Chapters 22 & 23

1. Chapters 22 & 23 Beginning and Promoting an Ornamental Horticulture Business & Human Relations: Personnel Management and Customer Sales

2. Why would you want to start your own business???? It gives you the opportunity to exercise leadership and make all major decisions that impact the operation of the business (in other words, the chance to be your own boss!) It gives you the opportunity to build a business around your own interests and personal strengths

3. Job security insofar as this ever exists • Certain tax advantages • Money (however, the perception that the owner of a business makes the most money is not always correct

4. Advantages of Not Owning your own Business • Lack of major responsibility for decisions that affect the future of the business • The opportunity to pursue a career interest without the problems of ownership • Freedom to change jobs and relocate as the desire or opportunities arise

5. The owner sets the tone for the way customers are treated. • There are 3 forms of organization of a business: • Sole proprietorship • Partnership • Corporation

6. Sole Proprietorship • The sole proprietorship is the simplest form of doing business. • It is the easiest to begin and the most private. • The sole proprietor puts up the capital, hires and directs all employees, reaps all profits, absorbs all losses, and is personally and totally responsible for all those of the business. • There is no separation between the sole proprietor’s personal finances and those of the business.

7. Disadvantages of a Sole Proprietorship • The business can be limited by the weaknesses of the owner • The business usually grows at the outset, then reaches a plateau due to the proprietor’s inability to direct its growth further • The business ends with the death of the owner • If the death is premature and unexpected and no provision has been made for the sale or continuation of the business, liquidation may be the only recourse

8. Partnership • A partnership is a business engaged in by two or more persons. • It is also a common form of business in ornamental horticulture. • Partnerships work best when the partners have interests and abilities that complement rather than duplicate each other. • In modern partnerships, all agreements between partners are in writing before the business begins

9. Terms of Agreement • The following things should be included in the terms of agreement in writing: • The percentage of original capital to be provided by each partner • The responsibilities assigned to each partner • The business objectives of the partnership • The provision for the dissolution of the partnership in the event a partner dies or wishes to leave the business

10. In the classic partnership, the two partners contribute the same amounts of capital and divide the work equally. • They each draw the same weekly salary, and at the end of the year they divide the profits equally. • In a partnership, both partners become liable for the actions of either partner.

11. Corporation • A corporation is the most public method of doing business and more governed by state and federal laws. • The ownership of a corporation is obtained through the purchase of shares. • At the end of the fiscal year, the profits of the corporation are paid to the shareholders on the basis of the number of shares owned. • The profits of a corporation are known as dividends.

12. If the corporation does not make a profit, no dividends are paid and the value of the stock may be reduced. • A private corporation sells its stock publicly and can be owned by many people, often as an investment. • A closed corporation does not sell its stock publicly. It is often owned by members of a single family. • Operation decisions in a corporation are made by a board of directors elected by the stockholders.

13. What determines the success of a business? • The desire to start a business is not enough to ensure its success, even when the owner has enough capital to get the business started properly. • Simply stated, the success of a business depends on enough people wanting the products and having the money to pay for them.

14. The geographic are from which a business attracts most of its customers is termed as its market. • For garden centers, flower shops, retail nurseries, lawn maintenance firms, and landscape contractors, the market area may be limited to a city or county. • For wholesale nurseries, mail order nurseries, landscape architects, and propagators, the market area can often extend beyond safe lines.

15. Where does the money come from? • Since there is no predetermined period of time after which a business is guaranteed to survive, capital must be discussed in terms of initial funding and subsequent funding necessary to sustain the business. • Capital is needed for two reasons: • To purchase Fixed assets • Working capital

16. Fixed Assets • Real estate • Coolers • Furniture • Equipment • Working Capital • Paying wages • Purchasing supplies • Paying utility bills

17. Obtaining Capital for a Business • Use your own money or that of other people willing to invest their money in your business. • Borrow from lending institutions such as banks, insurance companies, and loan companies; persons seeking to buy into the business as limited partners; or from other companies that will market your future crop and are willing to pay you in advance. • Return the profits of the firm to the business for use as capital.

18. You should use your personal savings as much as possible in starting a new business. • Reasons for using your personal savings: • There is no interest charge when you use your own money. • It is evidence of your commitment to the business.

19. Borrowing Money • For the novice as well as the established horticulturist, borrowing may be the only way to obtain capital; but it is also the most expensive way. • It requires you to reveal a good deal of information about your background and personal finances, precise details on how the money is to be used, and in-depth records of the financial history of the business.

