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The Second Half

Still Keeping Score?

Welcome to the Second-Half of the Business Year

This is the second half of the fiscal year for most garden centers, aka the un-profitable half according to one client.

The second half of a ball game is where it all happens most of the time. The second half of the calendar fiscal year of a garden center is not so exciting, but it is still where the game is won or lost. Although I’ve never seen a garden center add even one dollar to their bottom line after June 30 (in any year), every dollar that is preserved from July 1 forward is preserved for profitability.

BUT, if you want to end up with a small pile of profit at the end of the year begin with the biggest possible pile of profit by the end of the first half of the year. You can quote me on that.

Maximizing Second-Half Profit Starts in the First Half of the Year

Even though every dollar of margin earning income from the second half is to the good, there are no lines at the concession stand during the second half of the game, and thus, limited  potential to accumulate significantly more margin dollars.Weak marketing, over-spending, and bad weather put too many companies so far behind at the end of June that there is no way they can recover profit during the second half of the year.  A plan for profit with an aggressive marketing strategy, tight spending control that sticks to a budget, and proper response to the weather give the best opportunity for a high profit first half necessary for a profitable year-end.

Whether your sales are up or down, your potential to have much impact on your income during the first half of the year is clearly gone, but should not be forgotten. Always remember that your FIRST focus should be on the First-Half, even though you should never give up during the second half .

Where the Game is Won or Lost

The second half is still where the game is officially won or lost, if you believe that it is possible to make money whether your sales go up or down. I do.

Companies with a fiscal year different from the calendar year have a modified profit pattern, but in the end it is just the same.

Here’s a second half plan for those of you who don’t already have one:

  1. Avoid rampant deep clearance discounting that destroys the value of your company and the products you sell to the customers you need to pay your prices next year.
  2. Get some much-needed rest & relaxation.
  3. Begin planning the first half of 2011. Develop a business strategy, a marketing plan, and a budget.
  4. Begin implementing your plan as if it were going to happen, and it will more likely happen the way you planned it.

Yes, that is a short list. It is simple, and although not easy, it is much easier to carry out than going through another year just  hoping it will be a “good year” and without having the BIGGEST POSSIBLE pile of profit to hold onto during the second half.

Could your first half profit pile have been bigger? What will you do to save it? What is your strategy for making your first half 2011 profit pile bigger?

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12 Responses

  1. One of these days, I’d like to hear more about “the proper response to the weather.” Just a thought…

  2. Excellent topic idea Elizabeth. I’m tempted to go into it here but I think I’ll just do as you suggest and start working on a post on just that subject.

  3. Do you go out to eat when it rains – yes you do. Do you go on vacation when it rains – yes you do.

    I would be interested in your thoughts Sid on how we create a marketing plan and a company that folks come even if it rains.

  4. “A penny saved is a penny earned”! There is fun in this part of the game as well, if you are a true gamester.

    I truly believe that your solid advice would make a lot of garden centers more profitable faster if they heed it.

    Does clearance this time of year really drag our value down or do customers see it as just the way all businesses do business at this time of year? And why would we not be like other established retailers who offer end of summer bathing suit sales?

  5. Desire is the draw. Myself in the customer’s shoes, what does that look like for me? To get out of the house/office, a change of scenery, a break from the usual, something valuable, something beautiful, something to learn/discover, someone to talk to, someone who understands, someone who is interested in my garden/landscape problem, a solution to improve my life, something to take home, a pleasant memory, a plan for tomorrow.

  6. I agree Denni that some seasonal clearance is not necessarily a problem, and is beneficial for the store eco-system (economic system, not ecological system) when not carried out to a fault. The trouble is that for so many garden centers this has become a way of life. It is a low quality life. During years like this when garden centers found themselves over-stocked the increase in seasonal clearance items cannot be successfully dealt with by having greater and constant clearance events. For lack of meaningful marketing, more mindless marketing is not a good substitute.

  7. All retail including restaurants suffer when the weather is bad Ed. Vacation is another story because some people vacation more when the weather at home is bad. Minnesota and Wisconsin residents can testify to that. Yes, when it rains where we are going we still go because the plans are made and frequently the vacation is paid for in advance. Looking forward to the upcoming discussion on “Proper Response to Weather”.

  8. All good reasons to go to the garden center John. You bring in the idea of the “third place” where everyone knows your name (aka Cheers). That is a value-add that many garden centers also provide frequently, and some are able to pull off with purpose and consistency.

  9. We used to have the clearing sale on Memorial Day then we slowly pushed it back into June until now it is the final weekend of June.

    I did go several years with out a clearing sale. We just threw it all away. But every dollar we can get in late June and July I felt was a good dollar even if the plants were 50% off.

    Although I hate the idea that we sale them 50% off but everyone else in our area is doing the same.

    I wonder if it wouldn’t be better to just throw part of the tray away before I plant it in March of some of the things that I never sell all of it anyway? Does anyone do this?

  10. Yes, Tim, some people do throw away plugs if they don’t feel they can sell all of those plants at full price. Some others wish they had. And even more are beginning to ask the same question you are. The greater cost is from the plug point forward is in the plastic and labor. But the greater cost is even higher with EXCESSIVE end of season price dumping. In my view it is a matter of BUSINESS DISCIPLINE to protect the value of the product by limiting how much of it is sold at a discount, even in a bad weather year that causes over-supply.

    In 1978-79 I was field production manager for a regional midwest nursery that produced at that time a lot of Taxus B&B sold to garden centers and very large landscape companies. In the summer of 1979 we rototilled under acres and acres of plantings because the owner wisely recognized that he could not afford to dump more money into them when he was certain he couldn’t sell them at the price he needed to run the company. The greater cost would have been excess on the market that would drive down the regular price of the plants, not just the excess production.

    There were and still are others that have this view of the marketplace, and yet many others who have not adopted it, especially at the retail level. The time to develop this type of discipline has arrived as the market for our products is depressed or excessively competitive and in the state of over-supply at the same time as so many companies expanded during the high growth period of the 1990’s and early to mid 2000’s. The 2010’s are a whole new ballgame and each company has to figure out how to not only compete, but to develop the disciplines required to make money no matter their sales level.

  11. Sid,
    While you’re thinking about your “proper response to the weather” posting:
    The common wisdom around here is that business lost to the weather isn’t made up. If it rains on a spring Saturday and business is down 25%, it doesn’t come back on Sunday or the next Saturday, even if the weather is perfect. I’m sure the specifics have something to do with the climate in each particular area. Which is odd, really. I don’t know how true that is, or if it holds for the rest of the country.

  12. I believe that is at least partially true, and even more so when Mothers Day Saturday is lost to bad weather. Even the best of customers will then more likely choose to take mom to a restaurant. The trouble in many areas this past spring was that it after the April gift it got wet and stayed wet until it got very HOT. The prolonged non-gardening period was longer than the mood to garden for many consumers.

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