George
R. Perkins
Economic I
Carolyn Almeter
-\
N.
I.
Business Analysis of La*ndscape
Nurseries in Florida, 1973
Food and Resource Economics Department
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611
August 1975
on
38
ACKNOWLEDGMENTS
Special appreciation is expressed to the nurserymen who furnished
figures on their business operations on a confidential basis and for
the time they spent explaining them and answering questions. Thanks
are also due to the county extension agents who assisted in collecting
the data. It is hoped that the business analysis will give nurserymen
--those who did not participate in the program as well as those who
did--a useful basis of comparison for appraising their business and
making better management decisions.
TABLE OF CONTENTS
Page
ACKNOWLEDGMENTS. . . . .. .. .. ... i
LIST OF TABLES . . . . ... ... ii
LIST OF FIGURES. . . . .. . .. iii
INTRODUCTION . . . ... .. .. ... 1
DEFINITION OF TERMS . . . . . 2
DATA PRESENTATION. . . . .. . 2
LIST OF TABLES
Table
1 Size of business for three large volume and three
smaller volume landscape nurseries in Florida, 1973. 4
2 Rates of production, three large volume and three
smaller volume landscape nurseries in Florida, 1973. 5
3 Labor efficiency, three large volume and three smaller
volume landscape nurseries in Florida, 1973. . 5
4 Efficiency in the use of capital, three large volume
and three smaller volume landscape nurseries in Florida,
1973 . . . . . . 6
5 Efficiency in use of space, three large volume and
three smaller volume landscape nurseries in Florida,
1973 . . . . . . 7
6 Comparison of certain cost and returns measures, three
large volume and three smaller volume landscape nurseries
in Florida, 1973 . . . . 8
7 Average dollar costs per nursery for various categories
of expense, for three large volume and three smaller
volume landscape nurseries in Florida, 1973. ... 9
8 Percent of total costs for various categories nf expense,
three large volume and three smaller volume landscape
nurseries in Florida, 1973 .. .... .. ........ 10
Table Page
9 Average costs per dollar of sales with sales
adjusted for plant inventory change, three large
volume and three smaller volume landscape nurseries
in Florida, 1973 . . . 12
10 Average costs per dollar of sales without adjust-
ment of sales for plant inventory change, three
large volume and three smaller volume landscape
nurseries in Florida, 1973. . . ... 13
11 Income summary, three large volume and threesmaller
volume landscape nurseries in Florida, 1973 . 14
12 Factors usually associated with level of profit,
three high profit and three lower profit landscape
nurseries in Florida, 1973 ... . . 15
13 Degree of association between level of profit and
factors which seemed related to it, six landscape
nurseries in Florida, 1973. ... . .. 16
14 Range of figures on profits and eight factors
usually associated with profits, six landscape
nurseries in Florida, 1973. .... . 17
15 Comparison of business analysis factors for six
years for same eight Florida landscape nurseries
which furnished data for 1968, 3969, 1970. 1971,
1972 and 1973 . . . ... .18
LIST OF FIGURES
Figure
1 As the total score on the first eight factors in Table
13 goes up, the profit usually goes down, six landscape
nurseries in Florida, 1973. . . ... 19
BUSINESS ANALYSIS OF LANDSCAPE NURSERIES IN FLORIDA, 1973
George R. Perkins and Carolyn Almeter
INTRODUCTION
Data for this report were collected through personal interviews
with participating nurseries. The cooperating nurseries were not
selected on a statistical sampling basis. Many of the nurseries
joined the survey when it was started several years ago and have con-
tinued to participate. Each year some new nurseries wishing to part-
ticipate are included in the analysis and those desiring to discon-
tinue are eliminated. The data refer to the 1973 tax year which may,
in some instances, not strictly conform to the 1973 calendar year.
