Focus on adding value, not cutting prices, growers told

Growers should focus on adding value to their businesses rather than cutting prices, according to Majestic Trees managing director Steve McCurdy.

"The biggest problem our industry faces, especially critical in the current financial crisis, is that we don't understand our costs," he told more than 70 delegates at the International Plant Propagators' Society (IPPS) conference in Falmouth last week.

He added: "We don't know how to value our products and sell them for a reasonable return on investment. If we sorted this out everything else would fall into place, as we would have enough money to attract and keep the best staff, pay them a living wage, invest in equipment and tools to do the job better and market our businesses."

He argued that the difference between gross and net profit was "poorly understood" in the sector.

"Too many people kid themselves that they are doing well when their gross margins are good.But if you were to review Companies House tax returns you would see far too many major players with minimal or even negative net profits in the good years, let alone in the current climate."

He compared horticulture with other sectors: "The companies that are run by businessmen who understand finance have the highest pre-tax profits and all pay their staff better than our industry."

He suggested ways of increasing value, including improving customer service, image and quality of product, and checking out competitors' prices and stock levels.

He also stressed the importance of learning who the customer is and building a relationship with them, setting a higher price if a grower produces something that is scarce, and listing strengths including unique selling points.

"Maybe you have the finest Camellia grower in the UK as your head grower - think about what makes you special and tell everyone about it," he said.

He concluded: "If you live by price, you will die by price. Your costs are going up, your small margins are getting smaller and if you cut your prices you will have no margins at all."

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