greenhouse listing

Discussion in 'Homesteading Questions' started by marvella, Mar 9, 2005.

  1. marvella

    marvella Well-Known Member

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    myself and a friend have been considering opening a greenhouse business. yesterday i picked up a copy of homes and land, and lo and behold, there was one for sale. asking price is $100,000. it has 3 hothouses, 1 cold house, large storage building, on 1 1/2 acres, with a creek and plenty of room for expansion. we have an appointment to go take a good look at the place saturday. what i saw was irrigation and fertilizer systems all in place, heated with propane, all on a busy state road, soon to be designated as a scenic route. the place was spotless, and the plants gorgeously healthy, no sign of disease. the owner did say that he wanted more than the 100K if we buy the stock as well. is this a common practice when buying a business? he said he had roughly 40K in plants and trees. he even had it set up to sell water plants, and says he will help us and advise us the first year to get us started.

    so, does this sound like a good deal? it does to me, but i want to be careful too.
     
  2. marvella

    marvella Well-Known Member

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    bump

    gosh, i thought there were a lot of greenhouse people on here. am i asking the wrong questions?
     

  3. Buggs

    Buggs Member

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    I have a hobby greenhouse but that is irrelevant.

    What you need is a bookkeeper to check the books for viability of the business. Greenhouses are a lot of hand labour and you have to be able to handle seasonal employees etc. Are you up to it?

    My opinion is, yes, you would have to purchase the inventories separate from the real estate. But that is only my opinion.
     
  4. fin29

    fin29 Well-Known Member

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    Yeah--you'll want to get copies of the seller's tax filing and look at the gross income vs. the cost of goods sold (seed flats, trees purchased wholesale, potting soil, etc.) and durable goods (new tubing for the irrigation, new cash register, stuff like that) purchased. With that you can get a basic idea of the net profitability of the business. Don't just let him tell you the gross and the net. Get the tax forms themselves.

    Even though your business prowess might be different from the seller's, his bottom line will at least give you an idea of the possibilities--or pitfalls--of taking over the business. And you always have to ask yourself: if business is so good and will only get better, why is he selling?
     
  5. marvella

    marvella Well-Known Member

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    thank you!! i'm taking notes.:) he said he was selling because he is getting older and his wife wants him to downsize. there are storage units right next to it and he is keeping those. one reason we started looking into this idea was because every nursery my friend knows of, is adding greenhouses. and the possibilities seem endless for growth and expansion.

    so, it seems right now like it would be easier to buy an established place, than to start from the ground up? our plan, until yesterday, was to start small and test the market. then i saw this and got to dreaming. it sems like a big jump to go from talking about it to actually considering buying an established business.

    is there anything else i should look out for? the price seems very reasonable to me. what do you think?
     
  6. stanb999

    stanb999 Well-Known Member

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    I hope so .... It's a green house :haha:.

    Go for it and good luck.
     
  7. Windy in Kansas

    Windy in Kansas In Remembrance

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    A couple of red flags pop up for me. You say the nurseries are adding greenhouses.
    While true that the established business will have the edge, you will still probably lose some business share so take that into account when looking at the books.

    You mention that the units are heated with propane. That is as expected, but you must remember that fuel prices are rising rapidly so the net profit of last year may be far different from in years to come.

    You asked us if this is a good buy, but $100,000 + inventory tells us little. Are the houses 4' X 6' or 40' X 100' or as I would expect somewhere in between? Are the units poly covered or ? When were they reskinned last if poly?

    Do you or your potential partner have commercial greenhouse experience? Retail experience? Will you have to hire a grower? Can the two of you handle the maintenance of the facility or will you have to hire it done? There are a lot of electrical items to a greenhouse so there is no doubt that electrical work will have to be done--changing out motors, controls, lights, etc. Can you handle the mechanical needs such as venting shutters that need adjusting from time to time?
    Are either or both of you licensed pesticide applicators? Can you handle the plumbing needs of the facility?

    The owner, in my opinion, has a right to know that you can get financing or have monies BEFORE showing you his books.