20. Lending institutions tend to be conservative and cautious when making loans, especially to new businesses with no financial history; hence their inquiring attitude. • Regardless of the institution, it will require collateral, or something of value to be guaranteed as security for the loan. • Things to be used as collateral include: land, buildings, vehicles, equipment, corps, or accounts receivable.

21. Types of Loans • Character or signature loans are short-term loans granted to business people with good credit ratings. • Term loans are long-term loans that are repaid over a period of years, usually by the month. • Accounts receivable loans are obtained by established businesspersons by pledging money owed to the business from the customers.

22. Loans on life insurance can be obtained using the cash value of the borrower’s life insurance as collateral. • Limited partnership loans are loans made by individuals who provide capital in return for a share of the profit, this type of capital is termed equity funds. • Contract growing loans are loans made to growers by firms that will eventually market their crops, these loans provide the grower with the money necessary to produce a particular crop while ensuring the lender of a guaranteed price.

23. Retaining the profit that a business makes rather than paying them out to the owners is an important method of raising interest-free capital. • It is not enough for a developing and expanding business, it can be of major significance for a successful, established firm that needs capital to replace inventories and depreciated equipment, or to pay taxes and other operational costs.

24. Selecting the Business Site • Size – must be evaluated in terms of how much area the business needs at the beginning and how much expansion is planned if the business is successful • Natural features – natural features of the site and adjacent areas are of special concern to production firms • Zoning regulations – determine what use can be made of a site

25. Utilities – must be on the site or easily installed to avoid high costs of hookups • Access – is of prime concern; type of access depends on the type of business • Compatibility – new business with other businesses around it will frequently determine whether customers are attracted to the operation

26. Merchants’ Associations – common in retail areas are often very helpful to new and established businesses alike • Lease agreements – usually required when land or buildings are being rented rather than purchased • Cost of acquisition – final factor in the evaluation of a site

27. Reasons for Selling the Business • The owner has reached the age of retirement and has no one to carry on the business. • The owner has become ill and is unable to carry on the business. • The business has been unsuccessful.

28. Purchasing A Business • When considering the purchase of an established business, the future owner should look at its past performance as an indication of how it will do in the future and also assess the potential of the business under new ownership. • Successful layout of a business includes proper sizing of each area and ease of circulation.

29. Purchasing • The best way to begin the purchase of materials and supplies is to order small quantities that can be turned over quickly and paid for promptly. • Large purchases tie up capital too long and can create problems. • When budgeting for inventory items, it is important to anticipate all of the costs that will be encountered.

30. Cost of the stock is obvious, but there are others, such as the staff time spent purchasing, receiving, and storing the stock, and the cost of keeping stock control records. • Records should be kept regarding the vendors’ terms, the credit lines they have extended for the business, who pays the shipping charges, how delivery is made, and the time usually required to fill orders.

31. Laws and Regulations • Like all businesses, horticultural businesses are subject to regulation by all levels of government. • Just a few important ones: • Pesticide Application Certification (Environmental Pesticide Control Act) • Limits the use of toxic pesticides and to ensure that they are used only by persons knowledgeable about their safe and proper use

32. Plant Patent Act • Protects the right of the inventor of discoverer of a plant to be the sole asexual propagator of the plant • Deceptive Practice or Product Regulations • Protects the consumer from unrealistic descriptions and claims for products and services • Occupational Safety and Health Act • Ensures safe and healthful working conditions for employees

33. Advertising • The purpose of immediate response advertising is to make customers reach for the telephone or come in the store soon after reading or hearing the advertisement. • The purpose of attitude advertising is to build the reputation of the business. • The business owner must know which media will result in the greatest return on the money spent.

34. Suggested places to advertise: • Newspapers • Magazines • Billboards • Telephone directories • Radio • TV • Direct mail • Handbills • Display windows • County fairs • Flower and garden shows • Etc

35. “Wasted Advertising Dollars” • The population reached by such media is predictably small, yet costs can be high compared to other methods of advertising. • These include: • High school yearbooks • Lodge and church publications • Local athletic team programs • Pencils • Matchbooks

36. Promotion, Publicity, and Public Relations • A complete advertising program must include promotion, publicity, and public relations. • Promotion is the range of activities whose purpose is to establish a good will or further growth of a firm. • Publicity and public relations activities are intended to bring the business and its staff to the attention of the public in order to generate favorable public opinion.

