- What are some of the first steps I should take when considering a greenhouse business?
A greenhouse business is far more than growing beautiful plants. Skills in plant production and greenhouse operations are critical, but competent business, personnel management and marketing skills are critical. Start out by educating yourself in all these areas.
- Subscribe to one or more trade magazines, preferably one relevant for your area
- Check your county extension agent for information on any of these topics
- Visit greenhouse operators in your region - get to know them and find out what they think about the industry and outlook.
- Attend greenhouse association meetings and trade shows. Talk with representatives (both sales and technical) of greenhouse supply companies, find about typical challenges and potential solutions for new greenhouse operators.
- Take advantage of plenty of educational opportunities - enroll in horticulture programs at vocational schools or local universities, as well as business and marketing classes at local community colleges.
While you’re increasing your understanding of the business, get a good idea of what financial resources you’ll be working with.
- The greenhouse industry is capital intensive, meaning you’ll need to have plenty of funds for getting started: investing in land, building and equipping your greenhouses, purchasing inventory and hiring labor must all be done months before you’ll be ready for your first sales.
- Consider your capital and operating expenses as well as human resource requirements against your expected return. How much active production space do you need to maintain to cover ongoing costs and pay off your initial investment as well as draw a reasonable profit?
- Start drafting your business plan. Most successful businesses are not entirely generalists but develop a unique market niche, such as specific crops, advantageous locations and markets, and strong business connections. As you develop your plan, consider what aspects of your business will stand out. Each element in your business plan requires careful research and detailed planning. Keep in mind how each element will fit with the other in a synergistic fashion:
- Market Survey
- Production Plan
- Financial Plan
- What are the main cash crops for a greenhouse business?
Naturally, this varies by climate and region, but the typical greenhouse operation has 3 primary crops: bedding plants in the late winter and spring, garden mums in the summer, and poinsettias in the fall. Spring bedding plants give greenhouse businesses their major cash flow and most profit. In fact, market competition for garden mums and poinsettias is so competitive that most greenhouses merely break even on these crops but permit operators to pay wages year-round for their full-time staff.
- Should I grow tomatoes in my greenhouse?
As US consumers have come to expect red, perfectly ripe tomatoes in their local grocery store, the greenhouse or hydroponic tomato market is growing rapidly. Sales to local grocery stores, farmers markets, and directly to the public offer strong opportunities to build a business on this crop.
However, it’s important to recognize that tomatoes are one of the most complex greenhouse crops to produce. They require the most sunlight, the most labor and the most careful management of any crop. It’s not possible to be successful if tomatoes are not the primary focus of your production. It’s also difficult to retrofit an existing greenhouse to meet the exacting needs of tomato production. If you’re considering starting a greenhouse business based on tomatoes, it’s wise to have (or employ) direct experience. If you’re expanding for tomato production, you can optimize a greenhouse from the start, but be prepared to shift focus almost entirely to your tomatoes.
- What is the most difficult thing to manage in a new greenhouse business?
For those new to the agricultural industry, it can be shocking to realize how extremely seasonal the sales are. Expect high income in the spring and low income in other seasons, yet you must make your operating funds last throughout. Managing seasonal cash flow can be a real challenge.
- What was one thing that surprised you in your new greenhouse business?
Energy costs for greenhouses won’t necessarily be the largest part of your operating costs. Greenhouses that operate year-round in northern climates will obviously have higher costs than those in mid and southern states and those may be only 10% to 20%. Even northern operations can benefit significantly from passive solar and geothermal energy sources and improve their bottom line.
