Chapter 9: Running Daily Operations and Planning for the Future
“If the day and night are such that you greet them with joy, and life emits a fragrance like flowers and sweet scented herbs…that is your success.”
— Henry David Thoreau
There is no substitute for daily attention to detail when it comes to growing herbs and running an herb business. You cannot plan for growth or even consider what tomorrow’s plan for the business may be unless you have a firm grip on what has gone on today. How solid is the financial footing? How healthy are the plants? What is selling in the way of subsidiary products? How do the demands of the business, in terms of your speaking engagements, time spent tending to the herbs, and time in the store, line up with family and other obligations? All of these are questions you need to keep in mind every day and consider on a regular basis. Keeping your eye on your business helps avoid major problems. You are less likely to face ugly surprises like additional insurances, taxes owed, or herb shortages. If you have been keeping a good tab on your finances, including insurances and taxes, and on the health of your herbs, you will be much more likely to be a survivor of a difficult situation than someone who has not thought ahead.
Keep Good Financial Records
In order to understand what is going on in the daily operation of the business, it is necessary to maintain up-to-date records. These records need to be complete — that means all money coming in and going out must be documented. It is important to hire an accountant. Discuss with your accountant the way in which the accounts will be kept. There are two major methods of accounting: a cash basis, which records transactions when the money comes in; or the accrual method, which records the money from the date when the service was performed, even if the actual funds have not yet been paid to the company. For a smaller, mostly retail business, the cash method is the most often used. Most larger companies use the accrual method of accounting because the cash method does not leave your book balanced at the end of the accounting period. Basic recording of information on a daily basis, what you took in, and what was spent by the business is what you want to do.
If you decide to keep the books yourself, be sure to get some assistance. QuickBooks or some other computer aid to keeping a business record will be invaluable. Do not forget to update the records daily, weekly, monthly, and quarterly. Payroll is another element of financials. An accountant can help advise on what software is best to keep track of all of the operating expenses so when it comes time to pay taxes there will be enough data to determine the amount properly owed. Generally, you will make tax payments on a quarterly basis to the state and other relevant local entities on sales tax, and on the income generated by the business to the state and the federal government.
Keep Overhead Low
Review your books constantly and look for ways to save money for the physical location of your herb business. This means doing the simple things such as making sure the lights are off, the watering is done at the proper time and only for the proper amount, and you hire employees carefully. Employees are expensive to hire, expensive to keep, and expensive to let go, so make sure you think about who to hire.
Review supplier costs carefully, always looking to see if there is a discount that might apply. Do not surrender quality to cost cutting, but always look to see if quality products can be obtained at a lesser cost. Conversely, do not surrender a good supplier relationship for a small savings. Always let your trusted supplier have a chance to offer the goods to you at the same prices as a newly discovered low-cost supplier. Watching costs will make sure there will be enough money to pay the expenses the business owes: taxes, payroll, money to invest in new supplies, and enough money to pay yourself or the shareholders of the business.
Case Study: Grow as You Grow
Diane Lynn Toombs, CNHC
Nature’s Sunshine Products
Cortland, New York 13045
607-756-5558
When health problems treated by traditional medicine did not get better, Diane Toombs began looking for alternative methods, which led her to herbal remedies. When Toombs decided to open her own herbal supplement business, she was already self-employed, so it was an easy transition to start her own business from home. At the time, Toombs had her daughter and wanted to spend quality time with her.
Financially, starting her business from home allowed her to keep her expenses low, but a home-based business also presented its challenges. At first, Toombs did not set hours of operation, so she and her family never had any period of time when the doorbell did not ring or she did not have to answer the telephone. Toombs soon learned in order to have family time, she need to establish set hours.
Because she has the corporate backing of the Nature’s Sunshine company, it was easy for her to set retail and distributor prices for the products; corporate offices set the prices for retail and distributor business for her. Toombs said, “It simplifies things to use the price list already made.”
Toombs never borrowed money to open her business, but instead continued to reinvest her profits into more inventory, expanding her business as needed. She started with just shelving in a spare bedroom that expanded into bookcases in a bathroom, and eventually took up an entire room in her home. As her knowledge in her business expanded, her business grew, too.
