Ian's Bits & Bobs: The Blog

Business Closed

Don’t Bank on These Guys for Help!

You may have heard about someone going out of business lately, shook your head and said “That’s a shame” and continued with your day. After five years of recession, consumer fatigue, stalled housing and increasing competition, we all knew a shake out was inevitable.

Most people assume that failing companies are badly run, saddled with debt and just not up to life in today’s retail fast lane. And there is some of that, no question –  owners unwilling or unable to change their strategies and operations. When the national lawn and garden market shrinks 20+% since 2007 and the sales of trees and shrubs drop by 46% in 4 years (National Gardening Survey), retail decisionmakers had better be nimble … or else!

But sadly, there is more to it:  garden centers that are making money go out of businesses too. We know of two (over 100 successful years between them) who are currently scrambling to stay in business despite positive cash flow, increasing customer count and on-time bill paying.

The reason? National brand banks are turning away from their traditional role of credit-line supporter. Maybe there was a bankers’ convention about the dangers of “exposure” to small family-held garden retailers. Maybe being awash in cash, large banks have decided they can afford to drop these relatively small accounts – they probably never were very profitable with low bonus opportunities for the top cats anyway.

Let’s Blame the Fed

We know an owner who was excitedly taken on-board with an aggressive pitch and very competitive terms by a national bank in 2007. The bank won all his business, loans, merchant fees and credit line effectively tying up all their collateral against long term construction loans. Now he is told that the yearly rubber-stamp for a winter credit line (always paid back on time in spring) has been refused and their application sent to the bank’s own “Graveyard”.

There, bean counters who know nothing about their customer, will declare the business too risky according to their formula. Even more galling is a bank tendency to blame this on the Federal government’s post 2008 lending guidelines. The retailer said to me, “Didn’t I – the taxpayer – just bail them out? This is what I get in return!”

After many years of providing local employment, creating wealth and running many millions of dollars in sales through the bank year after year it’s over; but you can’t fight it. Today’s reality is to learn and move on.

A “DUH!” Moment

This retailer was told that as their company didn’t make a profit last year, they couldn’t have a credit line. Well, DUH! It is a privately held company, of course they didn’t show a Net Profit on their Profit and Loss statement! But if the bank was interested enough (obviously not) to do an EBITDA calculation from the same documents and spend about 15 minutes on the phone with the owner (as I did), they would see that there was plenty of Net Cash Flow (a much more accurate measure) generated last year.

The kicker is that with the national bank holding the retailer’s collateral, no other bank will give them a credit line either. So, like others we know, this retailer is now schlepping his business around town to see how community-minded these local banks really are. The owners are cheered by the attitudes of managers they are now “interviewing” for the privilege of being their customer, so they feel safe, at least until that local bank gets amalgamated into another national “brand” with lush ads and silly mileage cards.

No names mentioned here (to protect our own Net Cash Flow!) but that same national brand name comes up a lot these days in this discussion. Clearly as they grew from regional retail and community bank to international investment and commercial banking giant, they forgot to read their own “Visions and Values” (I am being kind), or are simply dumping the small businesses that once were their life blood.

The Moral of the Story

The moral, if that word fits in a banking story, is to find a bank who knows that your business matters to them financially. Remember, your weekend cash flow is their source of loan money next week! Now is the time to be a bigger fish in a much smaller pond. Be prepared with true Net Cash Flow documents, not just your own P&L or tax docs. Find a bank (still one that is insured and tested by the Feds preferably!) with a few branches in town, where the decision maker might even know your store. Most cities do still have a few banks living by their original values without visions of grandeur. (Who knows, the manager might just show up for that seminar on herbs!)

If you’re not ready to hang out that “Closed” sign for good, your banker needs to be an ally for you, not an adversary. It’s time for you to practice what you preach to your own customers: SHOP LOCAL. 

photo credit:  Michael S. Richter via Morguefile
Sep 4, 2013 8 Comments

Thanking and Giving

Like other Americans (I might sound like I just landed, but I have been here 26 years and have the passport to prove it!), I was thankful for all sorts of things last week. I thanked my fab wife and business partner Lisa, my family, friends, customers, supporters and anyone who has been nice to me since I arrived in this beautiful country! I also thanked my parents for good genes and my brain for listening to smarter brains about lifestyle, diet and ways to live longer than some of my unfortunate grammar school classmates.

Without getting too sanctimonious here, I am truly grateful to any and all factors that allowed me to get this far, but my self-satisfaction evaporated rapidly when I saw the horrific scenes caused by Hurricane Sandy on TV.  Like watching a 24 hour car crash, the TV depicted a mesmerizing library of storm power and abject misery.

Some of our older friends may recall that we had a house flood from frozen pipes (in California?) over 20 years ago that trashed everything as water rained from the ceilings for three days while we were in England for Christmas. So, although that was at least clean water, we can relate in some small way to the poor people on the east coast.

We have clients up and down that area so the texting fingers were busy as the storm moved in. In some cases that was the only way to keep contact with them for days.