In order to assemble the tables which follow in this report, a
set of figures, developed from comparable data from each cooperating
nursery, was generated. Data on those nursery operations having more
than one type of business, i.e., container and field, were allocated
in accordance with the way inputs were used. If a nursery production
operation was a part of a landscape business, the landscape portion
was defined as including the entire operation, i.e., other components
as well as the landscape part--in short, the entire business.
The figures for each type of nursery were classified into two
major sections. The first major section contains averages for nur-
series classified by the level or volume produced. The second sec-
tion classifies nurseries by their profit levels. Within each major
section, the tables were divided into specified information, i.e.,
rate of production, level of profit, etc.
Those nurseries having sales in excess of $480,000 were classified
as large volume operations and those having sales less than $325,000
GEORGE R. PERKINS was formerly extension economist and assistant
professor of food and resource economics. CAROLYN ALMETER is a statis-
tical aide in the Food and Resource Economic Department.
were designated as small volume. Each table has figures selected as
"the one best measure" followed by "other useful indicators" which
may be significant to nurserymen.
DEFINITION OF TERMS
Most of the terms used in the tables are self-explanatory. Those
which may need some explanation are defined below.
Total sales of services, plants, materials, etc.--Includes plants
and materials sold and income from landscaping services. Does not
included plants purchased for immediate resale.
Percent of capital turnover annually--Calculated by dividing the
value of own plants sold by the total capital.
Labor income--Calculated by subtracting total gross costs from
total gain.
Nursery "farm income"--Labor income plus interest on investment.
This is the return to the operator for his management .and capital.
Net return--Labor income minus operator's salary.
Return to capital--Nursery farm income minus operator's salary.
Percent return to capital--Return to capital divided by total
capital owned.
Percent plant turnover--Square feet equivalent of own plants sold
divided by average square feet of own plants in production.
DATA PRESENTATION
The data in Tables 1 through 12 relate to size of business, rates
of production, labor efficiency, efficiency in the use of capital, effi-
ciency in the use of space, costs and returns, income, and other factors
for nurseries classified by size or volume of sales. Various analyses
relating to profit are shown in Tables 13, 14, and 15.
Table 16 denotes profit indicators for nurseries which have been
included in the study since 1968. An almost steady improvement in their
profit picture can be seen. Most nurseries cooperating in the program
made modest but constant progress; a few reported losses while still
others progressed a great deal. It is not claimed that the progress
made is due to their participation in this business analysis program.
Actually, more than half of all the nurseries surveyed showed improve-
ments in earnings. The study does, however, show each cooperating
3
nursery how it compares with respect to each factor in the analysis.
In Figure 1 each nursery is ranked by nursery farm income and a
summary of the factors associated with profit. As the total score
goes up, the total profit goes down. The upward sloping line indi-
cates that those nurseries which score poorly on certain management
factors also rank low on profits.
a
Table i.-- Size o business for three large volume and three smaller
volume landscape nurseries in Florida, 1973
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
One best measure
Total sales of services,
plants, materials, etc.
Other useful indicators
Total sales above adjusted
for plant inventory change
Sq. ft. equivalent own
plants sold
Sq. ft. equivalent own
plants sold adjusted for
plant inventory change
Average sq. ft. of own
plants in production
Average acres equivalent
own plants in production
Average number of employees
Average hours estimated
employee time
Capital owned
Growing plants
Land
Machinery & equipment
Bldgs., fences, wells, etco
Supplies
Total owned capital
Capital managed
Growing plants
Land
Machinery & equipment
Bldgs, fences, wells, etc.
Supplies
Total managed capital
$648,647$1,103,075
$615,795$1,020,934
296,683 540,513
281,657 500,264
1,141,836 2,060,552
26.21
40.83
47.30
70.65
$194,220
$210,657
52,853
57,326
223,121
5.12
11.00
84,926 146,952 22,880
$230,516
29,244
53,747
46,315
149q20
$366,480
45,984
93,002
86,941
21.514
$ 94,552
12,505
14,492
5,690
8.326
$
sq.
sq.
sq.
acre
hour
$
$374,743 $613,921 $135,565 $
$230,516 $366,480 $ 94,552 $
74,102 131,462 16,742
53,747 93,002 14,492
46,315 86,941 5,690
14 920 21,514 8,326
$419,600 $699,399 $139,801
$
The large volume nurseries each had annual income from services,
plants and other materials in excess of $480,000.
bThe smaller volume nurseries each had annual income from services,
plants and other materials less than $325,000.
