Setting up a Orchid Business

[Neenie]

Hello Orchid Geeks, I am a newby to your wonderful site. My husband and myself started with one orchid and now in less than 2 years have over 100 different beautiful orchids. The orchid industry really seems to be up and comming and I was curious if anyone knows how hard is it to turn our hobby into a business.

[silkymoon]

Oh how, would you have the heart to part with them

[jerrymeola]

Hard and expensive. Do not expect to do anything but put money in for 3-5 years. On the wholesale end the people who sell Home Depot and Walmart make 3-5% net profit margins. You can not consider your cost and subtract that from your sale price. Your real cost can be 50-80% higher.

Retail sales are limited to what venues you can get. Most shows are by invite only. It is very difficult the first few years to get an invite, and they are expensive. The world orchid congress in Miami is the high end costing each vendor $3-6000 for the weekend. Average shows cost $5-800 if within local driving distance and outdoors shows do not refund for bad weather.

Most of all do not judge by what you pay for orchids. You probably pay twice as much as someone else is charging and you do not know it. There is always someone selling for less than cost.

Real estate is high and financing non-existent. If you can not build the business from current cash and live off something else for 3 years, it will probably fail. These are just business numbers and really apply to all businesses not just orchids. Living things are just harder to make a profit as they die.

[janet_a]

the old saying that applies to horses applies as well to orchids: "in order to make a small fortune in orchids, you need to start with with a large one."

from a few folks i've talked with, it seems to roll over into a business when the number of orchids is in the thousands. (oh, and they had someone else paying the mortgage, too.)

[Neenie]

For now I will just enjoy the Fun of Orchids as a Wonderful Hobby.

[jerrymeola]

actually it becomes a business when the number approaches 500k and is a business when in the millions. And I only count potted plants in these numbers, flasks and com-pots do not count as too many never get sold.

[Andrew]

I don't think the nursery trade in general is a particularly lucrative business. The profit margins are fine because the customer does not see much value in the product. The orchid trade has the added problem of a relatively small market and a substantial time and resource investment to produce a salable product. If you have extra plants you want to offload make use of the sales table at your local orchid society. eBay also offers a good opportunity for small scale sales.

[kmarch]

Originally Posted by jerrymeola

Average shows cost $5-800 ...

Wow, Jerry Florida shows are expensive to sell. Most of the shows I know if in Michigan the tables are half that cost.

[kmarch]

Originally Posted by Andrew

The orchid trade has the added problem of a relatively small market ...

Perhaps locally but not globally. Orchids are the second highest selling flowering plant, second only to the lovely Poinsettia.

[Anton]

There's an old saying : "It takes money to MAKE money."

Jerry put it nicely.

The other thing is you have to take account of your loses, seeing you're dealing with a life source that will just drop dead for no reason and en-masse at times you have to be able to absorb those losses and not lose your mortgage.

[palito]

Originally Posted by Andrew

The orchid trade has the added problem of a relatively small market and a substantial time and resource investment to produce a salable product.

Originally Posted by kmarch

Perhaps locally but not globally. Orchids are the second highest selling flowering plant, second only to the lovely Poinsettia.

I think one must make a distinction between the small business and the massive operations that churn out millions of budded orchids for sale every year.

The economics of producing thousands of budded cymbidiums, dendrobiums and phals in warm weather in asia or central america seem unbeatable. And with fuel, electricity and heating costs going up every month I don't know what the future holds for european and US small growers.

[jerrymeola]

kmarch

your answer is typical of the problem I was emphasizing in business. The cost of the table is sometimes the lowest cost.

Most shows require a show display

These can easily cost two days time for design and setup. Some growers spend 1000-1500 on displays for the Orchid Congress. Specimen plants in the display get beaten and often can not be sold for an additional year. Extra help is expensive, hotels and meals. Travel expenses ($70-100 for local gas ignoring planes)

I have started taking double booths whenever possible to have the extra space and $1-300 extra is worth the cost in return for the ease of working in the space.

[jerrymeola]

Palito

the local markets are good for orchids and the per piece profit is OK on the retail level. That is why you see every wholesaler selling retail.

Global competition from Asia is not important since it requires large purchases to be economical. I can buy locally for less than Asian prices. I have brought Vanda from Thailand at low prices and regretted it. Re-establishing the plants to local conditions removes all the profits.

The real issue is not the profit margins but that owning a business takes a certain mental attitude toward it and a discipline most people do not have.

This is not my first business and I have worked at lower margins. It requires a fine attention to cost and constant analysis. After every show I want to discuss the show and how we can improve and my wife wants to forget it on the drive home. Consequently I never get any feed back from her. You need to question every decision you make and decide how to improve. The work does not leave when you go home at 5. it is 24/7

I will say I have made a cash flow profit (more cash left over today than yesterday) every day since I started without any cash of my own invested. Mostly because of prior experience in business, but never has it been sufficient to pay the bills.

I have an income that allows me to continue without taking living expenses from the business, otherwise, I would be out of business.

[tom499]

An approach I see some growers in Europe take is to make small profits off their collection as a side income to their normal job.

Many growers I guess probably do this, but some take it to a higher degree. Experienced growers usually specialise in one genus and have many interesting plants. As time goes by they make their own crosses, seedlings etc or divide up big plants. They then sell these off to other growers, slowly setting up a word of mouth reputation. They may go as far as having a website, but usually just a phone number or email address passed around which you contact them by.

They dont rely on sales for a living, dont sell at shows, and keep it a fairly low key process, usually meaning they sell plants cheaper, but wont have the same quanities available. They also arent so well advertised as others, but they probably sell enough to pay for some of the weekly food bill

[Andrew]

Originally Posted by kmarch

Perhaps locally but not globally. Orchids are the second highest selling flowering plant, second only to the lovely Poinsettia.

How do they compare with plant category sales, such as flowering annuals and vegetables, fruit trees, bulbs etc? That's where the commercial comparison should be made.