Our Business

A nursery plant business can be profitable and can also be started with medium investment. One might believe that because they are excellent gardeners, making the leap to running a nursery business cannot be very difficult. However there are some steps to be followed and some precautions taken in this business. Running a nursery business is more than growing beautiful plants. It is just as much about sales, marketing, and finance. But with the right effort and techniques, one can start making money and become profitable.

Site Assessment

If, after completing the assessment, the budding entrepreneur has what it takes to start down the road to being a nursery owner, the next step is to thoroughly understand the constraints and capabilities of the home site. To determine the best fit for your home nursery, you have to answer these questions:

How much space can I allocate to this business?
How much of this space will be shelters from the elements?
What is my climate like?
Am I willing to spend money and time building a greenhouse?
How much time do I want to spend each week gardening?
Do I have a truck, or other large vehicle available to me to handle transportation of products?
What kind of soil do I have? Will it support the types of plants I envision?
What water source is available? Is it municipal water, well water, river, or spring water?
How much do I want to spend on soil amendments?
How will I handle irrigation and drainage?
What are the zoning laws for the site?
Are there any additional tax regulations or special licensing required?
Does your local community have restrictions on the number and types of plants that can be grown?
Does your local community allow you to run this type of business from your home?

Unless the home nursery is located in an area of the community that is zoned agricultural, there will be restrictions on the type and size of your operation. Some communities will also go so far as to write zoning regulations that specifically disallow businesses that have more than one, non-family worker. In other communities, they restrict the percentage of the property that can be allocated towards such activities. In these examples, they will use a percentage of the main structure’s footprint as the limiting factor. For those individuals, who want to develop an organic operation, be aware that some of the “natural” soil amendments, which are used, can be deemed a public nuisance.

Product Selection

Let’s assume, like most people, you have a home in the suburbs that is zoned residential, with typical restrictions on nursery size and use. In all likelihood, you will only be able to allocate up to 20% of your lot towards your endeavor. Since most suburban lots are between 1/8 to ¼ of an acre, and one acre is 43,650 square feet, your lot size is probably around 5,000 – 10,000 square feet. Assuming the 20% restriction, it means your available area is 1,000 – 2,000 square feet, at most. If you take into account walking, storage, and working space, you are probably down to 500– 1,000 square feet. Working with such a small area immediately rules out the ability to grow trees or large shrubs. The amount of space that would be used would far exceed the income potential.

With trees and large shrubs eliminated, you are left with the following options:

Small Shrubs
Herbs
Ornamentals
Annual Flowers
Perennial Flowers
Vegetables

There are pros and cons for each of these products. Some of these products can only be grown in warm climates, or require intensive greenhouse management. This is especially true with most ornamentals and some annual flowers. Assuming you do not already have a greenhouse on your property, you are going to want to start with products that meet the following criteria:

Highest Revenue per Square Foot
Easiest to Grow
Highest Demand in Your Local Area
Lowest Cost per Square Foot

Chances are that no one product will meet all of these criteria perfectly. However, picking the products that score the highest will put your budding nursery business on a path for sustainable success.

Budget & Nursery Build-Out

Start-up budgeting for a home nursery can be made more cost-effective, if existing gardening equipment and supplies are used. For example, if you already have a set of gardening shovels, there is no point in purchasing another set, unless you intend to hire assistance. For the purposes of this example, let’s assume that you are going to grow several varieties of pepper and tomato plants in spring and mums for autumn. For the initial nursery set-up, there are several, one-time expenditures required. They include the following:

Legal, Tax and Licensing Costs ($500)
Accounting Software, Checks & Bookkeeping Costs ($300)
12 – Cold Frames 48” X 48” ($3,600)
1 Sprinkler System ($100)
200’ of garden hose ($100)
1 Gardener’s Cart ($300)
1 Potting Table ($300)
1 Storage Shed ($500)
2 Compost Bins ($500)
Critter Fencing ($500)
Bird Netting ($50)

The total of these one-time expenses is $6,750. For your first season in business, you will need to plan for these additional, variable costs. These are expenses that will be incurred each year, as part of running your business.

400 – 6” Pots ($100)
200 – 12” Pots ($100)
300 Cubic Feet of Moisture Control, Enriched Potting Soil ($1,500)
1 lb of Pepper Seeds ($50)
1 lb of Tomato Seeds ($50)
600 Plant Labels ($50)
Pesticides ($50)
Soil Amendments & Other Fertilizers ($50)
Gloves, Shade Covers, and other Miscellaneous Items ($100)
Plant Transportation ($200)
Water ($100)

The total of these variables expenses is $2,350. Your soil costs will be reduced by over half in year 2, as a direct result of your compost bins. Like most homeowners, you will have a lawn that will need to be cut and leaves from trees that will need to be raked. Instead of throwing these materials in the garbage, they will now go into your compost bins. Depending on your town’s ordinances, you may need to use sealed composters, instead of open compost bins. Regardless of which is used, the end result will be many cubic yards of excellent growing medium.

Here are some tips for reducing your variable costs:

Buy 6” and 12” pots in bulk, covering more than one season. Doing so allows you to get bulk pricing.
Buy a compost bin that separates the compost from the compost tea. The compost tea is an excellent substitute for store-bought fertilizer.
Allow the unsold portion of your pepper and tomato plants to grow to full-maturity, providing both seeds for the next year and a bountiful amount of produce.
Purchase a laser printer. Have a freelance designer create a custom label for you. Use sticker labels on your products, instead of pre-purchased soil-insert labels, reducing your plant label expense.