37. Successful In-Store Displays • A customer who comes to buy one item may be encouraged to buy others if they are displayed freshly and attractively. • To help make in-store displays successful, keep these things in mind: • Keep the display simple • Feature either a single product or service or a limited choice of related products or services • Suggest use for the product • This may establish a need for the item in the customer’s mind

38. Keep the display small • Display a few of the items, but avoid a mass display • Keep the display complete • If customers are to lift items out of the display for purchase, replace them quickly • Coordinate the display with other advertising • The display may feature merchandise advertised in the newspaper or on the radio or television

39. Neatness counts • All signs should be neatly lettered, un-faded, and free of spattered water, soil stains, and dust • Light the displays • Show windows offer opportunities for effectively lit displays even after the store closes for the day • Change the displays frequently • Regular customers will cease to see them if they remain unaltered for too long • Keep all plant material in peak condition • Do no let wilted blossoms, yellow leaves, wilted foliage, or broken branches suggest merchandise of inferior quality

40. Importance of Human Relations • The direction of workers in a manner that brings out their best efforts and attitudes on behalf of the business is termed personal management. • Career directed employees can be expected to have personal goals for advancement. They may want to stay with the company for many years or they may intend to start their own business after a few years of on-the-job training.

41. Part time employees’ career goals usually do not involve advancement in the business. The job may be a way to supplement family income, a way to fill empty time, or a way to earn money for a short-term objective such as schooling, a new car, or vacation. • Temporary seasonal employees are hired full-time when there is more business than the permanent staff can handle. These employees are hired for their ability to perform a few skills competently and quickly.

42. Qualities of a Good Leader • Decisiveness – must be able to make good decisions quickly. • Thorough directions – employees may need a lot or a little direction to accomplish a task correctly the first time. • Competence – employees seldom perform at a level that they believe is beyond the capability of their supervisor to recognize and appreciate.

43. Fairness – supervisors must allocate work among their staff equitability. Two workers with the same competencies and receiving the same wage or salary should be expected to perform equally. • Understanding – a good supervisor is predictable. Employees must be able to anticipate the consequences of performing in a way contrary to established company policies. • Respect – supervisors who expect respect from their staff must demonstrate their own respect.

44. Sincerity – all supervisor-employee relationships benefit if the staff perceives that the supervisor is sincerely interested in their well-being. • Praise – everyone appreciates recognition. When an employee or group of employees does a job well, the supervisor should recognize the accomplishment. • Reward – in return for their continuing good performance, employees expect their status within the company to improve.

45. Qualities to Avoid • Inflexibility – company rules bust be applied fairly to all employees, but little is gained by a policy of “no exceptions for anyone at any time.” • Partiality – in the close working environment of many horticultural businesses, friendships form easily. Joking with some employees and not with others can be interpreted as partiality. • Condescension – training a new employee or assigning a new task to an old employee usually requires the supervisor to give instructions. Talking down to employees by oversimplifying the directions or giving shallow answers to serious questions insults their intelligence.

46. Subjective criticism – the objective of properly applied criticism must be to prevent the employee from feeling personally offended or embarrassed while assuring that the mistake in behavior or performance is corrected. • Double standards – employees have the right to expect that policies set for them will be followed by those in supervisory positions as well • Indifference – the small-business atmosphere of most horticultural enterprises requires that supervisors give frequent positive reinforcement to their workers • Sarcasm – neither humor nor criticism should be directed toward employees in sarcastic tones

47. Need and Want • The customers are the people who keep the business in existence. • The type of customer to be served will depend first on whether the business is retail or wholesale. • As soon as customers believe they can afford the item or service, they move to satisfy the need by going to the shop or calling on the telephone. • New homeowners may have the desire for a maintenance firm to care for the landscape, but they may not be sure if they can afford it.

48. Characteristics of a Good Sales Person • Friendliness – The customer should be greeted soon after walking through the door or into the sales yard. • Helpfulness – Customers should be given a short period of time to get their bearings in the store or sales area, and to look around. • Knowledge – Salespeople should be familiar with the plants and products that are being offered for sale.

49. Honesty – The salesperson must be honest in describing how the product or service will fulfill the client’s need or desire. • Good grooming and articulate speech – salespeople must be dressed to meet customers and create a good impression on behalf of the firm. • Courtesy – salespeople must be polite and positive with customers, even if they do not return the courtesy.

50. Making the Sale • Successful sales result in satisfied customers who: • Get what they came for and perhaps even more, but • Do not spend more than they should have spent, and • Will return again for future purchases