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J.Robert Strain


Economic Information
Report 150


\03c

Business Analysisj -poiage
and Potted Flowering Plant
Nurseries in Central Florida, 1979


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


August 1981













ABSTRACT


Average sales, costs and returns information are presented for 19 whole-
sale foliage and potted flowering plant nurseries in Central Florida for the
tax year of 1979. Average value of plant sales was $355,475. Cash costs av-
eraged $321,595. Non-cash costs and allowances including a 12 percent return
on investment amounted to another $65,087. Total costs, then, were $386,682.
After adjustments for the change in plant inventory value and additions for
miscellaneous income, return to capital averaged $40,981 for a 11.3 percent
return on investment. Comparable information is also presented for the aver-
age of the four larger and the four smaller nurseries in the study.

Key words: foliage nurseries, nursery business analysis, nursery income,
nursery costs, nursery efficiency measures, nursery investment, Central Flor-
ida nurseries.





ACKNOWLEDGEMENTS

This report was made possible by the 19 cooperating foliage plant nur-
serymen who made available their production and accounting records on a confi-
dential basis for analysis and averaging. In addition, assistance and encour-
agement were supplied by Extension Ornamental Horticultural Agents Bruce Barm-
by, Bill Bodnaruk, and Roger Newton, and by Extension Area Farm Management
Specialist Jim Stricker. Linda Gauer tabulated the data and 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 19 whole-
sale foliage and potted flowering plant nurseries in Central Florida for the
tax year of 1979. Average value of plant sales was $355,475. Cash costs av-
eraged $321,595. Non-cash costs and allowances including a 12 percent return
on investment amounted to another $65,087. Total costs, then, were $386,682.
After adjustments for the change in plant inventory value and additions for
miscellaneous income, return to capital averaged $40,981 for a 11.3 percent
return on investment. Comparable information is also presented for the aver-
age of the four larger and the four smaller nurseries in the study.

Key words: foliage nurseries, nursery business analysis, nursery income,
nursery costs, nursery efficiency measures, nursery investment, Central Flor-
ida nurseries.





ACKNOWLEDGEMENTS

This report was made possible by the 19 cooperating foliage plant nur-
serymen who made available their production and accounting records on a confi-
dential basis for analysis and averaging. In addition, assistance and encour-
agement were supplied by Extension Ornamental Horticultural Agents Bruce Barm-
by, Bill Bodnaruk, and Roger Newton, and by Extension Area Farm Management
Specialist Jim Stricker. Linda Gauer tabulated the data and 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 . . .

LIST OF TABLES . . .


.. .. .. .. .. .. .. .


INTRODUCTION . . . .

PROCEDURE . . . .

DEFINITIONS . . . .

DATA AND RESULTS . . .

Size of Business . .

Rates of Production . .

Labor Efficiency . .

The Use of Space . .

Efficiency in the Use of Capital

Dollar Costs by Expense Categoryl


Percent of Total Cost by Expense Category . .

Costs Per Square Foot of Total Bed and Bench Space

Costs Per Square Foot of Propagating and Finishing Space

Costs Per Dollar of Sales Adjusted for Inventory Change

Costs Per Dollar of Sales .................

Income Summary . . . . .

Total Gain . . . . .

Net Nursery Income . . .. . ..
Return to Capital . . . . .

Factors Associated With Level of Profit . . .

Size of Business . . . . .
Production Rate . . . .

Labor Efficiency . . . . .

Space Use Efficiency . . . . .

Use of Capital . . . . .

1These 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)
Page

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


LIST OF TABLES

Table

1 Size of business, 19 wholesale foliage and potted flowering plant
Nurseries in Central Florida, 1979 . . . . 5
2 Rates of production, 19 wholesale foliage and potted flowering
plant nurseries in Central Florida, 1979 . . . 6
3 Labor efficiency, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979 . . . . 7
4 The Use of Space, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979 . .. . . 9
5 Efficiency in use of capital, 19 wholesale foliage and potted
flowering plant nurseries in Central Florida, 1979 . . 11
6 Dollar costs by expense category, 19 wholesale foliage and potted
flowering plant nurseries in Central Florida, 1979 . ... 13
7 Percent of total costs by expense category, 19 wholesale foliage
and potted flowering plant nurseries in Central Florida, 1979 15
8 Costs per square foot of total bed and bench space, 19 wholesale
foliage and flowering plant nurseries in Central Florida, 1979 17
9 Costs per square foot of propagating and finishing space, 19 whole-
sale foliage and potted flowering plant nurseries in Central
Florida, 1979 . . . . . .. 19
10 Costs per dollar of sales adjusted for change in plant inventory,
19 foliage and potted flowering plant nurseries in Central Florida,
1979 . . .. . . . . ... 21
11 Costs per dollar of sales (no adjustment for change in plant inven-
tory), 19 foliage and flowering plant nurseries in Central Florida,
1979 . . . . . . . 23
12 Income summary, 19 wholesale foliage and flowering plant nurseries
in Central Florida, 1979 . . . ..... 25
13 Factors associated with level of profit, 19 wholesale foliage and
flowering plant nurseries in Central Florida, 1979 . . 27
14 Range of figures on factors associated with level of profit, 19
wholesale foliage and potted flowering plant nurseries in Central
Florida, 1979 . . . ... ...... .32














BUSINESS ANALYSIS OF FOLIAGE AND POTTED FLOWERING PLANT NURSERIES
IN CENTRAL FLORIDA, 1979


J. Robert Strain


INTRODUCTION


This publication contains information on sales, costs, returns, and pro-
duction efficiency for foliage and potted flowering plant nurseries in Central
Florida for 1979. Other publications in this series include reports on South
Florida foliage nurseries, container nurseries, and field nurseries.
Purposes of the nursery business analysis series include:
1) Furnishing nurserymen with various physical and economic measures
that may be used in evaluating the efficiency of individual nurseries;
2) Supplying cooperating nurserymen with data so that they may make
more informed management decisions;
3) Providing individuals considering entering the wholesale plant pro-
duction business with an estimate of the input requirements and revenue
potential; and
4) Providing Florida Extension personnel with data for conducting
educational programs with nurserymen.

