In 1995, Cliff Street left his steady job with a dream of owning his own garden center. With a shack on some land his dad loaned him and $4,000 capital from selling an old pickup, he opened Street’s Exquisite Plants & Aquatic Gardens in Fairhope, Ala.

Opening the store on April Fool’s Day, there are many occasions when Street wonders if that first day should have told him a little bit about the choice he was making.

The rocky first years

In his first year of business, sales were $42,651 gross. By the end of the second year, the garden center was in debt $50,000.

“We borrowed money from the bank to pay that debt and my wife and I worked outside the business for three years to pay it off. We didn’t buy inventory or do anything, we just paid the debt off.”

From 1995 to 2001, Street was working six days (and sometimes nights) a week with very few holidays.

“It is a huge commitment to running your own business,” he said. In 2000, his wife, Kristie, went to work full-time in the store, quitting her other job.

Sales increased in 2001 to $96,000.

“We started making money instead of losing money. In 2001, we were breaking even. We made $800 on $96,000 in sales. The next big change was 2005. We made enough money to renovate the building on our land and buy inventory at a better level,” Street said.

In 2004, the store’s sales were $172,000; in 2005 they were $314,000. In 2006, sales grew to $436,000 and as of mid-December 2007, the store was on track for a 25- to 30-percent increase.

“We now pay off accounts every month,” he said. “That was one of my biggest mistakes -- not paying off the bills each month. It is just really hard to know what to do about taxes; remembering to make all the payments. There is so much involved in a business that people don’t know, from bounced checks to unhappy customers.”

Lack of experience showed

Part of what made those first years so tough was Street’s lack of retail experience. The garden center president grew up on a farm and worked in the nursery business as a vendor before venturing out on his own in retail.

“I always wanted to own my own business and I thought maybe I can make some money in a retail garden center business. I had never owned or even worked at a retail store. It has been a very good education; very eye-opening,” Street said.

Looking back, he sees some of his biggest mistakes were his best education in the business.

“Things I thought would sell, I would buy too much of it. Not knowing the business was the biggest disadvantage I had. I didn’t know what to sell, when to sell, where to buy stuff.”

Specializing in fountains boosts business

With numerous wholesalers within an hour’s drive of his garden center, combined with the big boxes dominating the commodity items, Street discovered that he had to specialize to make the garden center attractive.

“Through trial and error, I discovered our niche,” he said. Street’s biggest money maker was and is concrete fountains, benches and birdbaths, but primarily fountains.

If you want your store to be known as the source for certain products, you have to make a real commitment to the product. “If you can’t afford to put enough inventory in to make a show, don’t pick up the line,” Street said. “If you can’t afford a minimum order of a product from a manufacturer when it comes to hard goods, don’t buy it.

“We buy enough to make a show and if it sells, we build on it,” he said. “We started with 10 fountains and now we have 120.”

But with that success, the Streets are leery of certain product lines. They have had success with Crocs shoes, having sold about $30,000 worth in the first year. But now they’re clearing them out to avoid being stuck with product that is past its prime.

Street has a new category to build up these days. He is going out on a limb -- pardon the pun -- by adding a line of birding products.

Lessons learned. And more to come

Street still searches for the magic formula.

“When we looked at the books, July to December is killing us,” he said. The garden center began adding seasonal merchandise for Halloween, Christmas and Easter to keep traffic in the store.

At Easter, he works with local churches selling Easter lilies. In December, he pre-sells poinsettias to area businesses.

“Some hurdles are consistent. One of the biggest is product selection -- what to stock, when, how much do you get, figuring out your sales,” he said. “But with experience, I can tell you now what date I need to be out of poinsettias, and we target those dates. If we still have them in the store, we mark them down and get it out of there.

“If I had to do it all over again, I think about my 6-year-old and 4-year-old who’ve grown up here and the women who work here who look out for my kids,” he said. “But if you ask me on a day when I’m unloading product or building a greenhouse, I might give you a different answer.”

