Will it rise like this? Probably not. More of an exponential: shallower at first, then it takes off. On the other hand look at the value of inventory for the last 6 years. (In the spreadsheet link below)
Due Diligence
Questions you should ask
How much are you making now? Seriously. Last year we had a gross profit of $30,000 on sales of about 100,000.
How does that compare to previous years? How fast are you growing?
- Some income is not assigned to one of the niche categories. (deliveries, consulting, pot sales, fertilizer…) Totals are a few percent above the sum of the niches.
- Privacy trees peaked in 2014 when we discovered bronze leaf disease in our swedish aspen. We've not sold SA since then, but other sales venues have. With other trees being used for this function distinguishing between trees for privacy and for landscaping becomes more difficult. You may wish to lump landscaping and privacy as a single category.
- Shelterbelt has been nearly flat in part because of supply issues, in part because of difficulty keeping up, in part because of the economy.
- Landscape in 2014 is distorted due to a single $7000 pre-order. With luck and work this will become less of a fluke. We are still at a size where individual niche totals in a given year are in part determined by random events.
How long might it take me to make my investment back?
If you just run it as is, it will take forever. That makes the payments on the loan for the farm portion. (everything - house)
Raw profit (Sales minus purchased trees and direct expenses for resale) is about 50% but most of that is re-invested in more pipe, more pots, and an increase in inventory value of about 60k per year. But we've done the hard part: Now is the time to take it to the next level. See the section on expansion options for lots more detail.
If you are serious, you can come spend a day with Laura and she will print any part of the books you wish.
Buy the farm. Run it as is for a year. Start by implementing the low hanging fruit in the Expansion section. Example:
Market seedling sales more aggressively and double sales. $15K.
Ramp up production of shelterbelt trees by 2000 trees/year. $30K.
Double the size of the ornamentals and fruit sales $30K
Get two more government bids per year. $20K.
Sell 1000 native perennials $10K.
These alone will more than double sales. There are other low hanging fruit. Pick which ones you want:
Put in two 720 pot strips of growbag trees a year. $140K/year starting 5 years from now.
No guarantees. Much depends on how hard and how smart you work. Try this: Read the expansion list. Read the notes. Put together a spreadsheet with a set of options you think is reasonable. See what you think, Do it as a google doc and we can discuss.
"But taking over a whole tree farm business seems like a lot of work."
_You want it easy? Buy a Mcdonald's franchise. _
Most worthwhile actions is life are hard.
Buying a business is fraught with uncertainty, especially when it takes a certain degree of expertise to make it work well. To help you make it work, I'll add these bonuses to the mix.
- BONUS #1: 1 year of 3 hours per week phone support.
- BONUS #2: For April through September 1 week per month on site teaching you the routine. Additional weeks at 2000/week + airfare. This assumes I get room and board with you.
"It sure sounds like a lot. How did you come up with that price?"
I started by throwing darts at a bunch of numbers stuck to the kitchen door. Just kidding. But really, I’ve linked to a spreadsheet below. These numbers may change as we get better handles of the value of each part.
Current Valuation You may want to open in new tab.
Got something to say? Email me: sfinfo@sherwoods-forests.com
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Sherwood's Forests is located about 75 km southwest of Edmonton, Alberta. Please refer to the map on our Contact page for directions.