How to Open & Operate a Financially Successful Herb and Herbal Plant Business

How to Open & Operate a Financially Successful

Herb and Herbal Plant Business

Edited By Kristie Lorette

How to Open & Operate a Financially Successful Herb and Herbal Plant Business

Copyright © 2011 by Atlantic Publishing Group, Inc.

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Library of Congress Cataloging-in-Publication Data

How to open & operate a financially successful herb and herbal plant business : with companion CD-ROM / by Atlantic Publishing Group, Inc. ; edited by Kristie Lorette.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-1-60138-329-7 (alk. paper)

ISBN-10: 1-60138-329-0 (alk. paper)

1. Herb industry--Management. 2. Herbs--Marketing. 3. New business enterprises. 4. Small business--Management. I. Lorette, Kristie, 1975- II. Atlantic Publishing Group. III. Title: How to open and operate a financially successful herb and herbal plant business.

HD9019.H472H69 2010

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2010053312

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Introduction

Chapter 1: Which Herbs to Sell

Chapter 2: The Basics of Raising Herbs

Chapter 3: Training — The Learning Never Stops

Chapter 4: When, Where, What, and Who of Your Business

Chapter 5: The Legal Scene

Chapter 6: The Business Plan

Chapter 7: Financing

Chapter 8: Marketing

Chapter 9: Running Daily Operations and Planning for the Future

Conclusion

Appendix A: Herbs and Their Growing Conditions

Appendix B: Resources

Appendix C: Sample Business Plan

Glossary

Bibliography

About the Editor

Introduction

Spanning time and cultures, herbs have been used and revered for their ability to add flavor to food and color to gardens, and, in many cultures, for their contribution to physical and mental health and wellness. If you love gardening and know herbs or want to learn more about them and share that knowledge, it is not a surprise you have been thinking about starting an herb business. This book will help you learn what it takes to start a successful herb and herbal plant business. Coming to a decision that makes sense, financially and personally, usually means asking yourself as many questions as possible, using those answers to speculate on several potential outcomes, and then crafting a plan of action. Although no single source can answer all questions, this book strives to provide the basic information and resources needed to get started on opening and operating a successful herb and herbal plant business.

Taking an idea from initial excitement to working reality requires planning. Time spent on planning and research before you embark upon any business venture saves hours of possible mistakes when you are actually operating the business. In carpentry, there is the saying: Measure twice and cut just once. That same principle applies to every venture. The more planning you do now, the better prepared you will be to establish and actually run a successful business.

One of the first things to think about in the planning process is whether you really understand what running an herb business means. If an herb business is your dream, define that dream. Do you want to sell only plants (seeds and pots)? Do you plan to run your small business out of your home on a part-time or full-time basis? Are you going to sell only at fairs and festivals? Are you taking part of an existing farm and dedicating it to herbs? Are you going to use space in an urban/suburban house and yard to grow plants and sell on site? Or do you have still another option? Whatever you have in mind, it is the intention of this book to help you lay out your dreams and ideas so you can reform them into concrete plans.

Each chapter in this book is a point for consideration when planning and operating your business. There are two main aspects to consider: the herbs themselves and general business principles as they apply to herbs. The first two chapters take a potential owner through selecting herbs and herbal products and the general basics of growing herbs. The rest of the book is devoted to the business process with particular respect to herbs. You will learn more information about how to start growing your herbs and what supplies you will need to get started, as well as what you will need to start and successfully run your new venture. Critical to each of the planning steps and the success of daily operation is the creation of a business plan, a key element in preparing to start any business. You will learn how to create a business plan for your business, and you will also be able to reference a sample business plan when starting.

One thing must be made clear: This is not a gardening book. What is listed in chapters 1 and 2 is just a summary of the basic concerns for growing herbs and selecting herbs for a business. Each herb has specific requirements any herb grower needs to learn. The Resources section of this book lists many specialty books on herbs that will give you the kind of detailed growing instructions you will need.

