Profit - It’s All About Change

Profit - It’s All About Change

by Steve Bailey

The Group's Annual P&L Study for 2018 resulted in the highest number of awards ever presented. During The Fall Event, awards were given for both the High Achievers and Best Practices Centers for profitability. The photo below are those centers who were present and received the High Achiever Awards for 2018.

All of you joined The Garden Center Group for a reason. Maybe it was for the camaraderie of networking with peers, possibly to work more closely with Service Providers within The Group, to access the financial tools such as the Weekly Department Review and P&L Study, or any of the other numerous reasons there are to be a part. Most likely the underlying reason was you needed Change and all of the above enables you to enact it.

To put it into perspective, let’s look at the Profit Chart from the 2018 P&L Study. In case you haven’t seen it before, the Profit Chart has been a part of the Study for ten or more years now. To orient yourself into what the Chart is saying, each bubble is a direct representation of the actual Profit Dollars retained at the end of 2018. Look closely and you will see the Percentage level of Profitability on the left, and the Revenue level running left to right in the middle of the chart.

Most of the reasons stated above for joining The Group were because of a need. A need for more Profit. Yes, many centers join The Group due to a low level of Profitability. Not all, but many. This lower level of Profitability is represented by the bubbles below the blue rectangle. They begin in the negative Profitability area and range up to the 5% line. These are the centers that are just beginning to use some or all of the tools The Group has to offer. It’s also a challenge for a retailer to stay in this area and be sustainable. They want to move up, and they usually do.

Let’s go back to the High Achiever group, outlined in the blue shaded rectangle on the chart. This group of garden centers, twenty-three in all, achieved 5% to just a little over 10% Profitability.

As discussed before, many of these garden centers began below that blue rectangle. But what moved them up the ladder to achieve a higher level of Profitability?

There are multiple factors that have contributed to their improvement. That’s what I see when I look down the list of High Achiever Garden Centers. For most, it was accountability. Putting The Group Chart of Accounts into place and having the detailed numbers needed just to begin managing ‘selling a product’ was the first step.

After that was accomplished, they tackled the cost of the product they sold. Since Cost of Goods Sold is the largest expense for any garden center, it’s also the easiest area of opportunity in the P&L to enact Change.

The second largest expense is Wage & Wage Benefits. This expense is now a major concern due to higher minimum wages, put into place either by government or through the need to attract people that fit our retail model.

Controlling Operating Expenses is difficult unless you have comparisons. The Profit & Loss Study is very detailed in that respect, enabling all participants the opportunity to improve, even if ever so slightly, and realize more Profit.

If there’s one area that this group has tackled, it’s increasing Revenues. This leads to reduced expense percentages and fuels facility improvements.  This is the sustainability discussed earlier, and should lead to increased Revenues and Profitability.

In general terms, these garden centers have taken the tools offered and improved their financial stability. But what about the bubbles above the High Achiever group? What made them attain an even higher level of Profitability?

We’ll dive into that next time.


Want to discuss how to reach a higher level of Profitability with Steve Bailey? Call or email him!
Steve Bailey
Cell: 618-521-5225‬
REMEMBER: Your interaction (by phone and email) with Group Service Providers such as Steve Bailey, Robert Hendrickson, Sid Raisch, Jean Seawright, and John Kennedy are included in your retainer!



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