Now comes the truly thankful piece of this blog. Within hours of the storm hitting, clients from all over the country called and asked if I knew how mutual friends were doing (if even even alive.) We knew some retailers right in the eye of Sandy, did they make it personally, how about their stores etc? It is heartwarming to hear of concerns but the true thankfulness began when within 24 hours of the storm I got a text from a garden center about 30 miles inland (and out of power themselves) saying “Tell the owner of Garden Center X that I have a truck and 4 employee volunteers ready to be there asap to help in anything they ask”.

When we heard that a particular NJ client had several employees who had lost homes, possession, cars etc we started relief funds* for them. More thanks can now given to other nursery people, from as far away as Oregon who sent sizable amounts, no questions asked, to employees they had never met at a store they didn’t even know. Our industry helping our industry – thanks be! And this was in Election week when our country was filled with rancor and division. That was a pre-thanksgiving WOW.

Jersey Boy

Quite by chance I was already scheduled to consult for a new client right on the bay behind Ocean City New Jersey two weeks after Sandy and as the client pointed out, “When 3 feet of saltwater has flowed through your store and greenhouse it probably is the best time to talk about change!” So off I went to join FEMA, Governor Christie and the throng of power company employees bringing light and warmth to the flooded masses. The devastation was amazing with square miles of ex-dunes now plowed on the street edges like brown snow and orderly piles of beds, cabinets, appliances and life’s possessions lining mile after mile of suburban streets. Oh and a word to city planners and politicians; never never allow homes or any building to be built less than a Bobcat apart! The national building codes have me scratching my head often but this is a no-brainer. Those same dunes are being shoveled out of houses, basements and property setbacks BY HAND! Good work for the local landscapers and I know the country needs more jobs but this is one blunder that no one should repeat, I don’t care how much property tax is at stake.

As reported elsewhere, the spirit of the New Jersey people is amazing. I am not sure if I would have their positive attitude had our house flood been one of saltwater and all manner of things floating. I wish them well and will work with our specific clients there to rebuild better and more efficient than before.

It is a well-worn sentiment at this time of year to say that we should appreciate or value what we have and give to others less fortunate but in this instance I am more than just Thankful, I am impressed that a cliché turned into actions. So I am still Thanking and Giving; hopefully you are  too.

*BTW an offshoot of our fund is still open for donations here

 image credit: Kevin Connors

Nov 28, 2012 4 Comments
Chihuly Glass

It Takes a Garden

I was with an industry group in Columbus, Ohio last week touring the very impressive Franklin Park Conservatory & Botanical Gardens, talking with Bill Dawson, who runs the beautiful 80-acre downtown site. (Industry veterans may recall Ameriflora on that site in 1992 which is how Bill got involved in the first place.) I remember I loved the inspiration of Ameriflora,  America’s one (and only, thus far) attempt to have a 6 month long European-style garden festival, so I was inspired again 20 years later by Bill’s current work.

Bill is especially passionate about their 5-acre Community Garden Campus, built with donations and lovingly tended by his team and a whole flock of community volunteers. I was amazed to hear that the greater Columbus metro area (population 2 million) has around 250 community gardens with 12 major “hub” gardens around the area.

Everyone in the garden business should plan a visit there to see how the local community has become a true partner in the use and direction of the whole park.  Set in mature botanical parkland in what was a run-down part of the city, the huge Victorian Greenhouse gets immediate attention – but this place has so much more.

From exquisite Dale Chihuly glass to stunning Aurora Robson art from recycled plastic bottles (the current temporary exhibition), there is a lot to see, but from our point of view the 5 acre Community Garden Campus (sponsored by Scotts Miracle-Gro) is the place to focus on.  This place has the expected Community Garden plots plus a rain garden, pollinator garden (and a thriving educational bee exhibit), tai chi garden, fruit, vegetables, herbs together with every educational tool imaginable from composting to an indoor cooking theater. They even have 5 types of outdoor cooking “fires” to learn about and use. Locals often just bring their dinner in with them to hang out enjoying the summer evenings: there’s no fence around this garden.

The Fall events schedule lists a dizzying range of things to do:  from environmental behind-the-scenes tours to craft workshops and cooking classes. Locals are involved at every stage and every minute — it’s their park. That, and generous corporate and private funding, is the secret to such a vibrant place.

Being the local garden products company (with almost 150 years in nearby Marysville, Ohio), Scotts have supported this horticultural gem for a long time, but recently the community garden became a model and rallying cry for a very-welcome corporate goal to “grow the gardening category”. As the biggest player (by far) in the L&G industry, Scotts can really punch their weight – so when they get behind a movement like community gardens we should all take note, and see how we can ride the wave. Through the magic of Google I see that Scotts have announced a goal of “1000 Community gardens in North America and Europe by 2018,” the 150th  anniversary of their company. This initiative has already been adopted by the U.S. Conference of Mayors, while Scotts have created a generous grant fund for the purpose of helping start-ups.

As a public company, Scotts have staked a flag in a long-term initiative that would at first sight seem at odds with the usual Wall Street short-term expectations, but their vision is to be applauded and all companies in the L&G business should lend support, however small, to this “Grow The Category” mantra. We all know that “different days” are coming, if not already here, and this would be a great way for any garden business to walk the talk.

So the obvious question of this posting is: What are you doing to encourage, create, expand, train, support, lead and become synonymous with local community gardens in your market area?  Let’s hear it!

Thanks for tuning in!

(photo credit: Allen Conant)

Sep 24, 2012 5 Comments