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How to Start a Plant Nursery

Overview

How to Start a Plant Nursery

Are you an avid gardener who loves to make beautiful things grow? If you have some land, a plant nursery could be a great business opportunity for you. While it may sound like an easy way to make money, it’s not. Nursery owners face several challenges outside of the normal marketing of a business as they face challenges and risks to their product, such as floods, ice, drought, plant diseases, and insects.

A plant nursery can be a part-time business and be an excellent source of additional income. You can get started with a small backyard plant nursery and specialize in a unique and high-value variety of plants.  Some species of plants, like certain onamental plants and varieties of Japanese maples and Boxwood, can bring in a lot of revenue from a small space.

Plant Nursery Industry Overview

A plant nursery grows seedlings or saplings of various trees and plants until they are at the stage where they can be sold to be transplanted directly into a yard or garden.  Most nurseries offer a variety of types of plants, while some specialize in certain plants, trees, shrubs, ornamental grasses, herbs, or flowers.  Species usually depend on the local climate.

According to IBIS World, the Nursery and Garden Store industry in the U.S. is $42.4 billion as of 2021 and is expected to increase 2.6% during the year.  It has increased 1.2% per year on average for the last five years. The largest market for the industry is people aged 50 and older, and that population is increasing.

Industry Trends

Rising per capita disposable income and increased spending on home improvements are expected to drive growth in the plant industry, as well as the rising older population.  The industry is sensitive to economic fluctuations, so during economic downturns, the industry suffers.

Target Market

Your target market will be consumers with yards or gardens or wholesale accounts like landscape contractors, retail garden centers, other growers, and municipalities.

Skills, Experience, and Education Useful in Running a Plant Nursery

There are several specific skills that you will need to open a plant nursery.

  • Experience.  Experience in growing plants and extensive knowledge about the types and care of plants is essential.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.

Checklist for Starting a Plant Nursery

Starting a plant nursery can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your plant nursery should be to write a plant nursery business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect plant nursery name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a plant nursery, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

You need a location with enough space to have your greenhouse and store, preferably in a convenient location with high visibility.

The soil type of your location will also need to be considered depending on the types of plants being grown.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Depending on the state, a plant nursery may need agriculture licensing with their Department of Agriculture. This department will make random inspections and search for things like invasive species and pests.

In addition, there will be general business licenses and registrations such as a sales tax permit and an Employer Identification Number.  

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a plant nursery is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

You will want to determine if you can be competitive in the market.  This is especially important if you are starting with a limited selection of plants or flowers.

Common marketing techniques for a plant nursery include social media marketing on Facebook and Pinterest and online advertising. Developing a website can be a significant expense, but it can also give your plant nursery greater visibility online.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!

Step 9: Get Business Insurance

A plant nursery should consider several types of insurance to fully protect the business. A few of the more common types of insurance include:
General liability insurance can help protect you from third-party claims of bodily injury and property damage.
Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

The cost to insure a plant nursery will vary based on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hire Employees

You may need employees to help you run your plant nursery.  Make sure that you select people with appropriate experience and training.

In addition to labor costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your plant nursery is critical to the long-term success of your business.

Staying on top of taxes keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a plant nursery?

Here are some of the typical costs of supplies and equipment you’ll need when you open a plant nursery, and this assumes that you already own sufficient land.

– Greenhouse $15,000-$100,000 +
– A storefront for your greenhouse $5,000-$50,000 depending on the size
– Equipment such as wheelbarrow, shovels, pruners, etc. – $500+
– Initial nursery stock and inventory such as seed, fertilizer, potting soil, pots, etc. $10,000-$30,000 +

How profitable is a plant nursery?

Your revenue will depend on the size of your nursery and whether it is a full-time or part-time endevor.  If you are successful, you could earn revenue of $15,000 – $600,000 per year.

According to Nursery Management, the markup on smaller trees might be 150 percent but the markup on large trees might be 75 percent, while the markup on a new shrub cultivars is 250 percent.

If not reselling plants, it will take time to start making money because you will have to grow enough plants to a sellable stage. Depending on the plants that are being grown, expect between two to four years before becoming profitable.

In addition to varying weather impacts, the business will be very seasonal too, with spring and summer when homeowners are doing landscaping projects. You will need to budget for slow times of the year.

Another factor in determining profitability is that trees and plants have a limited shelf life and require constant care. If plant health isn’t managed properly, you could face a significant loss in profits.

Are there grants to start a plant nursery?

It’s extremely rare to find a grant to start a plant nursery. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a plant nursery?

The NAICS code for a plant nursery is 444220, which is classified under Nursery, Garden Center, and Farm Supply Stores.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

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