The market has been great for the green industry, but the good times won’t last forever. Jeff Pettit is the chief financial officer of Everde Growers. At his session “Don’t go bust on the boom,” he will provide business strategies to navigate these tricky times.
How long do you expect the boom to continue? Has the market already turned?
Our company has seen pretty strong demand in all of our sales channels: retail, landscape, independent garden centers, rewholesalers. As terrible as it’s been, COVID has opened up a customer base of these do-it-yourself-ers, about 20 million of them across the country. That said, we’re not immune to the recent supply chain issues and cost increases. But despite that, demand has been relatively strong, so we’re encouraged.
Costs are rising everywhere. How has this affected the market?
Costs have increased dramatically for freight and transportation. The ability for our industry to order and receive timely and complete orders has been very inconsistent for the past several months. The steadiness has seemed to improve from six months ago. It’s still far from perfect, but we have seen some recent improvement.
The cost increases have driven our industry to raise prices for our products. We’ve done that, and so far, as best we can tell from our customers, it has not dramatically deterred the demand for trees, plants or shrubs.
The other thing that you don’t necessarily see in your financial statements is the increase in soft costs. What I mean by that is managing your disruptions. These are new business challenges, like having a bunch of back orders you didn’t expect, or having late deliveries, or trouble getting drivers for your shipments. Managing those things used to be more automatic, but now require us to spend more time, which means there’s more cost involved there that you might not see.
What are some strategies green industry businesses should consider adopting to deal with today’s market?
First, get to know your inventory. Understand what you have to sell today. Depending on your segment of the market, what do you have ready to sell today, what will be ready in 6 months, 12 months and beyond? What you don’t want to do is sell everything now and leave a void in the market. We definitely don’t have a crystal ball. A void like that could mean more demand and higher prices. On the flip side, it could allow customers to forget and effectively reduce demand for the market.
Some nurseries are flush with cash after two strong sales years. How should they spend it? SHOULD they spend it?
Stay the course that’s brought you success to this point. If you have extra cash, consider investing in mechanization or equipment and projects that drive efficiency and productivity.
What can attendees expect to learn at your talk?
I’m going to throw out a few strategies that companies should consider to optimize their growth in our industry, but attempting not to overextend their resources. One of our golden rules is sell what you produce and produce what you sell. You’ve seen your business increase 50 percent in the last two years. That doesn’t mean you should propagate or grow 50 or 100 percent more to meet the demand. Boom, the economy changes, costs go up. People get a little more cognizant of those costs and they might pull back some. Then you’re left with too much product. Are you going to scrap it, fire-sale it, reduce your prices and flood the market? Don’t throw out all your business fundamentals and just expand like crazy no matter the cost. That’s when you get into trouble. We always look at what the market’s telling us. What’s our capacity to produce and what does the market call for? Then we sync up our production plans with our sales plans.
Want to go?
Don’t go bust on the boom
Sunday, July 17 • 11:00 a.m. – 12:00 p.m.; Room: C160A
SOURCE: https://www.nurserymag.com/article/questions-with-jeff-pettit/