PROCEDURE


The information and averages presented in this report are based on data
supplied by 19 nurserymen in the form of confidential production and account-
ing records. Their nurseries are all located in the Central Florida counties
of Hillsborough, Lake, Orange, 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 Program

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











are thought to represent some of the more efficient foliage nurseries in Cen-
tral Florida, rather than being typical of the foliage and flowering plant
nursery industry.
Data were collected for the 1979 tax year. In some cases, data were re-
ceived for a fiscal year that did not coincide with the 1979 calander year.
Data for fiscal years ending after July 1, 1978 and before July 1, 1980 were
included with the 1979 calander 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 comparing data. For the same reason, interest expense paid by
the individual nurserymen was excluded fru,; the costs listed in this report.
Instead, an interest charge for the total owned investment was calculated at
the rate of 12 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
included 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 nurseryman 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 1979, it does represent the
investment he actually has in the operation.
The data from the individual nurseries are averaged and presented in tab-
ular form. The tables present average value of all 19 nurseries, for the
four "larger" nurseries, and for the four "smaller" nurseries. The larger
nurseries has 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 explan-
itory. 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 manhours a year). The most common
method for obtaining the number of fulltime equivalent employees for this
report was to divide the total annual payroll hours for the nursery by 2080,
and then add on any unpaid family or management time.

Capital owned: the net value (cost after adjusting for depreciation
taken in prior years) of capital assets, or investment in the nursery opera-
tion.

Capital managed: the sum of capital owned plus the value of additional
capital items used and under the control of the manager. Rented land and
leased buildings, equipment, etc., would be additional capital items whose
value would be added to capital owned to obtain 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 or change in values of inven-
tories.

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

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

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


1







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, income from the sale of plants grown
in the nursery. Thi averaged $355,475 for the 19 nurseries. For the four
larger nurseries, it was $992,696, or two and a half times the average. The
four smaller nurseries had $55,756, or about 16 percent of the average. Ad-
justing sales for change in value of plant inventory (Table 1B) did not alter
materially these relationships.
Total bed and bench space (Table 1C) averaged 94,581 square feet for the
19 nurseries. For the four larger nurseries, it was 261,573 square feet, or
two and three quarters times the average. The four smaller nurseries had
13,489 square feet, or about 14 percent of the average.
Employee numbers (Table IN) averaged 16.11 for the 19 nurseries. For the
four larger nurseries, it was 48.46 workers, or three times the average. The
four smaller nurseries had 2.95 people, or 18 percent of the average.
Capital owned (Table 1N) averaged $362,592 for the 19 nurseries. For the
four larger nurseries, it was $776,850, or 2.1 times the average. The four
smaller nurseries had $80,043, or 22 percent of the average.
Capital managed (Table IT) averaged $446,571, or 23 percent more than the
capital owned by the nurserymen. The difference was in the values for build-
ings and land. For the four larger nurseries, it was $1,042,975, or 34 per-
cent more than they owned. The four smaller nurseries managed only the cap-
ital they owned, which was $80,043. In other words, the smaller nurseries
rented no land and leased no buildings, machinery, or equipment.





5



Table 1.--Size of business, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979
Average Average Average Your
Item Unit all 19 4 larger 4 smaller
nurseries nurseries nurseries nu


The one best measure
----------------------------------------
A Value of own plants solda- $ 355,475 922,696
Other useful indicators of si---------------------------ze
Other useful indicators of size


55,756


Value of own plants sold
B adjusted for change in $ 379,966 994,344 57,331
plant inventory value
C Total bed & bench space sq ft 94,58] 261,573 13,489


SPropagating & finishing
bed & bench space


Stock plant bed
& bench space


- sq ft 60,035


- - sq ft


F Total nursery area - -sq ft
G Total nursery area --sq ft


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


34,548

99,568
2.29


lumber 16.11


127,555
127,915
59,064
24,680
23,378
362,592


127,555
190,599
59,064
45,975
23,378
446,571


avalue of own plants sold--is the value of total plant sales minus the
cost of plants purchased for immediate resale. The cost of plants purchased
for growing-on is not deducted.
bFulltime equivalent employee--is the equivalent of one person working
40 hours a week for 52 weeks a year (2080 manhours).
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 addition-
al capital items used and under the control of the manager (e.g., rented land).


146,594

114,979

271,136
6.22


48.86


295,401
164,905
218,485
16,008
82 052
776,850


295,401
408,030
218,485
39,008
82,052
1,042,975


9,220

4,269

15,944
0.37


2.95


16,430
46,133
5,755
9,938
1 788
80,043


16,430
46,133
5,755
9,938
1 788
80,043






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. This averaged $3.76 for the 19 nurseries. For the four larger nur-
series, it was $3.53, or about 6.5 percent less than the average. The four
smaller nurseries has $4.13, or 9.8 percent more sales per square foot of
total bed and bench space than the average. When sales are adjusted for
change in inventory value (Table 1B + 1C), larger nurseries were 5.8 percent
below the average and smaller nurseries were 5.7 percent above the average.
Sales per square foot of propagating and finishing space (Table 1A +
ID) 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 unless cuttings are being sold. It is the plants grown on
propagating and finishing space that pay the bills for the entire nursery
operation. This amounted to $5.92 per square foot for the 19 nurseries.
For the four larger nurseries, it was $6.29, or 6.2 percent greater than
the average. The four smaller nurseries had $6.05 which was 2.2 percent
greater than the average.