    Best wishes for a successful adventure and possible business.
     
  8. fin29

    fin29 Well-Known Member

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    Do the storage units share the same driveway? How will you and he share the upkeep of that if so?

    I would hire an appraiser to come in and value all the equipment. I would also hire an inspector to check for structural issues, drainage, etc. It doesn't take much to ruin a good growing environment.

    In response to Windy's opinion about showing his books, I think it's imperative that you see the numbers before you even think about financing. Any seller who refuses to show you his books unless you're caught up in the euphoria of this being an actual financial possibility is sketchy in my opinion. Plus, if you're thinking about financing any greenhouse endeavor (besides this one), you don't want a ding on your credit report unless you know it's the one.

    I just went through this same thing last year. We found a dream farm--50 acres of tillable riverfront, several outbuildings, tractors, nice house, an established farm store with a devoted clientele, historical appeal--EVERYTHING seemed right. Then we got the tax forms for the business side and that was the end of that. It's a really simple and fast way of making the most important decision about your business--whether it'll make money or not.
     
  9. Windy in Kansas

    Windy in Kansas In Remembrance

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    fin29, your are right about the ding on the credit report. I hadn't thought about that. On the other hand if I were the seller I wouldn't open up my books to just anyone wanting to look at them.

    marvella you mentioned that the highway may or will soon be designated a scenic route. I would expect most of your customers to be local so doubt you would gain from the change.

    Speaking of environmental issues, with pesticides being used and a creek going through the property fin 29 has raised a very valid point to consider.

    Along with propane costs, electricity for all of the fans and lights may well be on the rise too.

    Hm, what else?

    edited to add---- along with other rising costs, consider that nearly all of the trays are plastic and the price of crude oil is going up. I hear that some paint is now $38 a gallon. Can plastic increases skyrocket? I think I saw that crude was above $55 per barrel. On forecast suggested it may reach $80. How will those prices affect the bottom line?

    Please know that we are not trying to discourage you, but are just trying to make you think of all of the possibilities for stumbling blocks so that you can indeed be successful.
     
  10. Ozarkquilter46

    Ozarkquilter46 Well-Known Member

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    You said he has 40,000 in inventory. Make sure the 100,000 encludes the lights heater and so on. inventory should be plants, soil and so forth. You don't want to buy it and then have the greenhouse striped bare. As far as the inventory goes, I would give him 10 cents on the dollar. Tell him you think you could get it at auction for that if he goes that route. He is trying to get evey penny he can. I also after looking at the books would say you know there is alot of compatistion around here. Its not like you have the market heald up and offer 80,000. All he can say is no and give you a counter offer. Or decided to include the inventory :)
     
  11. oz in SC

    oz in SC Well-Known Member

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    Have no knowledge of greenhouse business but one thing to consider regarding his inventory-if you don't buy it he will have to find someone else to take it all off the premises-might be a hard thing for him to find a buyer....

    Also this is business so being hard-nosed is all part of it.

    In the restaurant trade,you pay almost NOTHING for used equipment etc. and it should be the same for you.
     
  12. fin29

    fin29 Well-Known Member

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    I'm with Windy--no discouragement, just feedback. I know all too well the elation you feel when you find that "Big Dream" business or property. But I also know that the disappointment you feel if things fall through is always overshadowed by the pride you feel when you know you made an educated decision. Course, that's all nothing compared to the excitement when you find out that everything actually is as good as it seems.

    Keeping my fingers crossed for you...
     
  13. Windy in Kansas

    Windy in Kansas In Remembrance

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    I'm of the personal opinion that you will HAVE to buy the inventory or you will basically have nothing at all to sell for months. The established trade would probably suffer greatly in the long haul if they came and there was nothing to buy.
     
