Cornell Greenhouse Business Summary, 2000

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Cornell Greenhouse Business Summary, 2000 -
Growing Greenbacks in Your Greenhouse
Wen-fei Uva and Steve Richards Department of
Applied Economics and Management Cornell
University
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Growing Greenbacks in Your Greenhouse

• HOW?
• Enhancing Business Performance

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Enhancing Business Performance

• Step 1 Keep Good Records
• Step 2 Construct Financial Statements
• Step 3 Calculate Financial Ratios
• Step 4 Benchmark Ratios with yourself, other
  businesses, and entire industry
• Step 5 Set Goals to improve business
• Step 6 Repeat process at least 1x year

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Part 1 Financial Management

• Step 1 Keep Good Records
• Step 2 Construct Financial Statements
• Step 3 Calculate Financial Ratios

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The Cornell Greenhouse Business Summary

• Started from a grant to improve Greenhouse
  Competitiveness in NYS.
• 30 Farms participated in 2000 2001.
• I encourage you to participate

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The Cornell Greenhouse Business Summary

• Step 1 Bookkeeping--Up to you
• Step 2 Statements--Done for you
• Step 3 Ratios--Done for you
• Step 4 Benchmarks--Done for you
• Step 5 Set GoalsUp to you
• Step 6 RepeatUP to you

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2000 Greenhouse Businesses Profile

• 29 New York Greenhouses
• 12 Eastern NY
• 11 Central NY
• 6 Western NY
• Marketing Channel
• 14 mainly wholesale, 15 mainly retail
• Major Crops
• 21 produced mainly bedding/garden plants
• 5 produced mainly potted flowers
• 1 greenhouse vegetables herbs
• 1 propagative material, 1 cut flowers

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Size of Greenhouses Surveyed
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• Scope of Greenhouse Study

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Wholesale Greenhouse 2000 Income Statement
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Cost of Goods Sold Wholesale

• Labor 44
• Plant Material 23
• Packaging Materials 11
• Heating 6
• All Other COGS 16

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Overhead Expenses Wholesale

• Land Rent 18
• Repairs 18
• Depreciation 17
• Insurance 12
• Interest 12
• Other Overhead 23

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Retail Greenhouse 2000 Income Statement
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Cost of Goods Sold Retail

• Labor 37
• Plant Material 27
• Hard Goods 7
• Heating 6
• All Other COGS 23

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Overhead Expenses Retail

• Depreciation 20
• Insurance 18
• Miscellaneous 15
• Interest 13
• Repairs 11
• Other Overhead 23

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Average Balance Sheet
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Average Cash Flow Statement
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Part 2 Industry Benchmarking

• Step 4 Benchmark Ratios with yourself, other
  businesses, and entire industry
• Step 5 Set Goals to improve business
• Step 6 Repeat process at least 1x year

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Greenhouse Business Charts

• Each Measure is either a financial ratio or an
  efficiency measure.
• These are calculated from the financial
  statements (IS, BS, CF)
• Your businesses ratios are calculated for you in
  your Greenhouse Business Summary Report.

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Greenhouse Business Charts

• The data are divided into quintiles representing
  the top 20, second 20.
• Each greenhouse business can see where they fall
  in each performance measure.
• Each Column is sorted independently! Best in one
  column may not be best in another!
• The asterisk is the Top 20 of ROA

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Using Business Charts Benchmarking

• Circle the closest number that corresponds to
  your business performance.
• Decide which areas need improvement.
• Set Goals for improvement.

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All GH Business Chart Size
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All GH Business Chart Sales
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All GH Business Chart Labor
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All GH Business Chart Costs
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All GH Business Chart Assets
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All GH Business Chart Profit
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All GH Business ChartProfit
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Part 3 Competitive Enhancement

• Is a huge need in the industry!
• Cooperative Extension Programs
• Greenhouse Financial Mgmt. Program
• Enterprise Budgeting Software from Cooperative
  Extension

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Greenhouse Financial Mgmt. Program Offering

• Walks you through the square foot analysis and
  budgeting process.
• Have presented this program in Erie County
• Contact Walt Nelson about a possible program in
  this area.

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Enterprise Analysis Software

• Helps you allocate fixed costs to products
• Helps you decide about product mix
• Helps you decide whether to grow a certain
  product or not.
• Is a service provided to you by Cooperative
  Extension

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What are Square Foot Weeks?

• Comparing different sized businesses can be
  tricky.
• Volume size weeks of operation
• Square Foot Weeks Sq Ft Weeks Used.

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What are Square Foot Weeks?

• More accurate to compare amounts divided by
  square foot weeks.
• Example Labor Cost /SFW is the total labor cost
  divided by square foot weeks.
• Extremely important in enterprise analysis

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What the Income Statement Leaves out

• Family Living Expenses
• Principal
• Arent included in an income statement, but need
  to be included in enterprise analysis.

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HOW TO Enterprise Analysis

• Step 1 Calculate Total Square Foot Weeks
• Step 2 Calculate amount of SFW a certain product
  is in the greenhouse
• Step 3 Calculate Direct Costs of product
• Step 4 Divide Indirect Costs by SFW
• Step 5 Allocate Indirect costs to product.

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Step 1 Calculate Total Square Foot Weeks
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Step 2 Calculate SFW Needed for Enterprise (ex.
Geraniums)
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Step 3 Calculate Direct Costs
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Step 4 Calculate Indirect Costs (A)
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Step 4 Calculate Indirect Costs (B)
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Step 5 Allocate Costs to Product
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Contact Information

• Walt Nelson [phone]
• Wen-fei Uva [phone]
• Steve Richards [phone]