1. BUSINESS MANAGEMENT

2. Business Management Definitions  Management: Directing of labor resourcesDirecting of labor resources utilization of resources/materialsutilization of resources/materials production decisionsproduction decisions  Labor: implementation of management decisionsimplementation of management decisions

3. Departmentalization Example Owner(s) or board of directors General Manager Engineering Manager Production Manager Marketing Manager Business affairs Manager Source: Nelson, P.V. 1998. Greenhouse operations and management. 5th ed. Prentice-Hall Inc.

4.  Production manager crop production/scheduling/recordscrop production/scheduling/records production materials ordering/storingproduction materials ordering/storing production labor schedulingproduction labor scheduling  Marketing manager sales/promotions/recordssales/promotions/records order “pulling”, packaging, and deliveryorder “pulling”, packaging, and delivery  Engineering manager maintains physical plant, structures and equipmentmaintains physical plant, structures and equipment may include shop for custom-building equipment/buildingmay include shop for custom-building equipment/building  Business administration manager financial recordingsfinancial recordings purchasing, billing, and payrollpurchasing, billing, and payroll

5. Greenhouse “Evolution”  Up to about 60,000 ft 2 owner/managerowner/manager laborerslaborers secretary/bookkeepersecretary/bookkeeper  Above 60,000 ft 2 owner/marketing manager? engineering manager?owner/marketing manager? engineering manager? production managerproduction manager growersgrowers business officebusiness office Business Management

6. Business Structure  Survival tenets: each employee answers to one person onlyeach employee answers to one person only ownership = full responsibilityownership = full responsibility departmentalize logically and as neededdepartmentalize logically and as needed delegate responsibilitydelegate responsibility complycomply records rulerecords rule

7. Business Management Labor Management  Have clearly defined job descriptions and goals for labor force  Establish effective evaluation and rewards system  Create positive working conditions (physically and mentally)  COMMUNICATIONS

8. Business Management Records  Cultural records include timing (or treatments) and schedules  Plant environment records include temperature/light records, plant/substrate test results, insect & disease scouting  Production records are “timing notes” and visual assessments (digital photographs!)  Pesticide application records/ WPS/govt. compliances

9. A Typical Cultural Schedule Record Placed at the End of a Bench in the Greenhouse Greenhouse sectionBenchesCropCultivar Date scheduled Date accomp lished Operation Employee 3-7 Plant 7” x 8” 3-7 Fertilize, half strength 3-7 Start lighting at night 3-14 Fertilize and spray 3-21 Fertilize and spray 3-28 Pinch 3-28 Fertilize and spray 4-4 Fertilize and spray 4-11 Fertilize and spray 4-18 Fertilize and spray 4-18 Start shading 4-19 Prune plants back to 2 or 3 shoots 4-25 Fertilize and spray 5-2 Fertilize and spray 5-9 Fertilize and spray 5-16 Fertilize and spray 5-23 Fertilize and spray 5-30 Fertilize and spray 5-30 Disbud 6-6 Fertilize and spray 6-13 Spray 6-20 Spray 6-24 Harvest

10. Business Management Financial Records  Income  Expenses: variable costs (fertilizer, pesticides, substrate, containers, labels, boxes/packaging, seed/cuttings, labor)variable costs (fertilizer, pesticides, substrate, containers, labels, boxes/packaging, seed/cuttings, labor) fixed costs (depreciation of equipment and buildings, interest, repairs/maintenance, taxes, insurance, office expenses, telephone, accounting/legal fees, travel and dues, management salaries, fuel, electricity)fixed costs (depreciation of equipment and buildings, interest, repairs/maintenance, taxes, insurance, office expenses, telephone, accounting/legal fees, travel and dues, management salaries, fuel, electricity)  Labor Potting, Watering, Spraying, Pinching, HarvestingPotting, Watering, Spraying, Pinching, Harvesting

11. Cost Analysis Sheet for an Individual Crop Listing Expenses, Revenues, Profits or Loss Source: Nelson, P.V. 1998. Greenhouse operations and management. 5th ed. Prentice-Hall Inc.

12. Labor 34.8% Selling 17.8% Cultural Products 14.5% Heat 8% Depreciation 5.5% Upkeep & Repair 3% Property Tax 3% The relationship of each production and marketing expense to the total expense (based on fresh-flower and pot-plant growers from Wisconsin and Michigan) Source: Grimmer, 1975. Greenhouse cost accounting.

13. Business Management Cost Analysis  Statement of cash flow (monthly) day-to-day ability to pay debtsday-to-day ability to pay debts  Balance sheet (annually) assets (cash, equipment, stock, etc.)assets (cash, equipment, stock, etc.) liabilities (outstanding loans, interest, etc.)liabilities (outstanding loans, interest, etc.)  Income statement revenuesrevenues expensesexpenses

14. Planning for Profit Increase  Profit depends on management of expenses and the production of revenue revenue can be increased by:revenue can be increased by: higher productivityhigher productivity higher quality product (if not currently meeting market standards)higher quality product (if not currently meeting market standards) more profitable market channelsmore profitable market channels rising prices (small increases and only if justified)rising prices (small increases and only if justified) lower expenseslower expenses

15. What Is the Economic Impact of Rising Expenses on Profits?  Enterprise budgets determine profitsdetermine profits analysis of breakevenanalysis of breakeven If a factor of production was increased one-percent, what is the anticipated percentage change effect on profit? Study by Stegelin, F. 2001. Southeastern Floriculture 11(2)

16. A “1%” Increase in … Results in a... % Change in Planned Profit Price received per flat+16 Yield or % of crop sold as marketable+25 Production materials expense-8 Production labor (man-hours in greenhouse)-11 Labor wage rate-5 Equipment investment-4 Management cost-4 Cost of cuttings for rooting-4 Marketing costs-2 Interest rate on operating loans -2 Utility rate for heating (natural gas) -2 Crop: bedding plant flatsShrinkage: 10% Greenhouse Size: 30’x 90’ Labor wage: $7.00/hr (including benefits) Space utilization: 85% Management Fee: $15,000

17. Bodie Pennisi Paul Thomas Forrest Stegelin Copyright , 2003 The University of Georgia Department of Horticulture Department of Agricultural and Applied Economics