For more: Street’s Exquisite Plants & Aquatic Gardens, (251) 990-0901.

An expert’s advice to new storeowners

Guts, grit and determination to pursue the American dream make for great movies and fairy tales, but taking on inventory, taxes and even marketing is foolish without putting in the homework and legwork, said Sid Raisch, owner and consultant with Horticultural Advantage in Hillsboro, Ohio.

When examining the origins of Street’s Exquisite Plants & Aquatic Gardens, Raisch said he sees lots of mistakes that many startup garden retailers make.

Homework is a must. Many startup retailers don’t do enough homework before starting the garden center, Raisch said. Make sure your sources of information are experts and knowledgeable in the industry.

“Although Street didn’t risk a lot of dollars, he risked a lot of emotion, and that is, in my opinion, more valuable,” Raisch said. “What would have happened if he’d failed? Fortunately for him he’s been able to overcome obstacles and survive this far.”

Concentrate on turns. Raisch advises clients to get more turns on product. Street’s strategy of marking down prices on items that have been on the shelves for 10 months is a good start, he said. While it is fairly typical of retailers to follow this practice, Raisch said there is more that retailers can and should do.

“The retail benchmark is don’t buy anything you can’t sell all of before you have to pay for it -- on vendor terms,” he advised. “It is good to have and practice common sense, but it is still just common. You have to go beyond the common sense and get to the correct information.”

Ask for help. Raisch urged those new to retail to seek help, and to be careful from whom they seek it. “We are led astray to think the other garden centers know what they’re doing,” Raisch said. “I just returned from a consultation with a client who has three stores, doing over $4 million total revenue, and who is making all kinds of mistakes. They’ve been unprofitable in retail and just dribble away profit from another business. Most of the people who you would think would know what they need to know in this business just don’t.”

Avoid gambling with your future. Raisch said he has seen a pattern with struggling retailers who increase advertising and add product lines or services in hopes of increasing revenue. These efforts rarely work, he said.

“Unless you really know what you’re doing, don’t go down this path and don’t think that taking risks to add revenue will solve your problems unless you get at least one confirming opinion from someone else who really knows. If the numbers can be made to work another way, it is almost always better to explore those possibilities first,” he said.

Some solutions Raisch mentioned include reducing overhead, selling nonproductive assets, restructuring debt and finding additional capital.

“You may not find these solutions to be attractive, but I can tell you that when a company is losing money they are much more likely to work than most efforts to increase revenue will,” he said.

Figure out what works -- and what doesn’t. In every situation there are certain things that are working, and others that are not, Raisch said. It seems obvious that they need to focus on what is working, and stop doing whatever is not, he said.

Understand vendor credit. Raisch said it isn’t a mistake to use vendor credit. What is a bad move is to use it to buy merchandise that won’t sell before it has to be paid for. While Raisch said he doesn’t expect all of his clients to be able to do this on every purchase, he cautions that retailers need to strive to reach that goal.

Don’t obsess over weak months. Another suggestion Raisch made to Street and other retailers is to relax a bit on the goal of being profitable in July and August.

“It is not a reasonable benchmark, although it would be a good thing. The reality is that there isn’t enough demand and traffic to keep the sales volume for those months high enough to offset the overhead necessary to have a strong peak season three months earlier,” he said.

Here are Raisch’s thoughts on those months:

1. “The first thing to do is not get in more trouble trying to increase sales during July and August,” he said. “It will be almost impossible to recover the added marketing expenses.”

2. Reduce expenses throughout the year, as well as during these two months, Raisch said.

3. An increase in spring sales will offset the loss in July and August, Raisch said. “September should not be a problem in most areas of the country if a garden center is selling the right things the right way,” he said.

“The key to all of this is that if you’re going to be in business, you need to accelerate your learning to get past the common mistakes and pitfalls in your mind and on paper first.”

 

For more: Sid Raisch, Horticultural Advantage, (937) 302-0423; www.horticulturaladvantage.com.

- Tonie Auer

Tonie Auer is a freelance business writer in Denton, Texas. 

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