Table 2.--Rates of production, three large volume and
volume landscape nurseries in Florida, 1973
three smaller
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
One best measure
Sq. ft. equivalent of own plants
sold adjusted for plant inventory
change per acre in production
Other useful indicators
Sq. ft, equivalent of own plants
sold per acre in production
Total sales adjusted for plant
inventory change per acre in
production
10,745 10,576 11,192 sq. ft.
11,318 11,426 10,318
$23,492 $21,538 $41,127
sq. ft.
Table 3.--Labor efficiency, three large volume and three smaller volume
landscape nurseries in Florida, 1973.
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
One best measure
Total sales of ::rvices,
-lants, materials, etc.,
per employee $15,887
Other useful indicators
Total sales of services, plants
materials, etc. adjusted for plant
inventory change per employee $15,082
Sq. ft. equivalent of own plants
sold per employee 7,266
Sq. ft. equivalent of own plants
sold adjusted for plant inventory
change per employee 6,898
Average sq. ft. in production per
employee 27,966
$15,613 $17,656 $
$14,451 $19,151 $
7,651
7,081
4,805
sq. ft.
5,211 sq. ft.
29,166 20,284 sq. ft.
aNurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
---------------
a
Table 4.--Efficiency in usp of capital three large volume and three smaller
volume landscape nurseries in Florida, 1973
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
One best measure
Percent of own capital
turnover annually
Other useful indicators
Percent of managed capital
turnover annually
Capital owned
Per employee
Per acre
Capital managed
Per employee
Per acre
Capital managed investment
per employee in
Plants
Land
Machinery & equipment
Capital managed i:vestmen.:
per acre in
Plants
Land
Machinery & equipment
Percent of capital] ma-,red in
Plants
Land
Machinery & equipment
Bldgs., fences, wells, etc.
Supplies
Total
173.09 179.68 143.27
154.59 157.72 138.93
$ 155
14,296
158 $ 12,324
12,978 26,466
$ 10,277 $ 9,899
16,007 14,785
$ 5,646
1,81.5
1,316
$ 8,794
2,827
2,050
54.94
17.66
12.81
11.04
3.56
100.00
$ 5,187
1,861
1,316
$ 7,747
2,779
1,966
52.40
18.80
13.30
12.43
3.08
100.00
$ 12,709
27,294
$ 8,596
1,522
1,317
$ 18,459
3,268
2,829
67.63
11.98
10.37
4.07
5.96
100.00
aNurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
$
$
$
$
$
$
Table 5.--Efficiency in use of space, three large volume and three
smaller volume landscape nurseries in Florida, 1973
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
One best measure
Percent of production area (or
plant) turnover annually 25.98 26.23 23.69 %
Other useful indicators
Percent plant turnover with
sq. ft. equivalent of own plants
sold adjusted for plant inventory
change 24.67 24.28 25.69 %
Average value of plant inventory
per acre in production $8793.97 $7747.37 $18459.45 $
aNurseries with annual sales in excess of $480,000
Nurseries with annual sales less than $325,000
Table 6.--Comparison of certain cost and r turns measures, three large
volume and three smaller volume landscape nurseries in
Florida, 1973
Average Average Average
Item all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
Returns
Total sales of services,
plants, materials, etc. per
hour of employee time $7.64 $7.51 $8.49 $
Costs
Total costs pe5 hour of
employee time $7.72 $7.65 $8.19 $
Difference between
Total sales and costs per
hour of employee time $-.09 $-.15 $ .30 $
Price goal
Total sales per hour of
employee time which would
have been required to yield
a 15% return on investment
(not including plant inventory
increase as part of return). $8.12 $8.03 $8.72 $
aNurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
CCalculated by dividing item 8 in Table 1 into item 1 of that table.