Table 2.--Rates of production, 19 wholesale foliage and potted flowering
plant nurseries in Central Florida, 1979
-- I I -I I I J I. .. .
Average Average Average Your
Item Unit all 19 4 larger 4 smaller
nurseries nurseries nurseries nse
The one best measure
Value of own plants sold per
sq ft of total bed & bench sq ft 3.76 3.53 4.13
space - (Table 1A 7 1C)

Other useful indicators
Value of own plants sold per
sq ft adjusted for inventory $ 4.02 3.80 4.25
change (Table 1B 1IC)
Value of own plants sold per
sq ft of propagating & fin-
Ishing space (Table 1A 7 ID) $ 592 6.29 6.05
-- adjusted for inventory $ 6.33 6.78 6.22
change (Table 1B 7 ID)
Value of own plants sold per $ 155,516 148,238 152,326
acre - (Table 1A i 1G)
--- adjusted for inventory $ 166,231 159,757 156,629
change (Table 18 1G)











Labor Efficiency (Table 3)

"Value of own plants sold per employee" (Table 1A 7 1H) was selected as
the one best measure of labor efficiency. This averaged $22,066 per employee
for the 19 nurseries. For the four larger ones, it was $18,884, or 14.4 per-
cent less than the average. The four smaller nurseries had $18,900, or 14.35
percent less than the average. Adjusting for change in inventory value (Table
1B 4 1H) increased the average by $1,520 to $23,586. For the four larger nur-
series, the increase was $1,468 per person. The smaller ones were up $534.
Total bed and bench space per employee (Table 1C ; 1H) averaged 5,871
square feet. For the four larger nurseries, it was 5,354, or 8.8 percent
less than the average. The four smaller nurseries had 4,573 square feet per
person, or 22 percent below the average.
Propagating and finishing space per person (Table 1D 1H) averaged 3,726
square feet per employee. For the four larger nurseries, it was 19 percent
lower at 3,000 square feet. The smaller nurseries were 16 percent lower at
3.125 square feet. For total nursery area per employee (Table 1F I 1H), both
the larger and the smaller groups of nurseries were again below the average.


Table 3.--Labor efficiency, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979

Average Average Average
Item Unit all 19 4 larger 4 smaller our
nurseries nurseries nurseries nur
The one best measure
----------------------------------------------
Value of own plants sold per $ ,
employee (Table IA 1H) 22,066 18,884 18,900
--------------------------------
Other useful indicators
-----------------------------------------------
Value of own plants sold per
employee adjusted for change $ 23,586 20,352 19,434
in inventory (Table 1B 1H)
Total bed & bench space per
employee (Table IC T 1H) $ 5,871 5,354 4,573
Propagating & finishing space
per employee (Table 1D 0 1H) sq ft 3,726 3,000 3,125
Total nursery area per ,
employee (Table IF I 1H) sq ft 6,81 5,549 5,405









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 ; 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 19 nurseries averaged
279 percent. This means that annual plant sales amounted to two and three
quarters (279 percent) times the value of plants in inventory. For the four
larger nurseries, turnover was 312. Their annual plant sales were 3.12 times
the value of plants in inventory. The four smaller nurseries had an even
higher turnover rate. It was 339 percent.
Vacant bed and bench space is the measure used for efficiency of space
use. Generally, reducing the percent of space vacant is desirable. However,
some vacancy is inevitable between the time a plant is removed for sale and
the time another is put in its place. The average amount of vacant space
during the year divided by total bed and bench space (Table 1C) shows the
average percent of vacant space. This was 5.46 percent for the 19 nurseries.
For the four larger ones, it was only 3.74 percent. The four smaller nur-
series had 4.62 percent.
Other useful indicators to study are percent of total nursery area in-
cluding buildings and roadways that is bed and bench space, add the division
of bed and bench space between propagating and finishing area and stock plants.
Other things being equal, the higher the percentage of total nursery area de-
voted to bed and bench space, and the higher the percentage of bed and bench
space used for propagating and finishing rather than stock plants, the better.
But, of course, other things are not always equal, such as the cost of raising
rather than buying cuttings, and availability of quality material when needed.







The 19 nurseries averaged 94,581 square feet of bed and bench space,
which was 94.99 percent of their total nursery area. The four larger nurser-
ies averaged 96.47 percent of their area in bed and bench space, while the
four smaller nurseries only utilized 84.60 percent of the total nursery area
as bed and bench space.
Propagating and finishing area averaged 60,034 square feet for the 19
nurseries. This was 63.47 percent of total bed and bench space (Table 1D .
1C). For the four larger nurseries, it was 146,594 square feet, or almost
two and a half times the average. However, this was only 56.04 percent of
total bed and bench space, indicating that the four larger nurseries devoted
more of their space to stock plants than the average. The four smaller nur-
series had 9,220 square feet for propagating and finishing, which was but
15 percent of the average. However, this space represented 68.35 percent of
total bed and bench space which was near Five points higher than the average
and over 12 points above the larger four nurseries. This is probably natural,
since smaller nurseries, 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, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979
Average Average Average Your
Item Unit all 19 4 larger 4 smaller ur
nurseries nurseries nurseries se
-_ Intensity of space use
Annual turnover of plant in-
ventory value (Table 1A I II) $ 279 312 339

Efficiency of space use
Vacant bed & bench space sq ft 5,167 9,781 624
- (divided by Table 1C) % 5.46 3.74 4.62

Other useful indicators
Total nursery area incl bldgs
& roadways (same as Table IF) sq ft 99,568 271,136 15,944
Total bed & bench space sq ft 94,581 261,573 13,489
- (Table IC i IF) % 94.99 96.47 84.60
Propagating & finishing bed sq ft 60,034 146,594 9,220
& bench space (Table ID 1C) % 63.47 56.04 68.35
Stock plant bed & bench space sq ft 34,548 114,979 4,269
- (Table IE IC) % 36.53 43.96 31.65









