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

Spring Fling 2013: Maybe Things are Starting to Change?

Oh I know this industry is full of perennial (ha ha) optimists but I just begin to wonder… are things starting to improve? (Though to be fair, if I lived in the part of the USA where the weather was back to a normal March seeing my sales numbers plummet compared to last year’s perfect March, maybe I wouldn’t even be writing this.)

But in California where the prior four springs have been down, flat, flat and down, there are some signs, trends and tea leaves that suggest things might be picking up ever so slightly. And the early spring here in the West is showing indicators the rest of the country might want to watch closely.

First, a business read: the wonderful warm, dry weather for the last few weeks brought April numbers in March for most L&G retailers with sales increases for the comparative stores during the comparative period of +25% to +50%. Some are posting their biggest March ever, even bigger than the last big cash-fest in 2007. (OK so we had 5 Saturdays and perfect weather in March but there’s more to it: Weather drives customer count, attitude drives customer spend – and that’s where we might be seeing some good news, finally.)

The Nitty Gritty Data

Looking at POS data and shopping carts suggests that there has been an increase in the bigger sized items where there was a choice; bigger pottery, statuary, fountains, 5 gal shrubs, 2 gal perennials and so on. Although trees are still stalled, there has been a welcome uptick in shrub sales this year, especially flowering ones that can be used as decorative color or basic landscaping. It’s nothing like 2002 – 2007, but it is a start. We even hear of the basic shrub shortages that the growers were predicting 3 years ago.  Classes or seminars on DIY landscaping, sprucing up the greenery or “curb appeal” that were empty just 2-3 years ago are oversubscribed everywhere, while the landscaper’s phones are starting to ring again. Meanwhile the home-grown food theme is still a traffic driver, as is decorating and self-indulgence.

A smart retailer I know from an earlier-Springing part of the state pointed out that this new-found optimism is very recent – since December actually. He said even the Christmas customer was not this enthusiastic about spending money. In fact, several retailers told me they were caught napping by the big demand increase for plants, pottery, seeds and bag goods. Fall season consumer behavior did not predict such a quick turn-around in attitude. So what’s going on?

It’s the economy

The stock market is on a logic-defying climb to all time new highs, which matters a lot in the California economy where taxes and government budgets depend heavily on capital gains and unemployment is still falling. Since February the news media have begun to talk positively about the housing market, hedge-fund managers are snapping up investment properties creating a demand. That drives up prices, turn rates and homeowners’ interest in spiffing up hundreds of thousands of properties that have been ignored for 4 years.

All this, I think, has resulted in a slight loosening of the purse strings … even though some areas are still struggling and the city of Stockton down the road just went bust. The warm weather drove April traffic in March but the customers’ self-confidence pushed up the average sale in the garden center by anything from $3 to over $6 – a huge jump in a recession.

Can it be sustained?  Is it predictive?

Our first April week lived up to its showery reputation so we will see if this has legs in another few weeks. We optimists are always looking for light at the end of the tunnel. No one is ordering a new Ferrari, but for now the message from warmer climate L&G operators to their cooler climate brothers is:

“Make sure you have big volume ready to go and backup when that sells out. If your weather is even just “normal” this spring, business is going to break BIG for you!”


 (photo credit: taken at Round Rock Gardens, TX)

Apr 5, 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
LondonBridge britishflag_2crop

Rule Britannia!

Sorry, this might be badly typed (badlee tiped?), because it is hard to see the keyboard with so much Olympic GOLD reflecting in my eyes! I am not sure whether we put something in every other country’s tea or what, but to give Great Britain’s medal haul some context: we got one gold in Atlanta in ’96 and when I was younger I recall 5 or 6 gold was the norm. This time with home field we have more gold than Russia and total medals way above all but China, US and Russia – a fact which is pretty hard to believe. It just goes to show what can be done with a bit of leadership and focused vision.

Sitting Down Sports

After Atlanta in 1996 I suspect that someone important in government (Tony Blair was elected in 1997) called a crisis meeting and rallied for serious public/private sector investment in sport (knowing they was going to bid for the 2012 games I suspect even then). Knowing what they could NOT dominate (e.g., track & field) they looked at sports that went with the weather, were already done in Britain (if badly), and would generate private business opportunity too.

So GB at the moment seems to own cycling (the Brits who starred in the Tour de France, Wiggins and Cavendish started on the sprint programs) and are pretty good in rowing, equestrian and sailing. As I heard it described on the BBC the other day, GB excels at the “sitting down sports!”

What I found interesting is that on the back of their best-ever performance in Beijing, they are now winning medals in things they would never have thought possible: diving, gymnastics and even the long jump (first win since the 60’s I think). So, they are now much stronger in the core activities having built athlete and public confidence on the opportunistic events first.

The  Garden Center Lesson

Yes, it’s my blog so I can go on a bit with country pride – but there is a story here for GCs:  In the same time-frame (since 1996), many owners in the garden center retail business in North America left their core activities to the box stores and hardware stores, developing strong offers in other opportunistic products (personal items, home décor)  attracting a wide range of consumers and markets. Perhaps it is time to use that image and customer confidence to strengthen the offer in core products and return to garden success again…? (Okay, I know it’s a stretch for an Olympic tie in!)

I will watch the closing ceremonies with pride for both my homeland and my adopted USA – both have had a spectacular and inspiring showing in the Games this summer.

Aug 12, 2012 Comments Off on Rule Britannia!