BY ART VANDEN ENDEN

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Garden centres have been around in Canada for close to 100 years. In fact, there are several that can say they are more than a century old. I am proud that I was given the opportunity to work for one of those businesses for much of my career. 

What does it take to thrive for a generation or more in the garden centre business, or any other business? To be frank, it takes profit. Profit allows a business to survive, expand, and stay ahead of, and on top of changing business trends. Profit enables a business to provide well paying jobs for people where they can raise a family.

Without profit, no growth in your business can occur. What is profit? By definition it is the difference between the revenue a retailer makes through direct sales and the costs incurred through managing the inventory of the goods sold, as well as the other costs of running a business. Quite simply, you need to make sure there is a healthy sum of money left after you have paid for your inventory, paid all of your labour and related expenses, plus other operating costs.
 

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Inventory management

Inventory management is probably the biggest opportunity for cost savings in the garden centre business. Factors such as how much inventory you have, how much you paid for it, how well you maintain it, how accurate your sales are tracked (often through a POS or Point of Sale system), how you manage theft and cashier accuracy, and how much spoilage and surplus you have after a season, is crucial to your profitability. In a seasonal business like ours, the temptation to never sell out creates a strong desire to order too much product. I have witnessed over the years, during the peak season, where nurseries have pushed a bit too hard to get that last order in from suppliers and then (not surprisingly) the demand drops off significantly and they’re left with more than they can sell.
 

Building your team

Labour is generally considered to be the most controllable expense a retail business has. Trust me, I am not preaching to you to cut your labour. Investing in quality staff is critical to providing great service to your customers. And quality really is more important than quantity. I recommend prioritizing better hiring and training, as well as investing in quality equipment and tools to enable your staff to do their jobs well.

When speaking about labour, we also need to talk about health and safety. Employee safety is one of the critical foundations that every business should be built on. I do not like to consider health and safety as an additional business expense. Health and safety fits within good human resources practices as well as business operations. Cleanliness, proper use of appropriate equipment, safe lifting, and hazard reporting, all need to be deeply rooted in your business culture.

 

Operating expenses

Operating expenses are another bucket where miscellaneous costs can be lumped together. This will include: utilities, communication and technology expenses, building and property expenses, and banking and credit card fees. Many of these expenses may seem somewhat fixed, however, there are some savings to be found with focused attention. Look to reduce fuel costs, rental fees for payment devices, rental fees for seasonal equipment, and establish a preventive maintenance program for your trucks, equipment, heaters, and cooling units.

 

Measuring performance

Successful businesses know how well they are performing in real time. In the garden centre business, it is common to track sales, customer count, average basket, gross profit margins, and labour expenses as a percentage of sales to name a few. Knowing your controllable KPIs is critical to being able to forecast where your business is heading. Some KPIs can be shared with staff, while others should be used as a management tool. If an employee can impact a KPI based on their performance, it is generally okay to communicate this with them. In fact, it could also be seen as critical information to ensure employees are aware of your goals and expectations.
 

Key Performance Indicators (KPIs)

Daily: Total sales, category sales, average sale, labour hours used, customer transaction count, gross profit dollars generated.

Weekly: Total sales, category sales, average sale, labour hours used, labour ratio to sales, customer transaction count, gross profit dollars generated, Gross profit margin percentage, scrap and waste reporting.

Monthly and annually: Total sales, category sales, average sale, labour hours used, labour ratio to sales, customer transaction count, gross profit dollars generated, gross profit margin percentage, scrap and waste reporting, operating expenses in dollars and percentage.

Take out the trash

Everything I’ve touched on comes back to reducing waste. While I would not profess to have all of the answers in waste reduction, I can confidently say I never cease to be impressed with how wasteful practices and processes can sneak into a business. There are generally seven different types of business waste: Transportation; Inventory; Motion; Waiting; Overproduction; Over processing; and Defects.

An easy way to remember these different types of waste is the acronym TIMWOOD, or LEAN Management. Every business needs to evaluate waste and develop plans to mitigate it. Unfortunately, many businesses wait until it is too late to go through the exercise. You should not wait for a recession or realize you are losing money only to finally reduce your expenses. In fact, a great business will focus on it every day of the year. It becomes a business mantra to eliminate waste.
 

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Art Vanden Enden loved every minute of his 44-year garden centre career with Weall and Cullen and Sheridan Nurseries. In retirement, Art enjoys giving back to the profession with Landscape Ontario’s Garden Centre Sector Group, and sharing his experience with Landscape Trades readers in the Art of Gardening column.