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 't IN).
Annual turnover averaged 98.04 percent for the 19 nurseries. This means
that sales for the yeardid not quite equal the capital invested. For the
four larger nurseries, it was 118.77, which was a 20 percent faster turnover
rate than the average. The four smaller nurseries had 69.66, which was near
a third slower than the average turnover rate.
Managed capital turnover averaged 79.60 percent for the 19 nurseries.
Thus, there was enough additional capital being managed to reduce the turn-
over rate about 22 percent. For the four larger nurseries, it was 88.47,
meaning there was enough additional capital involved in the operation to re-
duce the turnover rate by 25 percent. The four smaller nurseries had no ad-
ditional capital to manage, so their turnover rate stayed the same at 69.66.
Capital invested per employee (Table IN ; 1H) averaged $22,507 for the 19
nurseries. For the four larger nurseries, it was $15,900, or about 70 percent
of the average, indicating more efficient use of owned capital. The four smal-
ler nurseries had $27,133 which was 20 percent higher than the average.
Capital invested per acre of nursery area (Table IN i 1G) averaged
$158,630 for the 19 nurseries. For the four larger ones, it was $124,807,
$21,346, but still only 77 percent of the average and still indicating more
efficient use of capital. The four smaller nurseries had no additional cap-
ital to manage, so their rate stayed the same at $27,133 per employee. This
was but 2 percent below the 19 firm average.
Capital invested per acre of nursery area (Table 1N 1G) averaged
$153,630 for the 19 nurseries. For the four larger nurseries, it was $124,807
or only around 80 percent of the average. The four smaller nurseries had
$213,678, or over a third more than the average. Calculations for managed
capital show a similar relationship, with the larger nurseries managing
about 86 percent of the average capital per acre, and the smaller nurseries
having about 12 percent more than the average.
Growing plants represented 28.56 percent of capital managed by the 19
nurseries. For the larger nurseries, it was about the same. The smaller









nurseries had 20.53 percent of their capital tied up in plants.
Buildings took the largest share of capital, averaging 42.68 percent of
the total. For the four larger nurseries, it was less at 39.12 percent. The
four smaller nurseries had over half of their capital in buildings, 57.64
percent. For the larger nurseries, machinery and equipment took more than the
average share of capital. The smaller nurseries used more than the average
for land.
Table 5.--Efficiency in use of capital, 19 wholesale foliage and potted
flowering plant nurseries in Central Florida, 1979
Average Average Average
Item Unit all 19 4 larger 4 smaller ur
nurseries nurseries nurseries nursery
The one best measure
Annual turnover of owned 9 1177 .
capital value (Table IA 7 IN) 1187

Other useful indicators


Annual turnover of managed
capital value (Table 1A 1T)
Per employee:
Capital owned (Table IN 1H)
--- managed (Table IT I 1H)
Per acre:
Capital owned (Table IN 1G)
--- managed (Table IT I 1G)
Managed capital/employee in:
Plants (Table 10 1H)
Buildings (Table 1P 1H)
Mach & equip- (Table 1Q 1H)
Land - (Table 1R 1H)
Managed capital per acre in:
Plants (Table 10 0G)
Buildings (Table IP 1G)
Mach & equip- (Table 1Q IG)
Land - (Table IR 10G)
Percent of capital managed in:
Plants (Table 10 IT)
Buildings (Table IP IT)
Mach & equip- (Table IQ IT)
Land - (Table 1R IT)
Supplies (Table IS I 1T)
Total nursery(Table IT IT)


% 79.60


22,507
27,720

158,630
195,369

7,918
11,831
3,666
2,854

55,804
83,385
25,840
20,113

28.56
42.68
13.23
10.30
5.23
100.00


88.47


69.66.


15,900 27,133
21,346 27,133


124,807
167,562

6,046
8,351
4,472
798

47,458
65,553
35,101
6,267

28.32
39.12
20.95
3.74
7.87
100.00


218,678
218,678

5,569
15,638
1,951
3,369

44,887
126,036
15,722
27,149

20.53
57.64
7.19
12.42
2.23
100.00


eAnnual turnover of capital
dividing the value of own plants
(Table IN or IT).


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


100.00


rom


--


-







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. Av-
erage was $143,464 for the 19 nurseries. For the four larger nurseries, they
were $403,274, or 2.8 times the average. The four smaller nurseries had
$23,334, or about 16 percent of the average.

Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". They averaged $156,936 for the 19
nurseries. For the larger nurseries, they were $373,955, or 2.38 times the
average. The smaller nurseries had $18,870 or 12 percent of the average.
Other Production Costs
Other production costs include "repairs" and "equipment operating costs".
They averaged $11,179 for the 19 nurseries. For the four larger nurseries,
they were $26,092, or two and a third times the average. The smaller nurseries
had $3,133, or a little over a fourth 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 $34,118 for the 19 nurseries.
For the larger nurseries, they were $72,084, or a little over double the
average. The smaller nurseries had $6,805, or about 20 percent of the average.

Total Cash Costs
Total cash costs averaged $321,595. For the larger nurseries, they were
$875,403, or over double the average. The smaller ones had cash costs of
$52,140 -- 16 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 $65,087. For the larger nurseries, they were $135,413, double the
average. The smaller ones had $17,072, or a fourth of the average.

Total All Costs
Total costs averaged $386,682. Larger nurseries averaged $1,010,815 (2.6
times the average), and smaller ones had $69,212 (18 percent of the average).

Table 6.--Dollar costs by expense category, 19 wholesale foliage and potted
flowering plant nurseries in Central Florida, 1979

Average Average Average
Item all 19 4 larger 4 smaller ur
nurseries nurseries nurseries nursery


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


- - Dollars - -


19,777
123,687
50,858
23,418
13,944
10,617
2,677
4,887
15,204
11,231
6,581
4,598
1,413
5,183
3,079
5,022
2,590
1,745
4,804
10 282
321,595


7,821
13,754
0
43,511
386,682--
65 087
386,682


28,273
375,001
146,474
68,885
27,755
36,156
6,621
16,330
48,504
23,230
18,741
7,351
1,994
10,268
6,443
12,062
5,305
4,717
8,315
22,980
875,403


21,807
20,384
0
93,222
135, 413
1,010,815


11,380
11,954
6,986
5,687
1,546
972
383
763
1,405
1,128
2,097
1,036
306
1,141
748
1,200
135
179
0
3,096
52,140


2,514
4,953
0
9,605
17,072
69,212








Percent of Total Cost by Expense Category (Table 7)