dCalculated by dividing item 8 in Table 1 into total costs in table
Table 7. Average dollar costs per nurserX for various categories of
expense, for three large volume and three smaller volume
landscape nurseries in Florida, 1973
Average Average Average
Items of cost all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
---------------Dollars---------------
Cash costs
Materials and supplies 178,616 307,349 49,883
Wages, salaries and commissions 268,443 479,592 57,294
Operators' salaries 25,433 35,505 15,362
Equipment operating expense 20,354 34,358 6,349
Insurance 20,293 35,138 5,448
Taxes, licenses and bonds 11,017 10,253 11,782
Advertising 7,372 10,645 4,099
Repairs 24,304 43,233 5,376
Utilities 8,999 11,114 6,883
Rent-land and/or buildings 7,083 14,167 0
Other expenses 40,666 70,561 10,771
Total cash costs 612,580 1,051,914 173,246
Non-cash costs
Depreciation machinery & equip. .16,376 28,090 4,661
Depreciation buildings, etc. 4,554 7,779 1,328
Inventory decrease on supplies 0 0 0
Interest on capital @ 6% 22,485 36,835 8,134
Total non-cash costs 43,414 72,705 14,122
Total all costs 655,994 1,124,619 187,368
aNurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
Table 8.--Percent of total cRsts for various categories of expense,
three large volume and three smaller volume landscape
nurseries ,in Florida, 1973
Average Average Average
Items of cost all 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
---------------Percent--------------
Cash costs
Materials and supplies 27.23 27.33 26.62
Wages, salaries and commissions 40.92 42.64 30.58
Operators' salaries 3.88 3.16 8.20
Equipment operating expense 3.10 3.06 3.39
Insurance 3.09 3.12 2.91
Taxes, licenses and bonds 1.68 .91 6.29
Advertising 1.12 .95 2.19
Repairs 3.70 3.84 2.87
Utilities 1.37 .99 3.67
Rent--land and/or buildings 1.08 1.26 0
Other expenses 6.20 6.27 5.75
Total cash cost 93.38 93.54 92.46
Non-cash costs
Depreciation machinery & equipment 2.50 2.50 2.49
Depreciation buildings, etc. .69 .69 .71
Inventory decrease on supplies 0 0 0
Interest on capital @ 6% 3.43 3.28 4.34
Total non-cash costs 6.62 6.46 7.54
Total all costs 100.00 100.00 100.00
aNurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
Table 9.--Average costs per dollar of sales with sales adjusted for
plant inventory change, three large volume and three smaller
volume landscape nurseries in Florida, 1973
Average costs per $ sales with sales
Items of cost adjusted for plant inventory change
All 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
----------------Cents-------------
Cash costs
Materials and supplies 29.01 30.10 23.68
Wages, salaries and commissions 43.59 46.98 27.20
Operators' salaries 4.13 3.48 7.29
Equipment operating expense 3.31 3.37 3.01
Insurance 3.30 3.44 2.59
Taxes, licenses, and bonds 1.79 1.00 5.59
Advertising 1.20 1.04 1.95
Repairs 3.95 4.23 2.55
Utilities 1.46 1.09 3.27
Rent--land and/or buildings 1.15 1.39 0
Other expenses 6.60 6.91 5.11
Total cash costs 99.48 103.03 82.24
Non-cash costs
Depreciation machinery & equipment 2.66 2.75 2.21
Depreciation buildings, etc. .74 .76 .63
Inventory decrease on supplies 0 0 0
Interest on capital @ 6% 3.65 3.61 3.86
Total non-cash costs 7.05 7.12 6.70
Total all costs U10b.3 11U.16 88.94
aNurseries with annual sales in excess of $480,000.
hNurseries with annual sales less than $325,000.
