On a positive note, I think Brad is a good businessman. If he can make it work from a pricing standpoint while providing consistently high-quality plants, then I am going to buy from him because I would like to see him succeed. I like people who are romantics. I am one and so is Brad. But I'm not willing to finance a whole lot of risk to see him succeed.
OBSERVER
GEORGE KOZIARZ
President, George Koziarz & Associates Inc., a nursery-industry consulting group in Bannockburn, Ill.; did consulting for Glacier Nursery last summer
Brad has built one hell of a business out of sweat equity. He has put in the hard work and long hours that an entrepreneur needs up front. His biggest problem is that he's undercapitalized. You need an enormous amount of money to start a nursery. The time horizons quite often scare away even the venture capitalists who are looking for high risk. It's just a roll of the dice, but if it pays off, it pays off very well. What Brad is doing right is developing long- and medium-range plans that fit with his ability to get capital for the company. He tends to reinvest in the crop at a faster rate than I would do it, but he's got his heart in it, and I've got a pencil and a computer in it. But he has no option. That has kept him cash poor but also enabled him to build the company. I see him at the beginning of a cash cycle that will allow him to pay down debt and pay for additional expansion.
COMPETITOR
NORBERT KINEN
Vice-president and controller of J. Frank Schmidt & Son Co., of Boring, Ore., an $18-million nursery
His market niche is great. He built on the Montana region and then expanded to the Rocky Mountain region as a whole. His thinking is very sound there. His advertising pitch is simple and straightforward -- quality and Montana grown. You can't beat that out there.
His pricing approach is probably good, too -- starting customers off below market and then bringing prices up to 10% above market. A lot of people starting out in the nursery business use the approach that they are always going to undersell the big boys, and that's a terrible mistake. They think that people buy strictly on price, and a few do. But my advice is, Don't try to serve those people. Serve the people who are willing to pay for what you've got.
One thing he has to watch out for in his pricing is that he does all the selling. There are no sales costs other than travel. A lot of his competitors have a 5% to 10% sales cost in commissions. What's going to happen when he can't handle sales any longer? He'll have to reduce some other costs so he can reap the benefits of that premium he charges.
I'd have to pin a star on him for getting that line of credit. A lot of people in this field don't do that. It's important just to go through that exercise, and it will be essential when he has those bad years. Two things that can hit him -- the economy and the weather. Those can kill a lot of businesses when they strike at the same time. Because he is running so tight in terms of sales to expenses, he'll have only one place to go in a bad year, and that's to the bank. It's good that he's building a history there.
Finally, he and his wife have struggled for a lot of years. I think it's important, at least psychologically, that they start slowing it down a little bit. They're getting to that age when they should start to reap something from all their work.
CUSTOMER
BOB MARBLE
President of Billings Nursery Inc., a $1-million garden center and wholesaler in Billings, Mont.
We are looking for suppliers with proven quality. I want the guys I'm dealing with to have high principles, people who are going to ship me only quality stuff with complete reliability and truthfulness. Somebody who keeps his promises, from whom I can order sight unseen with complete confidence. Brad, as far as I know, meets all those qualifications. On top of that, he's living in Montana. He's very knowledgeable, and he's doing his best to turn out a good product, so quality is not the issue.
His prices, however, are higher than those of the people I'm dealing with now, and we get volume discounts. My major tree supplier is in Idaho, and Brad is substantially higher, maybe $12 to $18 more for a tree that's two inches in diameter. Still, I'd say price is my third consideration after quality and service. And I have bought some items from him in the past, but not that much. I do think, however, that he'll become extremely valuable to us as a fill-in supplier during the summer, and that can represent a considerable amount of money.
Maybe someday he'll be able to handle our big orders, too. But I don't see him as a primary supplier in the near future, because I don't think he's got the capacity yet. Last year I ordered 2,000 cotoneasters. I don't think he could have handled that, and even if he could, it might have cleaned out his inventory so that he wouldn't have been able to take care of his other customers.
But all in all, I think if he can manage to handle the weather here, particularly the sudden temperature drops after a prolonged warm period, he'll do very well. He's eager to please, and he's quality oriented. I think he's a better businessman than I am, and I've been in this business since 1951, the past 22 years in Montana.
