Loans

v Supply financing without affecting management decisions.

v Require collateral and repayment of the principal plus interest

v Sources include banks, savings and loan banks, credit unions, insurance companies, mortgage companies, private individuals

Information Needed for Loan

1. Ownership and management information

v Type of business organization

v History of the business

v Managers background both professional and personal

v How long under the same ownership and management and likelihood of change of either

2. Objectives and repayment of money lent

v will it be used for equipment, operating costs, land, plants, etc.

v Paid back monthly over one year, 2 years, etc.

v Factors that may affect repayment and alternative ways of repayment as a result.

3. Financial information-

v Nursery financial data audited by a CPA

v Type of accounting system used

v Current balance sheet and profit/loss statement

v Cost of production schedule and cash-flow analysis

v Long and short-term financial outlook of nursery industry as a whole

v Other financial obligations and their repayment

v Proposed collateral and its forced liquidation value

v Other assets- money owed as accounts receivable, value of land, equipment and facilities

v Forced liquidation value of the nursery crop.

Crop Value Assessment

v Cost of production schedule

v Professional Appraisal- value appraised by outside consultant of forced auction sale.

v Wholesale value of crop minus harvesting costs

Information Needed About Lender

v Regulations and limits set by institution about loans- how much and for how long

v Their clientele

v Stability of the lender and policies

v How much liberty does the loan officer have in negotiating

Security or Collateral

v Loans are secured based on assets called security or collateral.

v Assets have fixed, increasing or decreasing values

v Not all assets should be used as security

v When using assets with increasing value as collateral the loan agreement should release some of them over time

All Aspects Negotiable

v Lender

v Amount

v Repayment schedule

v Interest

v Monthly payment

v Flexibility

3. Profit and depreciation funds

v Profits- can be reinvested in business

v Depreciation fund- should be safe and interest earning

Investment Analysis

v Determining how to select between investments

Urgency Analysis

v Red Maples versus Tree Spade

Pay-back-period Analysis

v Time to repay initial investment.

v Can use cost of production schedule to evaluate.

Simple-rate-of-return Analysis

v Allows calculation of a simple rate of return on the additional earnings or savings created by the investment.

v Formula:

v (additional earning - annual investment)/total investment x100 = rate of return

Example

v Tree spade A costs $36,000, saves $9,000/year labor.

v Life expectancy = 6 years, costs $6,000/year

v Rate of return = (9,000 - 6,000)/ 36,000 X 100 = 8%

v Tree spade B cost $25,000, saves $7,500/year labor.

v Life expectancy = 5 years, costs $5,000/year

v Rate of return = (7,500 - 5,000)/25,000 X 100 = 10%

v Tree spade C costs $18,000, saves $5,500/year labor.

v Life expectancy 3 years, costs $6,000/year

v Rate of return = (5,500 - 6,000)/ 18,000 X 100 = -3%

Personnel Management
Planning

v Determine Tasks

v Job description

v How many workers needed

Personnel Management
Hiring

v Job application

– Personal information

– Background

– Expectations

v Interview

– 2-way

– Nursery’s mission

– Qualifications of applicant for position

Personnel Management
Training

v Initial training

– Provides job expectations, skills

– Allows identification of abilities

v Continuing education

Personnel Management
Motivation

v Acceptance of mission statement

– Employee buy-in, team concept

v Communicate goals

v Communicate employee rights and responsibilities

v Rewards

Personnel Management
Motivation

v $$

v More $$ (bonuses)

v Fringe benefits

– Health, dental, retirement, vacation

– Training, professional meetings

v Commendation

v Inclusion/participation in planning

– Evaluation of suggestions

– Incorporation

– Recognition

Personnel Management
Evaluation

v At identified intervals

v Define strengths

– Commend & Reward

v Define weaknesses

– Training

– Suggestions for improvement

v Potential job reassignment

– Promotion

– Lateral

Personnel Management
Evaluation

Hourly employees & entry management

v Quantity

v Quality

v Incentives

– Bonuses for exceeding expectations

– Piece-rate

Personnel Management
Evaluation

Upper Management

v Fulfilling mission

v Profit?