A Coronavirus lifeline for a garden centrePublished on 16th April 2020 2020-04-16T11:00:00+00:00 - Last update on 17th April 2020 2020-04-17T15:13:15+00:00
A Rangewell funding success story
The shutdown of ‘non-essential’ businesses is costly for those affected - but vital to protect both staff and the public. But for the horticultural sector, the shutdown has come in the middle of the key sales season and is nothing short of a disaster.
The closure of the UK's 2,000 garden centres and direct-to-public-nurseries as ‘non-essential’ retailers during the key early spring season has been a major plank in the lockdown. However, it means that any business involved in "ornamental horticulture" cannot trade during their busiest period.
The problem does not just affect garden centres who are prohibited from welcoming in keen gardeners.
Growers have no outlet for their plants, which have been carefully readied for sale during the spring season. This means that millions of bedding plants, shrubs and even trees could be binned in the coming days and weeks. UK growers are facing a loss of their entire 2020 income.
Retailers are being forced to cancel orders that they cannot sell on.
A way to continue trading
At Rangewell we were recently approached by a Hertfordshire garden centre which was determined to struggle through the crisis - keeping on at least some of their staff, and moving on the orders that they had already had delivered.
“We were preparing for the busy Easter season, and we had made our usual orders of bedding plants and vegetables. When the shutdown was being talked about, we had a surge in business, and we believed that we would be able to continue trading in the same way that supermarkets would - there was simply no way that we could close.
We had people coming in wearing masks and gloves, but they were buying carloads of everything from compost to canes as well as the plants themselves.
Then the government dropped their bombshell. We were not classed as essential, and we would have to close.”
The business owners set up a crisis meeting to work out the impact on their business.
“It was nothing short of a disaster. We would need to lay off more than 50 staff, and keep on around four or five for security and basic watering of what greenstock we had that could survive for a few months. We would have to dump the rest. Our insurance was not going to help. We needed to find a way of keeping busy, and to find some way of selling the stock we had already invested in - and paid for.”
The closure of garden centres due to the pandemic comes at the worst possible time - the value of the stock during the key spring trading period is typically three to four times the year-end value of most businesses.
It is frustrating for customers as well as for the businesses which cannot access the demand they have been able to depend on. The UK’s 23 million gardeners are spending more time in their gardens, and desperate for the plants they cannot buy.
One answer was to ramp up online sales.
“Setting up a website for selling plants and other stock would be a costly proposition, but we saw it as the only way to salvage the season. We had some advantages, in that we serve an affluent area and we already have a web presence. When we talked to our web design experts they saw the possibilities of refreshing the site and putting it on an emergency footing.”
The big problem was setting up the site to shift the thousands of product lines our client carried. If customers were making small orders - a single plug of plants or a roll of garden twine - online sales were not going to be economical. They needed to work with big orders to make the strategy economically viable and deal with the logistics and other costs involved.
“We saw the answer when we looked at our customers' needs in the current crisis. Some of them would need a complete kit, everything from growing mediums and fertilizers to plants.
So we put together some kits - one for vegetable growers, one for flowers, one for people doing a garden makeover. It meant the order values were large enough to make delivery viable.
It meant that we could sell on the plants that were already with us - clearing our investment - as well as keeping on more of our staff for order makeups and stock picking. We had a few warehouse staff who had HGV licences - they were happy to get back on the road for local deliveries.”
The partners realised that there would be some short-term costs to cover to put their survival plan to work:
- Updating the website to allow online orders
- Arranging additional marketing - to get potential customers to the site
- Bringing in additional small delivery vehicles at short notice
All would be required at short notice, which will often force up the costs of finance.
The partners approached us at Rangewell for solutions.
The funding available
The business was successful in the past and had some cash reserves - although these were low at this time of year as the business was taking in large quantities of stock. However, there could be some additional sources of cash which we wanted to help them arrange.
Local grant funding could be available for many small horticultural businesses that currently qualify for Small Business Rate Relief (SBRR).
For small businesses that qualify, a grant of £10,000 will be paid automatically by the local council. Businesses with a rateable value between £15,000 and £51,000, like our client could see the local council grant rise to £25,000.
We looked at what other types of funding would be available. In the horticultural sector, both growers and retailers might be eligible for the Coronavirus Business Interruption Loan Scheme (CBILS).
This could let them borrow up to £5m, interest-free for 12 months, with the government promising to underwrite 80% of the loan should a business fail.
You can apply to lenders directly – but a better solution may be to call us at Rangewell, where we can use our expertise to help you secure the funding you need.
The CBILS facility can support many types of lending. Most popular is likely to be cashflow support which can provide a reserve of cash to tide a business over while income is reduced. In normal circumstances, the business could borrow from £1,000-£500,000 to support cashflow, but the lending available could be up to £5m through the Coronavirus Business Interruption Loan Scheme.
We arranged a short-term loan of £500,000 under CBILS which would provide the additional funding the business would need to deal with the crisis.
“Our new online business has been a success. Customers were desperate to buy and make the most of their gardens - because many of them have more leisure time than they know what to do with. We have been able to clear inventory with the packages we made up - some of the plants have come on a bit more than we would usually see them, but customers don’t seem to mind, and see them as good healthy plants, which of course they are, even if they look a little untidier than usual.
With the kits providing the core business that lets us run the service, we have been able to provide a few high ticket items too. We have sold some top-end garden furniture sets and parasols, and some garden building kits.
Obviously, sales are right down against our usual targets, we are missing the browsers who come in to look to see what we have, and who always leave with a few small items. These add up week in, week out - but we have been able to clear the stock area, and just as important, keep our people busy.
We have been able to salvage something from the season, and that will help us ensure we will be here next year - hopefully operating a business as usual. But I believe that we have found a new way to sell. Even if we are back to normal, the idea of selling complete packs for home delivery is definitely one we will want to carry on with.”
Helping businesses of all kinds - not just those in the horticultural sector survive the crisis is all part of the Rangewell service.
“At the end of the day, the crisis has hit everyone, and it has hit us harder than most, but we have been able to find ways to fight back. Rangewell were instrumental in helping us get the extra cash we needed to do it."
Whether we can help you find the answers to your needs with a loan under CBILS, or need more extensive answers such as Asset Refinance or even a remortgage to keep your business blooming, our team is ready to help.
We know all the lenders in the markets, and we can work with you to find the most cost-effective answers to your funding needs. During the current crisis, we can provide the quickest way to find the cash you must have to secure your business' future.
Call us now – we understand the pressures you are under in the horticultural business in the present crisis - and remember, our service is absolutely free.
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