While expenditures in the form of dollars show the magnitude of expenses
for various costs 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 37.10 percent of all
costs for the 19 nurseries. For the four larger ones, they were 39.99 per-
cent, or 2.9 percent more than the average. The four smaller nurseries had
33.71 percent, or 3.4 percent less than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 3,.35 percent for the 19 nurseries. For the larger nurseries,
they were 37.00 percent, or 2.6 percent above average. The smaller nurseries
averaged 33.71 percent of total.costs, or 3.4 percent below average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 2.89 percent for the 19 nurseries. For the four larger ones, they were
2.58 percent, or 0.31 percent under the average. The four smaller nurseries
had 4.53 percent, or 1.6 percent higher that the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 8.82 per-
cent of all costs for the 19 nurseries. For the four larger ones, they were
7.13 percent, or 1.7 percent less that the average. The smaller nurseries had
9.83 percent, or 1 percent over the average.
Total Cash Costs
Total cash costs represented 83.17 percent of all costs and allowances
for the 19 nurseries. For the larger ones, it was 86.60 percent, or 3.4
percent more than the average. The smaller ones had 75.33 percent, or 7.8
percent 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, through not necessarily with
cash during this accounting period. They averaged 16.83 percent of total
costs for the 19 nurseries. For the four larger ones, they averaged 13.40
or 3.4 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 four
smaller nurseries had 24.67 percent of their total as non-cash costs. This
was 7.8 percent more than the average, and nearly double the rate of the larger
nurseries. The largest differences were in the percentages of total costs re-
presented by depreciation on machinery and equipment and in return on capital.

Table 7.--Percent of total costs by expense category, 19 wholesale foliage
and potted flowering plant nurseries in Central Florida, 1979
-- L __ ,[ J, p I ,l Li 1 I ,


Item


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 - - -


Average
all 19
nurseries



5.11
31.99
13.15
6.06
3.61
2.75
0.69
1.26
3.93
2.90
1.70
1.19
0.37
1.34
0.80
1.30
0.67
0.45
1.24
2.65
83.17


2.02
3.56
0.00
11.25
16.83
100.00


Average Average
4 larger 4 smaller
nurseries nurseries
- Percent -


2.80
37.10
14.40
6.81
2.75
3.58
0.65
1.62
4.80
2.30
1.85
0.73
0.20
1.02
0.64
1.19
0.52
0.47
0.82
2.27
86.60


2.16
2.02
0.00
9.22
13.40
100.00


16.44
17.27
10.09
8.22
2.23
1.40
0.55
1.10
2.03
1.63
3.03
1.50
0.44
1.65
1.08
1.73
0.20
0.26
0.00
4.47
75.33


3.63
7.16
0.00
13.88
24.67
100.00


Your
nursery


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 151.68 cents for the 19 nurseries. For the larger ones,
they were 154.17 cents, or about two and a half cents more than the average.
The smaller ones has 127.99 cents, or more than 20 percent above the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 140.44 cents. For the four larger nurseries, they were
142.95 cents, or another two and a half cents more than the average. The
smaller nurseries had 139.89 cents, or about a half a cent under the average.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 11.82 cents in the 19 nurseries. For the four larger ones, they were
9.97 cents, or close to two cents below average. The smaller nurseries had
23.22 cents, or almost double the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 56.82 cents
per square foot. For the four larger nurseries, they were 49.17 cents, over 7
cents lower. The smaller ones had costs 30 percent over the average.

Total Cash Costs
Total out-of-pocket costs per square foot of total bed and bench space
averaged 340.02 cents ($3.40). For the four larger nurseries, they were
334.76 cents, or more than five cents below the average. The smaller ones
had 386.54 cents, or more than 46 cents above the average.

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









68.82 cents in the 19 nurseries. For the larger ones, they were 51.77 cents,
or 17 cents below the average. The smaller nurseries had 126.56 cents, near
double the average.

Total All Costs
The total for all costs and allowances averaged 408.83 cents ($4.09) in
the 19 nurseries. For the four larger ones, they were 836.44 cents, or 22
cents below average. The smaller nurseries had 513 cents, or about $1.04
over average cost per square foot of total bed and bench space.

Table 8. Costs per square foot of total bed & bench space, 19 wholesale fol-
iage and potted flowering plant nurseries in Central Florida, 1979

Average Average Average Your
Item all 19 4 larger 4 smaller
nurseries nurseries nurseries nursery
nurseries nurseries nurseries


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 - - -


- Cents -


20.91
130.77
53.77
24.76
14.74
11.22
2.83
5.17
16.08
11.87
6.96
4.86
1.49
5.48
3.26
5.31
2.74
1.84
5.08
10.87
340.02


8.27
14.54
0.00
46.00
68.82
408.83


10.81
143.36
56.00
26.33
10.61
13.82
2.53
6.24
18.54
8.88
7.16
2.81
0.76
3.93
2.46
4.61
2.03
1.80
3.18
8.79
334.67


8.34
7.79
0.00
35.64
51.77
386.44


84.37
88.62
51.79
42.16
11.46
7.21
2.84
5.65
10.42
8.36
15.54
7.68
2.26
8.46
5.54
8.89
1.00
1.33
0.00
22.95
386.54


18.64
36.72
0.00
71.21
126.56
513.10








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


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

Salary and Wages
Salaries and wages (includes operator) per square foot amounted to 238.97
cents ($3.39) in the 19 nurseries. For the four larger ones, they averaged
275.10 cents, or 36 cents above the average. The smaller nurseries had 253.09
cents, or 14 cents more than the average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 221.27 cents ($2.21M) per square foot. For the larger nur-
series, they were 255.10, or 34 cents above the average. The smaller ones had
204.65 cents, or 16 cents below the average.

Other Production Costs
Other production costs ("repairs" and "equipment operation") averaged
18.62 cents. For the larger nurseries, they were 17.79 cents. The four smal-
ler nurseries had 33.97 cents, or almost double the average.

Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 56.82 cents.
For the larger nurseries, they were 49.17 cents, down 7 cents. The four smal-
ler nurseries had 73.79 cents, or 17 cents more than the average.

Total Cash Costs
Total cash costs in the 19 nurseries averaged 535.69 cents per square
foot of propagating and finishing space. For the four larger nurseries, they
were 597.16 cents, or 61 cents above the average. The four smaller nurseries
had 565.52 cents, or about 30 cents over the average. Thus, it follows that
the middle sized nurseries of this group averaged lower 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 of capital") averaged
108.42 cents. The larger nurseries had 92.37 cents, or 16 cents below average.
The smaller nurseries had 185.17 cents, or 77 cents higher than average.

