Industry Sector: Garden Centre Introduction You have decided that you want to run a garden centre - now you need to decide on how you will achieve this. Will you: buy an existing business start up a new business from scratch The course of action you choose will affect the costs you will incur and may also affect how soon you start to receive income from the venture. This Business Guide will help you to complete your cash flow. The topics listed under Income and Expenditure relate to fields in the cash flow section of the Business Plan. Cash sales 'Cash sales' means all income from your main business activity which is received at the time of sale. While some customers will pay you in cash, remember that Cash sales can also include: debit and credit card payments gift tokens (if you accept these) cheques To prepare your cash flow, you will need to estimate how much income you'll receive over the next 12 months (including VAT if appropriate). To do this you will need to estimate how many plants and related items you are likely to sell and at what price. There are a number of things to consider when you make your estimates: Type of business who will your customers be? Will you target members of the public exclusively or will you also aim to supply other businesses such as landscape gardeners or forecourt retailers will you sell by mail order and over the internet where will your premises be? You may need to have a main road frontage to attract large volumes of customers how large will your premises be? This will affect the range of plants and other goods you will be able to stock what security measures will you put in place to protect your stock how many outlets will you have what will your opening hours be Your product ranges will you grow any plants yourself will you target a particular type of customer - for example, young families will you aim to stock a wide range of plants or will you specialise - for example in herbs what other non-plant ranges will you stock will you offer services such as garden design will you allow other businesses such as swimming pool installation, conservatory or shed erection to operate from your site on a concession basis will you offer any catering to customers how will you make sure your plants are healthy and disease-free what will you do with 'leggy' unsold plants past their peak how will you minimise wastage are you prepared for seasonal variations - most of your sales are likely to take place between March and June or July Pricing what will your pricing policy be (don't forget, you must be able to cover your costs, overheads and drawings) how often will you review your prices will you offer special prices if customers buy more than one of a particular item will you try to offer plants in all price ranges how much discount will you offer your trade customers (if you have any) Staff will you be able to find experienced and knowledgeable staff locally what will be your policy on staff discounts Competition Independent garden centres face strong competition from supermarkets and from the national garden centre and DIY chains, which operate from very big sites, stock vast ranges of plants and non-plant products and offer customers an enjoyable day out with plenty to see and do. This can make it hard for the independent to compete. It's very important to make sure that your garden centre will offer something special that will attract customers to you rather than to your competitors. Buy an existing business You might decide to buy an existing garden centre rather than start your own venture from scratch. Buying a going concern can mean that: the premises, shop fittings and equipment are already in place there are established customers the business can generate income immediately suppliers have been identified and relationships established with them the business has a track record which can help if you are looking for finance staff may already be in place However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up. Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high. Other matters to consider include: the state of the premises, equipment and so on. Will you have to spend money refurbishing or replacing assets the condition of any stock you are buying - particularly plants. Check this over carefully before agreeing a price existing staff rights how to retain key personnel once you've taken over does the business owe money that you will be responsible for if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her, the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs. Market research Estimating demand As a first step, give some thought to who will buy your products. Bear in mind that your business is likely to be very seasonal, with high demand in the spring and early summer and a much lower level of demand during most of the rest of the year. As far as possible, match your perishable plant stock to the level of demand you estimate you will have. To achieve a reasonable level of sales, your 'catchment area' must contain a sufficient number of potential customers and not too many competitors. Catchment area Although the majority of your customers will visit you by car, most will not want to travel too far to reach you. Ideally your garden centre should be located in, or very close to, a major centre of population with many residential areas. Identify the different types of housing within, say, a 15 mile radius of your garden centre. You could even try to estimate the number of households there are. Make a note of the size, nature and appearance of the gardens. This will help you to decide on the range of plant and other products you might sell. For example, you might do well to concentrate on bedding plants for patios, window boxes and hanging baskets if your catchment area includes many flats or houses with very small gardens. Checking out the competition Plants, seeds, bulbs and other garden products are available from many different sources such as: other nurseries and garden centres - many of these are part of garden centre chains and offer customers a very comprehensive service florists DIY 'sheds' supermarkets petrol filling stations mail order and internet retailers greengrocers, variety stores and even convenience stores So you will need to decide whether there is room for another outlet selling garden products in your area. Count how many competitors there are already and identify the range of goods they sell. If some of these are garden centres note down whether they are independent or part of a chain. Think about the range of plants they stock - is it a little bit of everything or do they specialise, for example in herbs. Make a note of the condition of the stock too. Trade sales You might be planning to supply plants and other products to other businesses, such as: landscape gardeners petrol filling stations and other local retailers hotels and nursing homes your local authority (for parks, municipal gardens and so on) building contractors If you plan to target trade customers you could: count the number of suitable businesses and other organisations in your area work out what product ranges to offer them decide on the discount you will offer them approach them to see if they would be interested - if they are already being supplied by someone else you will have to give them a good reason to change. This might be a wider product range, better quality plants, lower prices or a better service Sector trends What has been happening in the garden products sector Over the last 10 years or so there has generally been a steady increase in demand for garden products, for a number of reasons: there was a lengthy period during which the housing market was buoyant, with many new properties being built gardening has become one of the most popular leisure activities and enjoys widespread coverage on TV and the radio, in magazines and newspapers container grown plants and pre-planted pots make 'instant gardening' possible - people do not have much time to spend growing plants from seed spending on garden items such as water features, garden furniture, barbecues, patio heaters and lights, paving, decking, boundary fencing, ornaments, planters and so on has grown significantly growing demand for 'green' and 'eco-friendly' products like water butts and composters the recent increase in interest in home-grown vegetables This has benefited the garden centre sector but has also seen other retailers, such as DIY 'sheds', entering the market.