Scaling up requires careful consideration

Text: Nursery Stock Trade Fair GrootGroenPlus SCALING UP REQUIRES CAREFUL CONSIDERATION

Scaling up has been an item in our industry for years. Companies take over each other, or grow. It has turned into more than just adding some land and buildings. Things have become much more complicated, with all the advantages and disadvantages that it entails. What are the pitfalls? We asked both the consultant and the grower.

Scaling up should not be an end in itself

“Increasing scale is not cultivation-related,” says René Dekkers, senior account manager for Food and Agri at Rabobank. “You can see it in all types of cultivation in the nursery stock industry. For some types of cultivation, mechanisation plays an important part and specialisation can also lead to expansion. Or what about less intensive cultivation and allow for more fallow land with the use of soil fertilisers. That would mean that you will need more land to meet your production requirements. With a healthier soil, you get better growth and therefore a better price. The soil is also capital and you have to deal with it in a sustainable way.” Dekkers mentions the aspect of efficient working through mechanisation and digitisation as an advantage of scaling up. “Beside mechanisation, digitisation is also increasing. Soil situation and growth are increasingly more often being digitally driven. You get data-driven cultivation. And what about the emerging use of drones. Specialisation can also be a reason for scaling up.” Dekkers: “You have to remember that specialisation also has the disadvantage of becoming more dependent. Distribution among customers is important. Another disadvantage of increasing specialisation is that it limits the assortment. Specialisation has highs and lows; you can see it with the Buxus. Many growers have stopped growing these, because of the Buxus moth. Now you can see that because of resistant species, interest is increasing again.” “Scaling up should not be an end in itself”, says Dekkers. “There is a lot to think about. And here, I would also like to emphasise the staff component. First of all, you need ‘enough hands’. Scaling up, mechanisation, and digitisation make the work more challenging. And that makes it easier to get staff.” “Quite a lot is happening in the industry. New developments, interesting knowledge initiatives, which also make the profession more interesting for young people. Finding staff abroad? Then make sure you’ve taken care of everything. I see that that isn’t always the case. In terms of staff policy, it is important that you ensure a good framework at every level, and good communication”, says René Dekkers.

Dare to make choices

Mike Aldewereld (relation manager horticulture) of Accountants- en Advieskantoor ABAB, mentions the lack of a successor, market circumstances, and cost efficiency as the most important reasons to scale up. “You have to make sure you don’t loose sight of the bigger picture. If you want to scale up, for whatever reason, it is important to find out if it fits you and the organisation you want to have. When scaling up, matters such as staff policy, organisational structure and business development are explicitly addressed. It’s not what it used to be.”

On behalf of trade fair GrootGroenPlus: Erik Bastiaensen, member of the board.

“According to the Van Dale, ‘scaling up’ means ‘an expansion of size’. However, the responses in this article show that it is much more than that. And I agree with René Dekkers that scaling up isn’t a goal in itself, but that it often helps entrepreneurs reach their goals. “Especially for the companies that are dealing with economies of scale for the first time, it is important to seek external advice,” says Aldewereld, “if you’ve got any experience, you know a bit more about it, but still, external advice can always add another dimension. The consultant can be the sounding board of the entrepreneur and if necessary, hold

Joost Sterke

up a mirror. At ABAB, we know the industry from ‘A to Z’ and know what is going on,” says Aldewereld. He mentions fiscal and financial policy, business development and of course HR management (including staff policy) as very important points of attention. “Dare to make choices, stay close to yourself and make sure that you continue to see the bigger picture” Mike Aldewereld advises the growers who consider scaling up.

Continuing to offer perspective to employees

“It is very important that you carefully list all the factors when thinking about possible scaling up,” says Elbert van Aalst of Alfa Accountants. “Bigger doesn’t have to be better”. In addition to considerations such as lowering the cost price, the need for cooperation and being desirable to the market, Van Aalst also mentions continuing to offer perspective to employees. He sees the increase in scale across the board in the nursery stock, not necessarily cultivation-related. It is often sales-driven, for example to continue to facilitate large customers “You sometimes have to grow with them.” “Choosing to scale up also means that, as an entrepreneur, you get a lot on your plate. You have to ask yourself if that’s really what you want. I think it is important that an entrepreneur attracts people he can talk to, and that he can work well together with. The team has to be strong. An increase in scale also means more employees, either because they come along during a takeover or are attracted externally. And if the size of your company is increasing, that also means that you cannot do it all by yourself as an owner. Other people will also have to take responsibility. And you have to choose them carefully and make clear agreements. And you have to keep communicating. If you work at one location, things are clearer than when you’re having multiple locations due to a takeover. That requires a different approach.” Van Aalst also gives us the opportunity to think carefully about the form of the company. Does the current shape still fit in with the new situation? And another point: “Scaling up can also mean the acquisition of land and the start of cultivation. In that case, it is important to carefully check whether the plans are in line with the zoning plan and the environmental permit.” We asked Joost Sterke, director-owner of Plantenkwekerij Joost Sterke. “Our company considers innovation to be a solid foundation, and our employees also play an important part in this”, says Sterke. “They are also thinking about how we can make cultivation smarter, more sustainable and more qualitative, which is also in their best interests. We are investing in precision farming within the nursery. Plants, pruning, rootballing and undercutting are all done by using GPS. A soil scanner will tell us exactly where on the plot we have to do what when it comes to food and water management. We use a drone to scan our plots, count the plants, and measure the sizes. We use underground drip hoses to water everything.”

According to Sterke, whether or not you should decide to scale up largely depends on the staff component. “Can you have enough skilled employees to cope with the expansion? If not, well, it ends there.” Sterke also notices that this aspect puts the brake on the growth of many colleagues. “Retailers are still able to cope with this increase in scale. That is not the problem. Up-scaling shouldn’t be more of the same entering the market, that only lowers the prices. In addition to the aspect of the employees, you will of course also have to deal with automation, digitisation, mechanisation and robotisation. If you want to scale up successfully, you can’t ignore these. But even then, you will eventually need those ‘hands’ to take care of the operation. I just mentioned the aspects of mechanisation and such; they are not just important from an efficiency perspective, but also for making the work lighter and more fun.”

It is not just the lack of skilled staff that plays a role. Sterke: “Across the board, it’s hard to get those hands. Even for unskilled work. At my company I mainly work with Dutch employees, but currently I have 5 people from Romania who will join us for a few weeks. In the past, people liked to work overtime, which was an extra income. Nowadays, people more often just want to work the 40 hours. You have to take this into account when planning your work. If you enter the field as’ unskilled in this field ’and you show your willingness to learn, then a great deal has already been gained. Then there is plenty of willingness to help such an employee on their way and to ‘retrain’. This way, we’ve added another valuable employee to our company.” 