Total All Costs
Total costs per square foot of propagating and finishing space averaged
$6.44. For the larger nurseries, they were $6.89, or 44 cents over average.
The smaller ones had $7.50, or $1.061 above average. Again, it follows that
the 11 middle sized nurseries had below average costs per square foot.
Table 9.--Costs per square foot of propagating and finishing space, 19 whole-
sale foliage and potted flowering plant nurseries in Central
Florida, 1979
Average Average Average Your
Item all 19 4 larger 4 smaller
nursery
nurseries nurseries nurseries nur
- - 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 - - -


32.94
206.03
84.71
39.01
23.23
17.68
4.46
8.14
25.33
18.71
10.96
7.66
2.35
8.63
5.13
8.36
4.31
2.91
8.00
17.13
535.69


13.03
22.91
0.00
72.48
108.42
644.11


19.29
255.81
99.92
46.99
18.93
24.66
4.52
11.14
33.09
15.85
12.78
5.01
1.36
7.00
4.39
8.23
3.62
3.22
5.67
15.68
597.16


14.88
13.91
0.00
63.59
92.37
689.54


123.43
129.66
75.77
61.68
16.76
10.54
4.15
8.27
15.24
12.24
22.74
11.23
3.31
12.38
8.11
13.01
1.46
1.94
0.00
33.58
565.52


27.26
53.72
0.00
104.18
185.17
750.69







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 37.75 cents per dollar of
sales after adjusting for changes in inventory. For the four larger nurseries,
they were 40.55 cents, almost three cei,,s more than the average. The smaller
nurseries had 40.70 cents, also almost three cents over average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 34.95 cents. For the four larger nurseries, they were 37.62
cents, again almost three cents over average. The smaller nurseries had two
cents below average, or 32.93 cents.

Other Production Costs
Other production costs ("repairs" and "equipment operating costs") aver-
aged 2.94 cents per dollar of adjusted sales. For the four larger nurseries,
they were 2.62 cents, or 0.32 cents less than average. The smaller nurseries
had 5.47 cents, or 2 cents above the average.

Administrative and Overhead
These costs ("travel" through "other cash expense") amounted to 8.97
cents per dollar of adjusted sales. For the four larger nurseries, they were
7.24 cents, or close to two cents below average. The smaller nurseries had
near three cents over the average, or 11.86 cents.

Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 84.64 cents. For
the four larger nurseries, they were 88.03 cents, or 3 cents higher than av-
erage per dollar of adjusted sales. The smaller nurseries had 90.95 cents, or
more than six cents above average.









Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged
17.13 cents. For the four larger nurseries, they were 13.62 cents, or almost
three cents below average. The smaller ones had 29.78 cents, nearly 13 cents
over average.


Total All Costs
Total costs per dollar of adjusted sales averaged $1.02.
nurseries, they were also $1.02. The smaller ones had $1.21.


For the larger


Table 10.--Costs per dollar of sales adjusted for change in plant inventory,
19 foliage and potted flowering plant nurseries in Central
Florida, 1979
Average Average Average Your
Item all 19 4 larger 4 smaller ser
nursery
nurseries nurseries nurseries
- - 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 expense - -
Total cash costs - -


Non-cash costs
Depreciation: mach & equip -
Depreciation: bldgs, fences, wel
Inventory decrease in supplies -
Interest on capital, 12% -
Total non-cash costs - -
Total all costs - - -


5.20
32.55
13.38
6.16
3.67
2.79
0.70
1.29
4.00
2.96
1.73
1.21
0.37
1.36
0.81
1.32
0.68
0.46
1.26
2.71
84.64


2.06
3.62
0.00
11.45
17.13
101.77


2.84
37.71
14.73
6.93
2.79
3.64
0.67
1.64
4.88
2.34
1.88
0.74
0.20
1.03
0.65
1.21
0.53
0.47
0.84
2.31
88.03


2.19
2.05
0.00
9.37
13.62
101.65


19.85
20.85
12.19
9.92
2.70
1.70
0.67
1.33
2.45
1.97
3.66
1.81
0.53
1.99
1.30
2.09
0.24
0.31
0.00
5.40
90.95


4.38
8.64
0.00
16.75
29.78
120.72


---L-


-~








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 40.35 cents per dollar
of cash received. For the four larger nurseries, they were 43.70 cents, or
over three cents more than the average. The smaller nurseries had 41.85 cents
or 1.5 cents over average.

Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 37.37 cents per dollar of cash sales. For the four larger
nurseries, they were 40.54 cents, or about three cents more than average. The
smaller nurseries had 33.64 cents, or three and a half cents below average.


Other Production Costs
Other production costs ("repairs" and "equipment o|
aged 3.14 cents per dollar of cash received. For the fi
they were 2.8 cents, or a third of a cent lower. The si
5.62 cents, two and a half cents more than the average.


operating costs") aver-
our larger nurseries,
smaller nurseries had


Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 9.60 cents
per dollar of sales. For the four larger nurseries, they were 7.81 cents, or
one and three quarters of a cent lower. The smaller nurseries had 12.20 cents
or two and a half cents more than the average.

Total Cash Costs
Total cash costs averaged 90.47 cents per dollar of cash received. For
larger nurseries, they were 94.87 cents, or more than four cents higher than
average. The smaller ones had 93.51 cents, or three cents over average costs.

