How to grow a horticultural businessPublished on 2nd July 2019 2019-07-02T13:14:11+00:00 - Last update on 1st April 2020 2020-04-01T13:13:44+00:00
The size and scale of horticultural production and sales in the UK is enormous. It ranges from large-scale farming growing fruit and vegetables in prairie-style fields and automated glasshouses covering several hectares to small market gardens.
What’s more, once you have opened a business, there could be exciting opportunities for growth.
So what does it take to grow a business? A serious horticultural business - rather than a hobby - may require time at college learning about growing, machinery, pests and soil science, in some cases up to postgraduate level.
But perhaps the biggest challenge of all is the need for investment. Producing fruit and vegetables will require funding for land, greenhouses, heat and operating funding for staff and supplies. They will also need a range of equipment, from tractors and forklift trucks to potting machines and irrigation systems.
“I studied horticulture as a degree subject, so I knew about the technical side of the business. Then I worked for other people to see how the business itself worked - but I wanted to be my own boss, and Rangewell were on hand to help.”
Garden centres are an important branch of the horticultural industry. These can range from small, family-owned growing businesses to self-contained shopping arcades with as much space given to gifts, hardware and cafes as plants. Many now recognise that they are also part of the leisure industry, and offer entertainment such as petting zoos and rides alongside the rows of greenery.
Again, competition is stiff - but like any other retail business, a good location well-stocked shelves and a well-lit welcoming environment will be essential.
“Running a garden centre is a full-time job in itself, but it can provide an extra income if you are a grower. Your customers come to you - you don’t need to go looking for them.”
If you are a grower, opening a retail side to the business - even on a seasonal basis - could be an effective way to move it forward and increase your takings. it could become the basis of a fully-fledged garden centre.
What type of business are you running now?
Running a small scale growing business - perhaps as a sideline for another agricultural business can be done on a shoestring - but a restricted investment will mean a small scale business with correspondingly small returns.
There are several ways to grow your business. You can take on more land to expand your growing capacity. You could operate a more intensive growing season - which might require bringing in polytunnels and perhaps permanent greenhouses. You could set up a sales operation to sell directly to customers - and make it the seed of a new garden centre operation.
Whatever your plans, if you are ready to make the most of your skills and take your business to a new level there are several areas that you will need to look at. The first step is to prepare a detailed business plan, which shows what you want your business to achieve - and how you will achieve it.
“A detailed business plan is vital in this business - because there are so many variables. Once you have written down your plans, it can be a lot easier to make them happen.”
Every business is different and will need a different growth plan, that takes into account your existing assets and your ambitions.
Land and buildings
With a small horticultural business that is being run as a sideline you may be able to avoid the costs of land and barns, but you will be faced with real costs when you seek to expand.
This will immediately mean two types of potential investment. Buying land, and building greenhouses and barns and possible retail facilities.
Most businesses can use a Commercial mortgage to acquire land that has buildings, but this may not be appropriate for acquiring land.
An Agricultural Mortgage may be the solution. These are a specialised loan product for the farming industry, with the loan secured by the land itself. They can be used to finance the purchasing of a farm, a farm building or fund improvements or extensions to existing farm properties or associated land.
Building the barns and processing areas you need for your future development over the next few years will be more cost-effective than buying buildings on a piecemeal basis - although with kit-style buildings it can be practical to add new units as you need them.
Buying land is costly - it may determine the direction your business takes for years to come
Your business may require equipment that ranges from the retail displays and lighting of a garden centre to tractors, automated watering systems and greenhouses.
Fortunately, Asset Finance can help make equipment affordable, by spreading the costs over time, with the lending you need secured on the equipment (or assets) themselves. This means that if you were unable to make the repayments the lender would simply repossess the asset. This can reduce your costs - lower risk to the lender means lower interest rates to you.
Asset finance includes both Hire purchase - which can help you spread the cost of equipment you want for the long term and leasing. Leasing works much like renting and can allow you to work with the equipment you need without any kind of upfront cost- simply a predictable monthly payment which can cover maintenance as well as the use of the equipment itself.
Asset Finance is versatile - it can be set up to cover secondhand equipment, which can be an important advantage when you are trying to expand your business while keeping costs under control.
Bringing in equipment can be the simplest way to increase the amount of work you do - and to grow your business
There will be energy costs for many types of growing - and for garden centre businesses. There will be suppliers costs, for seeds and consumables. But the main ongoing expense may be covering the costs of staffing your business - providing your workers’ wages while you are waiting for your payments -r even your customers if you are retailing - to come in. Even school leavers starting apprenticeships expect the national minimum wage of £170 a week. This figure applies to all 16 to 18-year-olds and older people in the first year of their apprenticeship.
Skilled staff such as supervisors and quality-control managers typically earn between £20,000 and £30,000, and salaries for graduate agronomists or senior retailers are £30,000 to £40,000.
Providing these ongoing costs can be a problem as your business will have seasonal highs and lows - but the bills will keep coming in all year round. Working Capital Loans can ensure that you have the cashflow you need to deal with the ongoing costs and cover your operations until you can start generating real profits.
“There are year-round costs, and income is very seasonal - so getting a financial safety net is essential.”
Why you need Rangewell to find finance for your horticultural operation
The horticultural sector is well established in the UK, but with changing attitudes to the environment and to leisure times, but it has many opportunities for niche businesses, and for those businesses to grow.
You need a funding expert on your side if you are to enjoy that potential growth. At Rangewell we can work with you to identify your funding needs, and to develop financial packages which will answer them.
We can help identify the most appropriate funding for each purpose as you grow, and find the most appropriate lenders to provide them.
If you are looking at the potential of growing up a business in the horticultural industry or considering growth or diversification, find out about plants and horticulture service financing - or simply call us now to get our experts working for you.
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