Anne and Ted Chalmers are a couple in their mid-40s who decided to turn their lifelong interest in gardening into a business opportunity. They opened a garden center in their provincial town location and their ultimate goal was to live a lifestyle away from the corporate world but to generate a reasonable profit on which they could comfortably live.

They planned their business launch over two years, during which they studied bookkeeping and other small business skills, and visited many nurseries around the country to pick up hints about the business.

The Chalmers purchased some land for the garden center and after using $125,000 cash from their personal savings, they raised a business loan of $200,000 secured against the land. This loan also allowed them to fence the property, and construct a car park and small building on it while retaining sufficient money for business cash flow including stock purchases.

Anne and Ted intend to operate the business in line with their personal values. These include always giving your best, having a can-do attitude, treating customers like family, and creating an environment that everybody wants to be a part of. When the garden center opened, Anne continued to work as a nurse to keep a flow of income, while Ted went to work full-time to build the business. He had previously worked in an administration role for a large corporation, which gave him a range of experience.

The first two years were very hard. Ted was a manager, shopkeeper, purchaser, and horticulturalists, and Anne was a nurse, shopkeeper, and bookkeeper. The hours were long, suppliers insisted on cash payment, and income was low. On day one, they had three customers. Nobody really knew the place existed and another two small but established garden centres on the other side of town were already in operation.

Ted added a marketer to his list of jobs. In time though, the business established a regular clientele. Suppliers were now more confident and trusting, allowing larger quantities to be purchased on credit. The garden center was also producing more homegrown plants on its own land. Cash flow worries eased enough for Anne to resign from nursing to ease Ted’s burden.

After five years, the garden center has become a seven-day-a-week operation opening 9–5 pm on weekdays and 8–4 pm on weekends. It now employs four staff to serve customers (two full-time and two part-time). It averages 70 customers per day at an average spend of $40 each, with total sales of just $1M per annum.

The garden center has exclusive selling rights for a popular range of garden accessories made by a renowned local craftsman. It is achieving a net profit of $100,000 per annum, which Anne and Ted consider a great return on their cash investment. They have some concerns that the country as a whole is currently going through an economic downturn but believe that this will not unduly affect the local garden center market.

They are also encouraged by the fact that a number of residential subdivisions are under development in their immediate vicinity and feel that these owners will be purchasing outdoor plants for their property landscaping. A major challenge has now arisen with a nationwide garden center chain setting up a competing operation in a central and high-profile location.

Regional council statistics show that 42,000 people live in the town boundaries with another 7000 people living in the outlying rural area.

Anne and Ted have previously conducted research showing they had a 40% share of the garden center market but they’re now very concerned that this could drop dramatically in the short term. They decide that they need to meet the challenge head-on by expanding their business offerings. They wish to do this in three different ways: open an on-site café, run gardening classes in the evenings, and develop a mini-golf course on the land. Their thinking is that all of these activities will provide reasons for existing customers to keep coming and attract new customers. They will need to take on additional staff for the expansion.

This expansion will require additional funding of $105,000. Anne and Ted have $25,000 of their own and wish to borrow $80,000 from the bank. The increased scale of operation will require the business to update its infrastructure and operational processes. Currently, they use a dated computer system, manual stock takes, and don’t really have any staff training system in place.

Anne and Ted are aware that they are taking a business risk with their planned expansion but feel it is a risk that they have to take for the business to survive.