Table 10.--Average costs per dollar of sales without adjustment of sales
for plant inventory change, three large volume and three
smaller volume landscape nurseries in Florida, 1973
Average costs per $ sales without adjust-
Items of cost ment of sales for plant inventory changes
All 6 3 large 3 smaller Your
nurseries nurseries nurseries nursery
-----------------Cents---------------
Cash costs
Materials and supplies 27.54 27.86 25.68
Wages, salaries and commissions 41.39 43.48 29.50
Operators' salaries 3.92 3.22 7.91
Equipment operating expense 3.14 3.11 3.27
Insurance 3.13 3.19 2.81
Taxes, licenses, and bonds 1.70 .93 6.07
Advertising 1.14 .97 2.11
Repairs 3.75 3.92 2.77
Utilities 1.39 1.01 3.54
Rent--land and/or buildings 1.09 1.28 0
Other expenses 6.27 6.40 5.55
Total cash costs 94.44 95.36 89.20
Non-cash costs
Depreciation machinery & equipment 2.52 2.55 2.40
Depreciation buildings etc. .70 .71 .68
Inventory decrease on supplies 0 0 0
Interest on capital @ 6% 3.47 3.34 4.19
Total non-cash costs 6.69 6.59 7.27
Total all costs 101.13 101.95 96.471
ANurseries with annual sales in excess of $480,000.
bNurseries with annual sales less than $325,000.
Nurseries with annual sales less than $325,000.
Table l1.--Income summary, three large volume and three smaller volume
landscape nurseries in Florida, 1973
Average Average Average
Item all 6 3 large 3 satllet Your
nurseries nurseries nurseries nursery
Value of production & other gain
Income from services, plants
materials, etc. 648,647 1,103,075 194,220 $
Inventory increase own plants -32,852 -82,141 16,437
Inventory increase for supplies 3,477 5,865 1,089
Miscellaneous cash income 7,776 13,550 2,003
Total gain 627,049 1,040,349 213,749 $
Cash costs less operator's
salary (from Table 7) 587,147 1,016,409 157,884 $
Non-cash costs (from Table 7) 43,414 72,705 14,122
Total gross costs 630,560 1,089,114 172,006 $
Labor income -3,512 -48,766 41,742 $
Interest on investment
(from Table 7) 22,485 36,835 8,134 $
Nursery "Farm income" 18,973 -11,930 49,876 $
Operator's salary (from Table 7) 25,433 35,505 15,362 $
Net return -28,945 -84,271 26,381 $
Return to capital -6,460 -47,435 34,514 $
Percent return to capital
(Table 1) -1.72% -7.73% 25.46% %
Cents per hour of employee time
Labor income (Table 1) -4. -33. 182.
Nursery "Farm income"
(Table 1) 22. -8. 218.
Net return (Table 1) -34. -57. 115.
Return to capital (Table 1) -8. -32. 151.
a
Nurseries with annual sales in excess of $480,000.
burseries with annual sales less than $325,000.
Nurseries with annual sales less than $325,000.
Table 12.--Factors usually associated with level of profit, three high
profit and three lower profit landscape nurseries in Florida,
1973
3 high 3 lower
Factor profit profit Your
nurseries nurseries nursery
Profit
Nursery farm income
Sales & inventory gain
Gain in sales & plant inven-
tory value over previous
year
Level of cost
Cost per $ of sales and plant
inventory value increase
Size of business
Total sales of services,
plants, materials, etc.
Sales price level
Difference between sales value
& costs per hour of employee
time
Production rate
Sq. ft. equivalent own plants
sold adjusted for plant inventory
change per acre in production
Labor efficiency
Total sales per employee $
Capital use efficiency
Percent of capital turnover
Space use efficiency
Percent plant turnover
$ 65,511
$ 61,824
77.71C
$-27,565
$ 17,557
113.21C
$248,894 $1,048,401
1.150
10,645
22,869
114.82%
-.24,
14,144
$ 18,452
214.41%
22.87% 35.91%
$
$
sq.
