87
cents leaving about 13 cents per dollar of sales after all costs were paid. The
least profitable third had $1.08. They lacked 8 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 inflationary 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 sales and value
of plant inventory over last year. In general, a steady growth in the business
is desirable.
On the average, growth was valued $63,803. This was about 18 percent of
the annual sales volume of $345,262. The most profitable third increased
$151,422 or almost 25 percent of annual sales. The least profitable third of
the nurseries increased $26,974, or about 21 percent of sales.
Growth in sales of a business can, of course, be due in part to inflation-
ary 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, 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, though desirable in an economic sense, needs to be carefully planned an
executed.


Range of Figures (Table 14)

In this section, the average for all 16 nurseries is repeated for ease of
comparison. The remainder of the table differs from the previous section in
that the three best and three worst numbers for each factor were averaged to
provide the range of high-low figures shown. In the previous section, figures
for all factors were for the same group of high profit and low profit nurser-
ies. This section shows the average for the best three and worst three numbers
regardless of the nursery or profit level to which they belong.
As can be seen in Table 14, quite a range of figures was found for most of
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 in seeing how they compare with those
participating in the Florida Nursery Business Analysis Program may calculate
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 concerning things that affect the profitability of the nursery
operation.
Nurserymen who find this kind of information to be useful, but have diffi-
culty finding the time or energy to engage in the tedium of doing their own cal-
culation 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.











Table 14.--Range of figures on factors associated with level of profit, 16
wholesale foliage plant nurseries in Central Florida, 1981

Average 3 best 3 poorest
Item Unit all 16 factor factor Your
nurseries average average nursery
Level of profit

Net nursery income (Table 12) $ 94,342 227,974 24,110
---- IF actors assoc rated wit h I evel of profit
Size of business (Table 1)
Value of own plants sold $ 345,262 800,416 58,042
Production rate (Table 2)
Sales/sq ft of total - $ 4.73 9.01 2.37
bed & bench space
Labor efficiency (Table 3)
Own plant sale/employee $ 29,815 45,291 18,705
Space use intensity (Table 4)
Annual turnover of plant % 14 568 143
inventory value
Use of capital (Table 5)
Annual turnover of owned 121 212 54
capital value
Level of costs (Table 8)
Cost/sq ft of total bed space $ 4.80 2.94 7.52
Cost efficiency (Table 10)
Cost/$ sales adjusted for $ .93 .71 1.19
change in inventory value
Growth in the business
Increase in sales & plant $ 63,803 195,218 (9,879)
inventory over last year