Toombs said, “I learned to be content with what I have and not make extravagant purchases. Also, I have to budget my advertising expenses, as once you start advertising everyone else calls for you to advertise with them. Word of mouth is the best form of advertising and free.”
She also writes a newspaper column that comes out twice a month; she has a website and is listed in the yellow pages of two phone books. She uses her e-mail signature and all of her printed material she hands out to promote her website, her name, and ways prospects and customers can contact her.
Keep Employees Happy
Employees are definitely the largest part of overhead, but employees, especially happy ones, are the key to growth. If you can keep employees in the family, as volunteers, then there is no problem. But once you begin paying a salary to an employee, there are additional requirements you will need to address. This was discussed in depth in Chapter 4.
Keeping employees happy by treating them well has been proven to make customers happier when they enter the store, and happy customers buy more products. Happy employees also remain longer with a company, are less likely to steal from a company, and more likely to contribute ideas that promote the growth and financial stability of a business.
Keeping costs lower than income is the point of everything. In order to be successful, the business must take in more than it spent. Services are an excellent way to beef up revenue because offering services tend to cost only your time. For example, if you charge for people to attend a lecture on ways to make crafts with dried herbs where you are providing information, you are increasing revenue to the business. Before the business starts to make a profit, there will be a time when what is taken in by the business is just enough to cover the money spent on items needed for the business and to cover the cost of overhead. This is normal for a new business, and during this time, cash will need to be available to cover your taxes and any salaries, as well as the cost of keeping the business going until it gets established.
It seems boring to have to review figures and check your stock daily. Even taking care of the plants is a routine, daily operation in an herb business; for example, plants need to be watered, checked for insects, and checked to see if they need re-potting, all of which must be done daily. The daily maintenance of paper and farm duties in tandem is of utmost importance to the success of your business.
Case Study: Expansion of Size and Scope
DeBaggio’s Herb Farm & Nursery
43494 Mountain View Drive
Chantilly, VA 20152
703 327 6976
www.debaggioherbs.com/index.html
DeBaggio’s is a family-owned and operated business that started in 1975. Tom DeBaggio first began selling herbs and vegetable plants from the backyard of his Arlington, Virginia, home. The business transformed over the years, and by 1997, DeBaggio's expanded into its present-day location in Chantilly, Virginia.
The move to Chantilly provided Debaggio’s with the space to grow additional plant varieties, which brings the total plants on the farm to 100,000 plants each spring.'s only employ five people to work on the farm. Three of the five people are responsible for the transplanting of the plants. The DeBaggio owners are proud to say they are one of the only farms that sells 100 varieties of tomatoes. Growing vegetable plants is in addition to growing herbs and a significant number of annuals and perennials, many of which have traditional herbal uses. The addition of so many new vegetables, herbs, perennials, and annuals brings the number of varieties DeBaggio’s grows close to 1,000. In order to grow all these plants more efficiently and to reduce the wear and tear on the humans growing them, the business recently purchased a machine to automatically fill the plant pots with growing medium. Seedlings and cuttings, however are still transplanted by hand on the farm.
When DeBaggio was still located on the home property of the founder in Arlington, the farm only had enough space to sell the herbs or vegetable plants. With the company’s expansion to its Chantilly location, DeBaggio's has added books and supplies related to fine cooking and gardening to its product offering. The recent addition of the “country store” has allowed the company to further complement its wide range of plant varieties. The farm’s line of products also includes fragrant and long-lasting soaps imported from France, herbal spritzers, candles, bird feeders, books, herbal personal care products, lavender sachets, honey, hard goods, organic fertilizers and plant growing aids, gloves, Renee’s Garden seeds, and pottery.
When the herb farm moved to its Chantilly location, keeping the old customers was easy — the firm kept in touch with customers through its catalogue. News articles about the move advised the general public and casual customer that DeBaggio’s Herbs was going to move. In addition, the reach of the business was extended through authorship.
Thomas (founder) and Francesco are prolific authors of wonderful books on herbs listed in the resources section. These books brought the business to the attention of the nation at large. Their website is a fount of information about herbs, vegetables, and other perennials. There is even a site-specific search engine feature that enables visitors to search for information about a particular plant by name. Clients can order through the website before and after the normal business hours, even if they live outside of the geographic region. When when the herb farm moved west to a farther suburb, its customer base increased along with the size and scope of the business.