$
Table 13.--Degree of association between level of profit and factors
which seemed related to it, six landscape nurseries in
Florida, 1973
Number and percent of the Rank of your
Factor 3 highest profit nurseries nursery
which were in the best on on each
each factor factor.
Number Percent
Profit
Nursery farm income 3 100
Sales & inventory gain
Gain in sales & plant inven-
tory value over previous
year 2 67
Level of cost
Cost per $ of sales and plant
inventory value increase 3 100
Size of business
Total sales of services,
plants, materials, etc. 1 33
Sales price level
Difference between sales value
& costs per hour of employee
time 3 100
Production rate
Sq. ft. equivalent own plants
sold per acre in production 1 33
Labor efficiency
Total sales per employee 1 33
Capital use efficiency
Percent of capital turnover 0 0
Space use efficiency
Percent plant turnover 1 33
Total score for your nursery on
the above eight factors which
are usually related to profit
Table 14.--Range of figures on profits and eight factors asually-associ-
ated with profits, six landscape nurseries in Florida, 1973
Average figures for the 3 best and
Factor the 3 poorest nurseries on each factor
Average for Average for Your
3 best 3 poorest nursery
Profit
Nursery farm income
Sales & inventory gain
Gain in sales & plant inven.
value over previous year
Level of cost
Cost per $ of sales and plant
inventory value increase
Size of business
Total sales of services,
plants, materials, etc.
Sales price level
Difference between sales value
& cost per hour of employee time
$ 65,511
$132,110
77.710
$1,103,075
1.15
Production rate
Sq. ft. equivalent own plants sold
adjusted for plant inventory change
per acre in production 15,226
Labor efficiency
Total sales per employee
Capital use efficiency
Percent of capital turnover
Space use efficiency
Percent plant turnover
$ 26,529
214.41%
9,564
$ 14,791
114.82%
37.96% 20.82%
$-27,565
$-52,729
113.21%
$194,220
$
$
$
sq.
$
37.96%
20.82%
Table 15.-Comparison of business analysis factors for six years for same eight Florida landscape
nurseries which furnished data for 1968, 1969, 1970, 1971, 1972, and 1973
Average for the same 3 nurseries in:
Factor Unit 1968 1969 1970 1971 1972 1973
Profit
Nursery farm income
Percent return to capital
Sales & inventory gain
Gain in sales and plant
inventory value increase
Level of cost
Cost per $ sales and plant
inventory value increase
Size of business
Total sales of services,
plants, materials, etc.
23,630
15.29
$ 12,897
S 93.56
$ 98,697
27,044
15.09
28,863
93.96
127,435
31,715
16.02
12,330
92.68
41,223
17.11
23,038
90.11
41,316
14.07
89,492
95.60
65,140
22.42
78,773
90.82
134,775 141,576 240,636 304,798
Sales price level
Difference between sales value
& costs per hour of employee
time, not considering inventory
increase part of income
Production rate
Sq. ft. equivalent own plants adjusted
for plant inventory change per
acre in production sq. ft. 10,049
Labor efficiency
Total sales per employee
Capital use efficiency
Percent of capital turnover
Space use efficiency
Percent plant turnover
$ 13,195
% 133.45
10,223
15,636
139.62
14,084 14,510
15,008 12,485
121.12
92.25
% 22.00 22.59 30.11
-.15
10,499
18,770
127.41
11,666
24,462
144.37
29.29 23.15 25.27
S40 -
040
4O
Ln I
O 00
m
20 -
0
2
4-4
0
O
rl4
0
0 .
0 1 2 3 4 5 6
to
0
E high low
Rank in level of profit
Figure 1.--As the total score on the first eight factors in Table 13, goes
up, the profit usually goes down, six landscape nurseries in
Florida, 1973
*i-
Eo)' h o
IMki lv1ofpoi
0 iuel-A h oa cr ntefr~ ih atr nTbe1,ge
Q) h rftuullrge on i ansaenreisi
}-lia 17
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