Successor to the typewriter, the word processor gives office staff members the opportunity to prepare correspondence and reports that have a highly professional appearance, with varied font styles, sizes, and even colors. Form letters can be personalized with the recipient’s name and other specifics that increase the probability of it being read rather than discarded. Spelling errors and incorrect grammar are minimized as software becomes increasingly user-friendly and responsive to human frailties. The word processor has also replaced the filing cabinet, with compact discs superceding manila folders as the place to store client and employee records...>
Most businesses of America and the developed nations have embraced computer technology, and are quick to accept and incorporate each new advancement. The companies of the green industry are no different. The most common software programs are of three types: (1) word processing; (2) numerical calculations; and (3) graphic visualization. In addition, the explosive growth of the Internet gives companies in the most remote locations access to the nation and the world. Current uses of the computer in the offices of American horticulture firms include:
• customer accounts
• accounts payable
• mailing lists and labels
• inventory records
• accounts receivable
• sales analysis
• office newsletters and promotional mailing...>
Once a company understands how to recover its overhead costs correctly, determines its needed markups, and establishes its competitive profit percentages, it is able to select a pricing method that best fits the way the company does business. There are several pricing alternatives.
Direct Cost Pricing Bases the selling price on the direct costs of materials, labor, and overhead. This method is effective for businesses that have little or no variable overhead and have a full understanding of their costs. Varying profit percentages may then be applied to different components of the cost and a price determined.
Profit Margin Pricing Calculates selling price as a percentage of total costs...>
Calculating profit correctly is of obvious importance, yet it is often done erroneously. The most common mistake is made when people believe they have applied profit as a percentage of the selling price, when in fact they have applied it as a percentage of their costs.
Example: If the cost of an item or service to the horticulturist was $100 and it was desired to sell it for the price that would return a profit of 30 percent, what would be the selling price?
• The incorrect solution—Some people might calculate the profit and selling price this way:
A. $100 x.30 = $30 (profit)
B. $100 + $30 = $130 (selling price)
It would surprise them to discover that they had actually added a profit of only 23 percent to their costs...>
Two major influences help determine the price charged for an item or service. The price competitors are charging is one. Customers may accept a small price differential between businesses if one has a better reputation for quality, honesty, or service, but getting the most for their money is always the first consumer concern. The other major influence is how much return on equity the business owner wants or needs to have to maintain a profitable business. Equity is the dollar amount of assets owned by the business that is not offset by indebtedness.
Equity = Total assets ^ Total liabilities
The rate of return on equity is the percentage of the owner’s equity that is returned as net profit during the business year...>
The price of an item or service is the sum of material costs, labor costs, overhead costs, and profit allowance.
Price = Materials + Labor + Overhead + Profit
Failure to measure any component of the equation accurately will result in a price that is unfair to either the business or the client.
The carefully kept records described earlier are the key to accurate pricing. Without them, price calculation is impossible. Even with records, pricing requires continual monitoring.
Materials Horticultural materials are both perishable and nonperishable. Nonperishable items range from floral wire to wire fencing. Their costs to the horticulturist can be found by consulting a current catalogue or by calling the distributor...>
Determining the correct price to charge is an ongoing challenge in any business, and ornamental horticulturists are famous for doing it badly year after year. They have underpriced their products and services for so long that consumers have come to expect a great deal for comparatively little. Too many horticulturists do not know why they charge a certain price except that their competition charges that price and they match it.
If horticulturists made a single product whose material costs were constant, whose time of manufacturing was as predictable as an automobile, and whose workers were all paid the same wage, it would be easier to determine the cost of the product, and a fair profit could be calculated and added on rather simply...>
A horticulture firm may measure its financial and earning potential by calculating different ratios that serve as quantitative guides. Ratios can be applied to the analysis of balance sheets and income statements to compare relationships among the different values. Typical financial ratios used by horticulture businesses include:
• Profitability ratios: These ratios relate profits to total assets, or gross income, or other quantities.
• Liquidity ratios: Liquidity is the ability of a company to pay its bills when they are due. This ratio reveals that ability.
• Leverage ratios: A comparison of the company’s debt with parameters such as total assets or net worth.
Some examples of ratios are given below, based on the data taken
Sample Profit-and-Loss Statement
GARLAND’S NURSERY AN...
The horticulturist should have an outside accountant prepare all financial statements for the business. Few horticulturists have the time to stay abreast of ongoing changes in the tax laws or the rush to computer technology that is altering the way accountants conduct their operations. Still, the horticulturist must be able to understand and utilize the reports of the accountant once they are prepared. The horticulturist should also request reports as often as needed to gain maximum benefit. Therefore, a quarterly financial statement may be all that is needed to complete required governmental forms but not sufficient to benefit the business. Monthly statements are common to all horticulture enterprises, and weekly statements are not uncommon.
There are two parts to a financial stat...>
As stated earlier, the horticulturist who would communicate most effectively incorporates a friendly and conversational tone into letters and calls, and emphasizes the positive rather than the negative. In addition, horticulturists should learn to describe their products and services in ways that evoke enthusiastic and receptive responses. For example, a customer may call a flower shop before Christmas to order “something for the front door.” A salesperson can suggest “an evergreen door swag” or “a cluster of fresh pine boughs with accents of red holly berries and pine cones, tied with a red velvet bow.” Both descriptions are truthful and refer to the same product, but the second enables the customer to visualize the product better...>