Once you have selected your target products and determined a budget, now is the time to build-out the nursery. When building your nursery, be sure to incorporate into your build-out as many of the natural advantages your property has on it. For example, if your target

plants require full sun, use an area of the property that has an unobstructed south view. If wind is an issue, attempt
to site the nursery in a location, where the main structure acts as defilade against the incoming winds. If your property has a natural slope or contour to it, use it to your advantage.

The property slope and drainage only become important, if you plan on planting into the ground. While common for shrubs and trees, it is not recommended for all other plants. The time, cost, and plant damage risk are too great for other varieties.

When building out your nursery, be sure to employ these additional recommendations:
Put the plants that have the tallest growing potential behind smaller plants.
Group plants together in batches, usually by type. It will make it easier to manage inventory later.
Ensure that plant pots touch each other, when grouped. This will help to prevent blow-over damage.
Place potted plants on level ground. Ground that has had a layer of gravel placed on it is ideal.
Fence the nursery in, to prevent scavenging animals from destroying crops.
For plants that can be damaged by birds, install overhead netting.
Implement a timed, sprinkler system. Doing so will have reduce the labor cost.
Allow enough room, between groupings of plants, for walking and cart space.

Calculating ROI

Let’s assume that you planned on growing 190 tomato plants, 190 pepper plants and 190 mums. The tomato and pepper plants will each sell for $4, at local farmers’ markets. The mums will sell for $8. Assuming 75% of your plants grow to a marketable size and quality and a further 70% are sold at market, you could expense the following gross revenue:

Tomato Plants
190 planted X 75% growth success X 70% sell-through success X $4 = $399

Pepper Plants
190 planted X 75% growth success X 70% sell-through success X $4 = $399

Mums
190 planted X 75% growth success X 70% sell-through success X $8 = $798

For year 1, your total revenue would be $1,596. Your fixed start-up costs would be $6,750. Your variable start-up costs would be $2,350. Your total costs would be $6,750 + $2,350 = $9,100. Your first year loss would be $9,100 – $1,596 = $7,504. This equates to a negative, 12-month return on investment (ROI) of -0.82.

It looks scary! It should be. In the example we used, we assumed only 500 square feet of space available for the business. Regardless of whether the space available is 500 feet or 5,000 feet, many of these fixed costs will be the same. Understand that the first year has many one-time costs included in it. These numbers also assume significant plant loss-rates, for the growing season. Given that it is your first year in the nursery business, these percentages are not unreasonable.

Going into year 2, you should be able to dramatically reduce your soil expense and positively impact your other variable expenses. In addition, your growth success rate should go up. Your sell-through success rate should also increase, as you better match the product demand mix of your target market. You should also start to develop a repeat customer base, further benefitting your sell-through rate and your unit pricing.

Let’s see how year 2 looks for our nursery. We’re going to assume the same number and type of plants are planted. However,
we’re going to assume that the soil costs are now $500. The tomato and pepper plants will each sell for $4, at local farmers’ markets. The mums will sell for $8. Assuming 85% of your plants grow to a marketable size and quality and a further 80% are sold at
market, you could expense the following gross revenue:

Tomato Plants
190 planted X 85% growth success X 80% sell-through success X $4 = $516.80

Pepper Plants
190 planted X 85% growth success X 80% sell-through success X $4 = $516.80

Mums
190 planted X 85% growth success X 80% sell-through success X $8 = $1,033.60

For year 1, your total revenue would be $2,067.20. Your fixed start-up costs would no longer be considered, as they were expensed in year 1. Your variable start-up costs would now be $1,350, reflecting the soil cost reduction. Your total costs would
be $0 + $1,350 = $1,350. Your second year profit would be $2,067.20 – $1,350.00 = $717.20. This equates to a positive, 12-month return on investment (ROI) of 1.53. The nursery business would need to stay open for about 10 years to recoup all year 1 losses.

Target Market

Who you sell your products to, can have a dramatic impact on the viability of your business. Because of the small size of your operation, you are limited to a couple of target markets. They include the following:

Direct-to-the-Consumer
Farmers Markets
Mail-Order
Boutique Markets
Local Restaurants
Local Florists

Direct-to-the-consumer and farmers markets are the easiest markets to tackle. However, direct-to-the-consumer may not be an option, depending on your town’s zoning restrictions. Mail-order operations are the most difficult to get established. They also are burdened with interstate commerce laws and regulations and shipping restrictions.

Local restaurants, boutique markets and local florists can be highly lucrative opportunities. However, they may require product volumes that your operation cannot handle. Their pricing is going to be more at the wholesale level. For larger volume operations, the increased quantities sold, greatly offset the smaller margins. However, for a home-based nursery operation, expansion capabilities are limited.

As a result of all of these factors, farmers markets tend to be the first, viable step most home-based nurseries employ for their business. Fortunately, there has been a renaissance in the number of farmers markets across the country. They have exploded, in direct response to consumers’ increasing consciousness of about the food they eat and the purchases they make. When determining, which farmers’ marketers to participate in, follow these recommendations:

Visit the market several times, to determine visitor levels, pricing, and competition.
Talk to other, participating vendors and get their thoughts about the market.
Find out how much it costs to be a vendor, and whether you have to commit to the entire season.
Find out if the market organizer will allow competing vendors.
Are tables included, as part of the stall rental price?

Once you have gone to at least ten, different farmers’ markets in your area, you can effectively determine, which ones to participate in, and the costs associated with them. Please note that the “plant transportation” expense included the cost of participating in these farmers’ markets.

Running a home nursery business can be both a rewarding and lucrative business. You get the opportunity to make money doing what you enjoy most. Like any other business, work and persistence are required to make your home-based nursery a success. Taking the time to invest in the planning process, prior to starting your operation can be the difference between sustainable success and financial failure.