Non-Cash Costs
In terms of bill paying ability, all three averages show enough sales to
pay the cash costs incurred during the year. However, none of the averages
had enough left over to cover all non-cash allowances for the year. The 19









had enough left over to cover all non-cash allowances for the year. The 19
nurseries averaged 18.31 cents per dollar of sales, which was nearly nine
cents in excess of the funds remaining after paying cash costs. For the four
larger nurseries, non-cash costs amounted to 14.68 cents per dollar of sales,
or 9 cents more than the cash received. The smaller nurseries had 30.62
cents non-cash costs. These exceeded cash received by 30.62 cents. In sum-
mary, enough cash was received to pay the bills, but not enough was received
to cover all additional non-cash costs and allowances associated with nursery
operations.
Table 11.--Costs per dollar of sales (no adjustment for change in plant
inventory), 19 foliage and potted flowering plant nurseries
in Central Florida, 1979
Average Average Average Your
Item all 19 4 larger 4 smaller
nurseries nurseries nurseries nursery
- - Cents - -
Cash costs
Operator's salary - - 5.56 3.06 20.41
Other wages & salaries - 34.79 40.64 21.44
Plants & seeds to grow on - 14.31 15.87 12.53
Pots & growing containers - 6.59 7.47 10.20
Fuel for production heat - 3.92 3.01 2.77
Peat, soil, shavings, etc - 2.99 3.92 1.74
Fertilizer & lime - - 0.75 0.72 0.69
Pesticides & other chemicals 1.37 1.77 1.37
Packing boxes & supplies - 4.28 5.26 2.52
Other production supplies - 3.16 2.52 2.02
Repairs & maintenance - 1.85 2.03 3.76
Equipment operating costs - 1.29 0.80 1.86
Travel & entertainment - -- 0.40 0.22 0.55
Insurance - - - 1.46 1.11 2.05
Telephone - - - 0.87 0.70 1.34
Electricity - - 1.41 1.31 2.15
Taxes, licenses, bonds - 0.73 0.57 0.24
Advertising - - 0.49 0.51 0.32
Rent: land and/or buildings 1.35 0.90 0.00
Other cash expense - - 2.89 2.49 5.55
Total cash costs - - 90.47 94.87 93.51
Non-cash costs
Depreciation: mach & equip - 2.20 2.36 4.51
Depreciation: bldgs, fences, wells 3.87 2.21 8.88
Inventory decrease in supplies 0.00 0.00 0.00
Interest on capital, 12% - 12.24 10.10 17.23
Total non-cash costs - 18.31 14.68 30.62
Total all costs - - 108.78 109.55 124.13







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 to 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 19 nurseries averaged $384,152. Larger nurseries aver-
aged 2.6 times that amount, or $1,007,413. Smaller nurseries had 15 percent
of the average, or $57,456.

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 19 nurseries, it averaged $60,758. For the four larger nurseries,
it was $188,093, almost twice the average. Smaller nurseries had $9,230, or
15 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
capital. This is the earnings of the money invested in the nursery. Divid-
ing it by the value of capital invested gives the rate of return earned by
the investment. When the owner and operator are the same person, dividing
net nursery income between the operator and return to capital may not seem
important. But when the owners are outside investors, then accurate division










is important. In either case, rate of return is a common indicator for eval-
uating an investment or for selecting between alternative investment opport-
unities.
Return to capital for the 19 nurseries amounted to $40,981, or a return
of 11.30 percent. For the four larger nurseries, it was $89,818, for a 11.56
percent return on the capital investment. The smaller nurseries averaged a
loss of $2,151. This means they received no return on their capital investment
and failed to recover fully what they allocated for their own salary.



Table 12.--Income summary, 19 wholesale foliage and potted flowering plant
nurseries in Central Florida, 1979
Average Average Average
Item Unit all 19 4 larger 4 smaller ur
nurseries nurseries nurseries nurse

Value of own plants sold $ 355,475 922,696 55,756
Plant inventory change - $ 24,494 71,698 1,575
Supply inventory change $ 2,071 10,668 125
Miscellaneous cash income $ 2 114 2,352 0
f
Total gain - - $ 384,152 1,007,413 57,456
Deduct cash costs less op sal- $ (301,818) ( 847,129)( 40,760) ( )
Deduct non-cash costs less int $ ( 21,576) ( 42,191)( 7,467) (
Total deductions - $ (323,394) ( 889,320)( 48,336) ( )
Net nursery income- $ 60,758 118,093 9,230
Deduct op salary or time value $ ( 19,777) ( 28,273)( 11,380) ( )

Return to capitalh -- -- $ 40,981 89,819 ( 2,151)
Rate of return to capitali % 11.30 11.56 ( 2.69)

fTotal 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.
hReturn to capital--the portion of net nursery income that is left after
subtracting the salary or time value of the operator. It is what the owned
capital earned.
'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 concen-
trate 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 19 nurseries is com-
pared 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 the areas. Nevertheless, nursery-
men analyzing their own operation may find this section especially valuable
for indicating the general area of their business needing additional study
and analysis.
"Net nursery income" from Table 12 ".3 selected as the indicator for level
of profit. Average for all 19 nurseries was $60,758. The most profitable
third of the nurseries averaged almost two and a half times this amount, or
$147,127. The least profitable third averaged $2,982. The following com-
pares the average for these three groupings of foliage nurseries using one
indicator from most of the proceeding tables. A more complete analysis
would use all the 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 19 nurseries average was $355,475. The most profitable
third had $745,679 in sales, or over twice the average. The least profitable
group averaged $138,330 or about 40 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 desirable. The average for all 19 nurseries was $3.76 per square foot.
The most profitable third had 10 percent more, or $4.13, and the least
profitable third had $2.97, or around 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 programs
can alter the returns received by two different nurseries for the same crop.