Herbs have inspired many throughout the ages with their beauty as plants and their utility. Herbs are even part of the language of flowers, a Victorian era way of communicating with another person through the presentation of a bouquet, including herbs. For example, the herb dill stood for lust, ginger represented strength, and mint represented virtue. Herbal quotes are found in the Bible, in Shakespeare, and in modern poetry. The quotes at the beginning of each chapter are to inspire your creativity in selling and using herbs. Ancient monks and wise women were the medieval arbiters of herbs as healing substances and as supplements to food. Today, anyone can access the intricacies of herbs for garden beauty, for the kitchen, and for healing purposes.

As an emerging herb and herbal plant business owner, you will be joining more than 27.5 million other small businesses in the United States, according to the Small Business Administration. Small companies represent 99.7 percent of all employer firms in the country and contribute more than 44 percent of the total U.S. private payroll. More than half of these businesses are home-based. Keep in mind that virtually every company that survives does so because the owners are working hard and care about their company.

Read this book with a pencil handy — underline the places that apply to you and write in the margins. Check out the recommended websites for additional information. Join an organization of herb growers and users. Use this book as a workbook for making your own plans. If herbs are your passion, then this book is for you.

Table of Contents

Chapter 1: Which Herbs to Sell

Hot lavender, mints, savory, marjoram; The marigold, that goes to bed wi’ the sun, and with him rise weeping.

-The Winter’s Tale by William Shakespeare

The heart of your business is the herbs, which means one of the first decisions to make in establishing your business is to decide which herbs to sell. There are several ways you can decide which herbs to grow and distribute in your shop. For one, think about the herbs you already grow. Think about the herbs you use in your own kitchen when putting together recipes. If you use herbs medicinally, then include these on your list as well. You can also turn to resources such as the Park Seed Company (www.parkseed.com), which publishes a list of the ten most popular herbs on the market.

Another great source for identifying potential herb products is to review the products your competition is selling. Not only do you want to find out which herbs they are selling, but also find out in which forms they are selling the herbs. For example, are your competitors selling plants, seeds, dried, or cut herbs? Although big box stores and grocery stores are not your direct competition, observing the herbs these stores sell and how the herbs are sold, seed, potted plants, or in bulk, provides a great source of information on hot selling products in your area.

If your focus is medicinal herbs, in addition to looking at big box stores, visit local natural food stores to see what other herbal health and food aids are sold in those outlets. Many types of herbal supplements are not marketed as drugs but are used as over the counter treatments for simple ailments ranging from seasickness to insomnia.

Survey Potential Customers

Beyond observing what is already in existence, the best way to find out what your potential customers want to buy is to ask them. Conduct an informal survey of your friends, family members, co-workers, and other people you know. Ask them about their herb purchasing habits. Also, find out what they would be interested in purchasing, even if it is not currently an available product. When you talk to people, it is an amazing way for you to gather information that can lead to creating the products and services your potential customers are seeking. If you have been involved in the herb business as an employee or you have access to a list of your potential customers, you can also perform a more formal survey. Type up a short survey of ten to 12 questions, multiple choice and free response. You can also use a free online survey option, such as Survey Monkey (www.surveymonkey.com) if your list is made up of e-mail addresses. Although you may think you know what the popular herbs are, finding out straight from the consumers who may be buying from you is the best way to find out what will actually sell.

Some of the questions to ask in your survey of friends and potential clients — garden club members, restaurant owners, and schoolteachers — to determine which herbs to sell when opening your business include:

What herbs do you use?

Do you buy herbs in pots? If so, when?

Do you grow herbs from seed?

Would you like to know more about herbs?

Would you like to be able to grow or purchase other kinds of herbs besides those offered in the grocery store or big box store? What other herbs would you like to purchase?

Would you like to learn about other types of herbs to use in crafts and ethnic cooking?

What do you think an herb business could/should offer that a large, general merchandise store cannot?

List of Plants to Sell

Because herb seeds are small and easy to store, it is possible to carry a wide variety of herb seeds from the start of your business. What may prohibit you from doing this is the cost to purchase the seeds. The good news is if you do invest money in seeds that do not sell, you can use the seeds in other ways, such as planting them in your own herb garden, as prize giveaways for a contest, or as a birthday gift for a regular customer.

