Managing Financial Risks for Plant-Based Businesses

Navigate financial risks effectively for your plant-based business.

By: THURSD | 30-05-2024 | 7 min read
Floral Education
Plant Based Businesses

Working in horticulture is a dream for many, but businesses in this $20 billion global industry are more vulnerable than most to financial fluctuations and external factors disrupting operations.

As a result, it’s necessary for companies that rely primarily on plants for revenue generation to have a handle on the risks they face, and the options they have for minimizing their exposure to them. So stick around as we outline the main contenders, and how they can be conquered with clever planning.

Seasonal Sales Fluctuations

Seasonal sales fluctuations challenge many plant-based businesses. Typically, peak demand aligns with specific seasons: spring and summer often drive higher sales due to planting and gardening activities. In contrast, fall and winter see a downturn in consumer interest, leading to lower revenues. This cyclical nature forces companies to manage inconsistent cash flows while maintaining operational stability.


Lady arranging flower bouquet in shop
Picture by @Amina Filkins


Why do these fluctuations occur? Several factors contribute. First, changing weather conditions affect planting schedules and crop yields. A warm spring might boost early sales, while an unusually cold winter can stifle them entirely.

Additionally, consumer behavior shifts with holidays; for instance, people buy more houseplants during the festive season but purchase less during off-peak periods. This was further compounded during the recent pandemic, when lockdowns caused a 30% spike in houseplant sales in a single year, for instance.

Moreover, supply chain disruptions can exacerbate these issues (think delayed shipments or increased costs). This alone can cost companies up to 10% of their yearly revenues, according to the Economist Intelligence Unit. Finally, competition varies by season—local nurseries might compete fiercely in summer but remain dormant in colder months.

Outlining the Solutions

Addressing seasonal sales fluctuations requires strategic planning and diversified revenue streams. Here are a few ideas:

Ultimately, solving seasonal sales challenges involves balancing flexibility with proactive strategies grounded firmly in data analysis.


lady creating new flower Bouquet
Picture by @Michelle Leman


Increased Costs Due to Climate Change

Climate change presents substantial financial risks for plant-based businesses – and across the board is racking up expenses of $16 million every hour, with annual expenses predicted to top $1.7 trillion by the middle of the century.

Rising temperatures, shifting precipitation patterns, and extreme weather events disrupt traditional agricultural practices. These environmental changes lead to unpredictable crop yields – which were at record levels last year, but are expected to fall, in turn driving up production costs.

How do these increased costs manifest? First, adverse weather conditions can damage crops or reduce their quality. For instance, prolonged droughts might necessitate expensive irrigation systems while excessive rainfall can cause flooding (damaging both plants and infrastructure). Over 10% of the country is experiencing drought conditions as we speak, so this trend is very much in place.

Additionally, pests and diseases thrive in altered climates, compelling businesses to invest more in pest control measures. This has hit particular crops hard, and horticulture is sure to suffer in the same way as agriculture.

Energy costs also rise due to the need for temperature regulation within greenhouses or other controlled environments (think of higher electricity bills during unusually hot summers). Moreover, transportation expenses increase as fluctuating fuel prices impact logistics operations—delivering products becomes more costly when supply chains face disruption from severe weather events.

Finally yet crucially is regulatory compliance; governments will impose stricter environmental regulations requiring investment in sustainable practices or technology upgrades (like switching to eco-friendly packaging). And for businesses in this sector that are small but still growing, owners being liable for fines leveled as a result of regulatory scrutiny could be a concern – in which case taking steps to hide your assets, such as setting up as an LLC, will be wise.

Outlining the Solutions

Mitigating increased costs due to climate change demands an adaptive approach – so here are some ideas to get you started:

More will need to be done to avert climate disaster, but business resilience in the face of threats is a good starting point.


Lady working on flower shop
Picture by @Надежда Мустафаева


Unstable Input Costs

Fluctuating input costs create financial instability for plant-based businesses. These inputs—such as seeds, fertilizers (whether organically derived or not), pesticides, and labor—form the backbone of horticultural operations. When their prices vary unpredictably, it disrupts budgeting and planning.

Input costs fluctuate due to several factors. Market dynamics like supply-demand imbalances cause price volatility (consider a sudden surge in fertilizer demand driving up prices). Additionally, geopolitical events influence global trade patterns; tariffs or export restrictions affect availability and cost structures.

Environmental changes also impact input costs: adverse weather conditions reduce crop yields for seed producers or increase water scarcity (necessitating costly irrigation solutions, as discussed). Energy prices further complicate matters; fluctuating fuel and electricity rates alter production expenses significantly.

Labor represents another critical component with its own set of challenges—wage increases driven by minimum wage laws or labor shortages force businesses to spend more on workforce management. And with 80% of team members required to work on-site in the retail side of horticulture, there are further complexities for this industry that aren’t as pressing in sectors where remote work is a possibility.

Outlining the Solutions

Managing fluctuating input costs isn’t possible if you aren’t proactive about putting a plan together, so here are some talking points:

The Bottom Line

While there will still be financial risks that hang over your horticulture business no matter how well prepared you might be, having strategies for sidestepping serious snafus such as climate change-related cost increases and seasonally-driven sales trends will put you on a firmer grounding for long-term success.

The one certainty is that uncertainty is inevitable in this industry, so planning for worst-case scenarios will mean you can both make hay while the sun shines and weather storms that can gather unexpectedly.



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