Table 13.--Factors associated with level of profit, 19 wholesale foliage and
flowering plant nurseries in Central Florida, 1979

Average Most Least
Your
Item Unit all 19 profitable profitable
nurseries third (6) third (6) nursery
Level of profit
Net nursery income (Table 12) $ 60,758 147,127 2,982
-------------------------------------
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 355,475 745,679 138,330
Production rate (Table 2)
Sales/sq ft of total - $ 3.76 4.13 2.97
bed & bench space
Labor efficiency (Table 3)
Own plant sales/employee $ 22,066 21,465 22,752
Space use intensity(Table 4)
Annual turnover of plant % 279 287 209
inventory value
Use of capital (Table 5)
Annual turnover of owned
% 98.04 100.79 75.97
capital value
Level of costs (Table 8)
Cost/sq ftof total bed space $ 4.09 4.45 3.70
Cost efficiency (Table 10)
Cost/$ sales adjusted for -c s 77 96.90 128.63
cents 101.77 96.90 128.63
change in inventory value
Growth in the business
Increase in sales & plant_ 67,905 191,511 4,433
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 19 nurseries was $22,066 per person. Sales were 3 percent lower than aver-
age at $21,465 for the most profitable third, and 3 percent higher at $22,752
for the least profitable third of the nurseries. This is opposite of expecta-
tions. But it illustrates the importance of an earlier observation, namely,
that profitability is the result of interaction of all the profit factors, and
not necessarily indicated by just one factor. For instance, 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 the volume of plants
being handled. This could result in Iu.d o, untimely plant care, hence, slow-
er growth and lower quality plus a failure to re-stock eipty 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 effic-
iency 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 be-
gin reaching salable size. Or it can also be the result of difficult economic
times when sales are slow, but plant care must go on. Differences between
nurseries can be the result of differences in investment in labor saving capi-
tal items, the result of any or all of the factors noted above that lower pro-
duction 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 per-
centage turnover numbers are desirable, because they indicate that the value
of money tied up in inventory is being revolved faster. Average turnover was
279 percent, meaning that the value of own plants sold was 2.79 (279 percent)
times the average investment in plant inventory. For the most profitable
third, it was 287 percent, or near 8 percent more than the average. For the
least profitable third, it was three fourths the rate of the average at 209.
Reduced intensity of space use may be the result of things that increase





29

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 al-
though accompanying sales have not yet started, poor labor management so there
is not enough labor at crucial times for rapidly refilling empty space, selec-
ting varieties that grow slowly relative to the price they receive, inadequate
fertilization 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 of 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 indi-
cate greater sales per dollar of investment in the nursery.
Annual turnover of owned capital averaged 98.04 percent, meaning that the
value of own plants sold during the year did not quite equal the capital in-
vested. For the most profitable third, it was 3.6 percent higher at 100.79.
The rate for the least profitable third was three quarters 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 particular common in nurseries just get-
ting started, or in nurseries that are expanding rapidly. Excessive invest-
ments in land, labor saving machinery and equipment, or expensive (though may-
be unnecessary) niceties will also tend to lower the 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 the 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 $4.09, or 32 cents higher
than sales per square foot before adjusting for changes in plant inventory
value. This means that sales did not cover all the cash costs plus all non-
cash allowances noted in Table 8. For the most profitable third, they were
$4.45, or 36 cents more than the average. The least profitable third averaged







$3.70 cents, which was 39 cents higher than average sales per square foot.
Problems that cause costs per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor saving
capital items, destruction or theft of supplies and plants, not checking for
best price before purchasing needs, and not carefully managing the nursery op-
eration. 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
packaging in order to satisfy the requirements of a premium market.

Cost 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 101.77 cents. ihus, they lacked 1.77 cents of recov-
ering all cash and non-cash costs incurred. For the most profitable third,
costs were 96.90 cents, leaving about three cents per dollar of sales after
all costs were paid. The least profitable third had 128.63 cents. They lack-
ed 28 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 expan
sion, because extra costs of a larger operation are incurred before the nur-
sery can experience the accompanying sales. During inflationary times, fail-
ure to get price increases at the rate that costs are going up will also re-
sult in higher costs per dollar of sales. While prices received are not al-
ways under the direct control of the nurseryman, other things mentioned earl-
ier are under his direction. These include things that affect rates of prod-
uction, 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 $67,905. This was about 19 percent of
the annual sales volume of $335,475. The most profitable third increased
$191,511, or over 25 percent of annual sales. The least profitable third of
the nurseries increased only $4,435, or about 3 percent of sales.
Growth in sales of a business can, of course, be due in part to infla-
tionary price increases. It can also be the result of all the things already
mentioned that increase sales volume or plant inventory for a given operation.








mentioned that increase sales volume or plant inventory values for a given
operation. To stay healthy, businesses do need to grow, at least enough to
keep up with inflation. But at the same time, growth needs to be planned and
orderly so that it contributes to the profitability of an operation. By way
of contrast, too rapid of an expansion program can result in excessive in-
creases in costs and strong needs for cash before the new plants have reached
salable size. The growth indicator may look good on paper, but tomorrow's
potential sales (plant inventory) may not be satisfactory for paying today's
bills. Thus, growth, though desirable in an economic sense, needs to be care-
fully planned and executed.


Range of Figures (Table 14)

In this section, the average for all 19 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 num-
bers 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 discussions
of things that contribute to variations in the figures in the previous section
would also apply here.


CONCLUDING COMMENTS

Nurserymen who are interested is seeing how they compare with those par-
ticipating 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 bus-
iness side of operating a foliage nursery. It should improve management deci-
sions concerning things that affect the profitability of the nursery opera-
tion.
Nurserymen who find this kind of information to be useful, but have








Table 14.--Range of figures on factors associated with level of profit, 19
wholesale foliage and potted flowering plant nurseries in Central
Florida, 1979
Average 3 best 3 poorest Your
Item Unit all 19 factor factor
nurseries average average nursery
Level of profit
Net nursery income (Table 12) $ 60,758 183,623 ( 5,944)

Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold $ 355,475 1,065,675 49,587
Production rate (Table 2)
Sales/sq ftof total- - $ 3.76 7.43 1.75
bed & bench space
Labor efficiency (Table 3)
Own plant sales/employee $ 2,066 46,030 11,535
Space use intensity (Table 4)
Annual turnover of plant 279 532 128
inventory value
Use of capital (Table 5)
Annual turnover of owned 98.04 222.86 41.42
capital value
Level of costs (Table 8)
Cost/sq ft of total bed space $ 4.09 2.19 8.37
Cost efficiency (Table 10)
Cost/$ sales adjusted for cents 10177 82.43 159.24
change in inventory value
Growth in the business
Increase in sales and plant $ 67,905 336,11 ( 15,734)
inventory over last year


difficulty finding the time or energy to engage in the tedium of doing
their own calculations 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.