The business plan and the financial plan are based on the estimates of Pascal Lambé, Founder and Managing Director of Phytesia.
Given the lengthy period of the production process from vitro-plant (IV) to flowering plant (PF), Phytesia has historically offered three types of products corresponding to the three stages of development.
- In vitro (IV) plants coming directly from the laboratory (one year in preparation) are marketed at this stage to other horticulturist-producers who take the plant growth further. This product is also sold to clients in the cosmetics sector.
- Young plants (JP) grown for an additional period of one or two years in greenhouses are marketed to other producers or to companies which are principally active in mail order sales.
- The adult plants (PF) (ready to flower) are marketed after an average growing period of four years. Sales of flowering plants (PF) are divided between horticulture wholesalers, retailers and garden centres, and B to C sales (internet site).
With the launch last May of the online sales site (available only in French for the moment, while the English version is being prepared) and with ad hoc communication tools (Facebook, referencing), the number of retail clients who will be able to buy Flowering Plants directly from Phytesia will grow very significantly. We are talking here about knowledgeable clients who often have purchased one of the Phytesia products from a retailer and then thanks to the label come to Phytesia to extend their collection and get orchids which the retailer is not able to sell them (as the purchase price is too high or stock is intentionally limited to products in the Easy Garden range).
Most sales turnover comes from sales of the Flowering Plants.
Taking 2016 for our example, the sales figures achieved from Flowering Plants (apart from B to C) will represent 66 % of total sales turnover (apart from B to C). The biggest volumes have gone to horticulture wholesalers (12% in terms of number of plants versus 29% in terms of sales turnover for the year 2016). Direct B to C sales represent barely 2% by volume but more than 21% in terms of sales turnover.
The costs of sales correspond to the cost of goods and raw materials. These are initially very low (concerning mainly soil, plastic pots, labels, etc.), but are growing with the volume of flowering plants sold in B to C (cost of packaging considered at the ceiling price of €0.9/plant).
Labour consists of one employee (manager of R&D and of production) and workers in the lab and greenhouse production areas (potting, maintenance, etc.). Phytesia also brings in seasonal labour. Here also, apart from an increase of 10% per year to deal with growth, the salary costs are growing with the volume of flowering plants sold in B to C (€0.6/plant).
At the management level, only Pascal LAMBE figures on the payroll. He is managing director and founder of Phytesia, and he looks after matters of marketing, production and daily management.
In terms of marketing costs, one has to distinguish between several kinds of expenses. Firstly there are expenses relating to participation in horticultural exhibitions (one or two per year at present), publication of articles in the press (advertising for the two open doors weekends in season), advertising materials (brochures, catalogues, etc.), and travel costs (visits to clients). Phytesia is determined to grow its presence in the horticultural exhibitions of Europe and beyond. For this purpose, an additional budget of €20,000 to €25,000 per year is planned, starting in 2016. In terms of personnel, this corresponds over time to about four additional full-time employees.
The other general expenses consist of maintenance and repair costs for the infrastructure, equipment, miscellaneous office supplies, insurance costs, accounting and the usual general expenses (telephone, postage, fuel, etc.). One point to note is that the energy costs of Phytesia are very low (+/-€10,000 per year for 4000 m2) since the installation of a co-generation unit which allows us to produce our own electricity and to use the heat generated for heating domestic hot water, the offices, the lab, the reception area and partly to heat the greenhouses.
The breakdown of total costs (costs of sales, salary expenses, marketing expenses, general expenses) is shown in the table below.
Break even volume