  14. marvella

    marvella Well-Known Member

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    no, i'mm not discouragd at all. i really want to know bforehand what might happen. but i'm still not sure what you mean by a ding on my credit report?

    one reason this all started was because there are low interest SBA loans available for poor appalachian women. of which i am one, and so is my friend. they are intended to give women a hand up, so to speak, a place to start. my credit is good, but my friends is not. she was recently laid off after several years in greeenhouse work, in retail and landscape design, when the owner sold out and retired. she is licensed in the pesticides. another reason is that i am looking for farm revenue to keep my greenbelt status, so i figured if i can grow here, that counts as at least part of it. right now, most of the business is local. but we will be having a scenic parkway built through here in the next decade (i am in a position to know this is true), and i would love to be able to capitalize on the increased tourism. a nice quaint place, may sidelines of gourds, birdhouss, fresh veggies, etc... there is an apple orchard in the area, about 20 miles further p the highway, that does something similar and their business is booming. right now, this guy specializes iin hanging baskets and people come from all over the area to get them.

    ok, increased costs are on the list.

    we'll offer 10% on the inventory. he already told me that all equipment goes with.

    the greenhouses are really long, so i expect 100'? and they look new. the whole place looks new, like he just refurbished everything to get it ready to sell.

    the storage units and nursery are on opposite sides of a county road.

    hm, i will worry about pesticide run off into the creek. during reading about another project yesterday (related to this scenic road) i just found out it crosses a major wetland. besides, i worry about that kind of thing. it's on the list.

    we are women, so therefore will have to hire the majority of repairs to be done. we can probably handle running pvc pipe, and a power drill, but that's about it. another cost to consider...

    keep it up... you guys are invaluable!
     
  15. marvella

    marvella Well-Known Member

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    i hear ya oz. excellent point. he did say it was costing him $500/ week to keep the place going. all that plant stock could be a bit of a liability. he has one employee, so i imagine that is part of that.

    windy- my friends first comment was exactly that- if there was no stock, it would take at least two years to get enough to sell.

    fin- at this point i'm not feeling much of anything except real cautious. i base a lot of decisions on how well something goes- if there are a lot of glitches and difficulties, i end up feeling like i shouldn't do it. if things go along fairly smooth, i take it as a sign to move ahead.:)

    he offered to hang around and get us started. how could that deal work out? would i expect to pay him as an employee? he has a wealth of knowledge, will talk your ear off about plants, etc., and according to the realtor has most of it written down for the new owner. she has been marketing it to established greenhouse businesses, and was surprised when a private buyer showed up.
     
  16. painterswife

    painterswife Sock puppet reinstated Supporter

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    My question is, Is this a retail or commercial greenhouse? Who is your market?

    I worked for a Company where the greenhouse business was a retail opertation that supplied the local as well as local gardneing and landscaping companies. 90% of there stock was bought from commercial
    greenhouses.

    I also have family members that work for commercial growers that supply rootstock.

    You can combine the two but you have too be very on top of your market. Most retail orperations buy starts from commercial growers. In this way they can meet the demand and change the order to reflect what is selling best. It also means that you don not have to heat buildings all year round.

    Jill
     
  17. marvella

    marvella Well-Known Member

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    i'll be sure to ask, i did see one greenhouse full of seedlings, so i guess that means he grows his own? there were lots of small trees too, so i guess he has to buy those. and the water plants. looks like it may be a combination of the two.
     
  18. PonderosaQ

    PonderosaQ Well-Known Member Supporter

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    I remember there was a thread a while back about someone else interested in a GH business. I know many good points were brought out there. Perhaps you could track it down. Maybe it was in the gardening forum.

    If you go over to Garden Web there are two forums there that might help you. One is Greenhouses the other and probably the most helpful of the two is Market Gardener. You might also want to pop into the Professional Gardener forum from which you could learn a lot about professionals price what they are going to use on jobs etc and what they expect from you.

    I used to work in a GH and loved it but it was very hard, hot and heavy work. I wish you all the best with your decision,

    PQ
     
  19. mikell

    mikell Well-Known Member

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    Can you pay the bills without selling a thing or are you going to live on it. 1k per month+- plus taxes and insurance.


    mikell
     
  20. marvella

    marvella Well-Known Member

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    i need for it to make enough profit to make payments on it, pay an employee and keep it going. i don't need any income from it yet, as i can make my bills with my job.