If you are considering selling plants in addition to or in place of selling seeds, then there are different factors to consider. Plants are more time intensive because you have to water, fertilize, and pot plants. Plants also take up more space than seeds and require growing lights or sunlight. This is where your survey results come in handy because it allows you to carry plants your customers have expressed an interest in purchasing. The herbs listed below include many herbs recommended by gardeners and companies such as Park Seed (www.parkseed.com) as the top-selling seeds in the industry. Other wholesalers will be glad to share with you their top sellers for your area.

Starting small, with about a dozen plants, allows you to learn about and become an expert in the herbs you have chosen. Starting small and growing into a larger herb business is perfectly acceptable and has worked for herb businesses that have come before you. Margaret Shelton, owner of Shelton Herb Farm in Leland, North Carolina, said, I started with about a dozen herbs in my first year of business and expanded to 36 kinds in the second year. After more than 20 years in business, her 5-acre herb farm grows hundreds of herb varieties, including many lesser-known varieties of more common herbs such as basil.

Here is a suggested list to use to choose your first herb offerings:

Additional varieties, seasonal offerings, and herb specialization

Open up an herb catalog, such as Richters Herbs (www.richters.com) and you will see three pages devoted to basil. Each type of basil has its own growing peculiarities and use. When you are just starting out in the herb business, however, it is sufficient to carry two types of basil, chosen according to the types that grow and sell the best in your area. Choose your variety according to the climate of the area your customers will be in. For example, the medinette variety bolts more slowly than most in hot climates, so it may be better to sell in the South. Bolting is when a plant flowers rapidly in response to a stressor. Also consider the needs of your customers. For example, if your customers are avid cooks of Italian food, stick with the Genovese or Napolitano varieties as your basis.

Seasonals

Seasonal herbs grow in popularity during certain times of the year. Generally, the popularity growth is because the herb is used in holiday recipes or as houseplants during certain seasons. For example, potted rosemary plants are often pruned into the shape of a small Christmas tree, which provides an aromatic houseplant during the holidays or makes a nice addition to an outdoor garden in warmer climates.

Easter lamb recipes call for marjoram, thyme, mint, and rosemary. Some stews also call for bay leaf. In order to prepare your herb inventory to accommodate these and other season needs, be sure to have herb plants ready at least three weeks before the date of the holiday or season.

Specialization

Another option is to specialize in a particular herb your business then becomes known for producing and selling. For example, some herb farms develop a specialty crop in lavender. Specialties are not necessarily a way to start your business out, but it may be something that molds and transforms as your business changes and grows. Generally, a specialization is something identified because of the great demand in the area for the herb or the ability for the herb to grow because your climate or soil conditions are ideal for the plant. Even when an herb farm or business decides to specialize, it still tends to offer a limited amount of herb seeds and plants of other varieties. Your own herb business may start out offering a variety of herbs, but as your business transforms, it may be more profitable and prudent to specialize in the best sellers. Make sure you are selling products that complement each other. When specialty farms offer complementary products such as seeds and small potted herbs, it is similar to impulse buys set up at the checkout lane of the grocery store. Because the customer is already shopping at the herb farm, it is likely he or she will be interested in other herb-related products. Selling complementary items boosts the average transaction amount up, the amount each person spends when they visit the business, without having to try to convince the customer to take more of the single herb they came to buy instead.

Culinary herbs

Although specialization for your herb business may be selling one herb, another way to specialize is to sell the herbs that cater to a specific need. Because culinary herbs is a popular category, you may decide to focus your business on growing and selling herbs used in cooking. Herbs add their own flavor to foods but also bring out the natural flavors of meats and vegetables. Attract business by growing herbs often paired together. For example, a Mediterranean herb palate consists of herbs such as flat parsley, oregano, basil, mint, garlic, and rosemary. Others often included are thyme, marjoram, sage, bay leaf, and fennel, also called anise. A potential customer may not know how to use an herb until you promote its uses, which can be another aspect of your business — education. For example, because dill is an essential ingredient in pickling, share pickling recipes with customers, which can directly drive up your dill sales. It is worth noting that dill requires a lot of space for growing and may be one to tackle in a second year of