I. The Company Lee Tree Service is a tree transplanting and sales business. The product includes all hardy deciduous and evergreen trees having a woody stem which are capable of propagation. Lee Tree Service uses a different method of transplanting trees than its competition. This difference gives Lee Tree Service the edge over its competition. Generally trees are transplanted by the ball and burlap method. The trees are dug using a spade that keeps the roots and dirt in a ball shape so each tree can be manually wrapped in burlap. This keeps the roots together preventing them from drying out in transportation, thereby keeping the success rate of transplanting high. Lee Tree Service uses a different method of transplanting trees. Cone-shaped pods are mounted on a flatbed truck or trailer. The trees are deposited into these pods. These pods keep the roots together during transportation. Transportation time is 30-60 minutes. Keeping the travel time short minimizes root dehydration and keeps the transplanting success rate high. The manual process to burlap each tree is eliminated. This saves on manual labor costs and time.II. Management Lee Tree Service is a Limited Liability Company. Management includes one owner serving as the truck and skid loader driver and the other owner in charge of sales and management. One assistant for planting is also needed. Management selects the trees, locates the tree sources, regulates the service contracts and maintains nursery stock. Management arranges for utility location flags to be staked and provides daily planting location and direction. Management works with the customer and drivers. The planting season is May and June. It starts again in September and October. Approximately 20 trees per day will be planted for five days per week for the months of May and June. There will be some planting in July, depending upon weather conditions, to 10 trees per week. September and October planting is anticipated at 20 trees per week. It takes approximately 15-30 minutes per tree. Seasonal wages will be at an hourly rate of $10-15 for the assistant. The wages will be paid at the end of each week.
III. The Product/Service Lee Tree Service’s method of transplanting is one chance where the exposure to heavy capital outlays is at a minimum and the ability to make good money in a short period of time is excellent. By decreasing labor costs, using the pod system, more trees can be planted in the month of May. This month holds the highest amount of interest for homeowners to plant. Most building codes require trees to be planted; therefore, it’s easier to generate sales as building increases at the arrival of spring. Hauling eight to ten trees at a time allows for a lower price than the competition can set. It also allows for more trees to be dug before they begin to bud in the month of May, and then again in July when the candles have hardened. The tree survival rate affects cost. There are many factors affecting the transplanting survival rate. One factor is the trees must be dug before they begin to bud. Otherwise a much larger root system must be taken using a larger spade. Not as many trees can be transported at one time using the larger spade. Lee Tree Service will use the larger spade for summer stock trees when the demand is less. Another factor affecting the transplanting survival rate is dehydration. To prevent dehydration, Lee Tree Service has its supply source in close proximity to the buyer. This increases the transplanting survival rate of the trees with less chance of root dehydration during travel. This also keeps the soil composition more likely to be the same. Also, management saves on travel time for trimming, watering, mulch, and fertilizing the trees at the supply source and buyer location. Using high transplanting survival rated trees also increases the transplanting success. Lee Tree Service will use nursery grown and state certified trees. Also trees for the correct zone will be used. Soil conditions will be kept closely related by their close proximity. Disease resistant trees will be used and trees unappealing to deer, for example. A 50% replacement cost per tree is guaranteed for one year if the tree did not survive, unless the tree died due to lack of water or an act of nature (weather, animals, bugs). This guarantee assists in keeping the transplanting survival rate up by giving the buyer some responsibility in caring for the tree. The demand for trees could decrease if the economy isn’t ripe for building. Lee Tree Service plans to use this as an opportunity to sell trees as nursery stock to nurseries, landscapers, and homeowners. In less prosperous times, homeowners are more likely to buy $20 two to three foot trees, planting themselves, rather than buying planted eight to ten foot trees at $350 each. 2
The other aspect of Lee Tree’s business success will be in its ability to generate sales. Anticipated sales are projected for 20 trees per day for 5 days per week. An average net profit of $119 per tree totals $7,140 per week for the months of May and June. July sales are anticipated to decrease to $2,500 at 3 days per week of sales. Anticipated sales for potted trees are 1,000 trees for $150 per tree. A First Year Nursery Stock Dealer Certificate must be applied for at a fee of $70 before selling the nursery stock trees. The best time for planting trees was ten years ago. The next best time is today. Lee Tree Service will begin planting trees in anticipation for transplanting and nursery stock sales in five to ten years. Five thousand dollars in trees today will yield approximately two million dollars for the future. Approximately 5 acres of land will be leased within the 40 mile radius of the business at $60 per acre per year, for a total of $300 per year. Along with transplanting the smaller trees, anytime a good tree is spotted, it will be purchased and transplanted onto this leased land for future sale.IV. Marketing Strategy/Marketing Analysis Tree transplanting is usually included with other services provided. This is because the transplanting season has been considered a short one, and the equipment initially appears costly. However; the more we learn about transplanting, the more we realize its potential profit. The season was initially considered over after the trees bud in May until September. Spade attachments were rented for $500 per week with earnings of $4,000 to $5,000 per week with one operator (1). However, the candles on the tops of evergreens, for instance, harden in July. This means they can be transplanted if their root system isn’t too deep. Nursery grown trees generally do not have to go too deep for water and nutrients because their source isn’t deep. Using nursery grown trees has lengthened the planting season, creating more opportunity for transplanting. It now pays to purchase a 44-inch spade for $10,000 initially and streamline the business to simply transplanting. The principal market is the homeowner and commercial builders within the 40-mile radius of our tree source. These areas total 80,000 building permits issued this past spring (2). Using the general rule of two trees per permit, 160,000 trees will be needed within the year. As the building economy grows, the tree transplanting opportunities expand. Lee Tree Service is located within the projected triangle of growth for the next ten years (3). This area is generally open farmland. And homeowners want trees. Selling the most popular five to six-foot trees creates instant prestige and privacy for the homeowner and profit for the transplanting business. 3
The companies Lee Tree Service competes with are:- Other tree transplanting businesses- Nurseries- Landscapers- Developers- Equipment rental companiesThe difference between the other tree transplanting businesses andLee Tree Service is in the pod system of hauling trees without doing the balland burlap method. Although other transplanting businesses may have apod system, Lee Tree Service can haul more trees with their system than theothers.Besides having a different system of hauling trees, Lee Tree Service hasstreamlined its operation to tree transplanting as its main operation. It mayincorporate future branches off the transplanting business, such as haulingdirt as a service, however; its main focus is tree transplanting. Most of theother businesses use transplanting as a secondary focus from their otherservices offered, therefore, they do not have to time to profit fromtransplanting.Another difference between Lee Tree Service and the other transplantingbusinesses is in its ability to sell the service. Either the other businesses donot have the time to sell because of other services, or they aren’t salesmen.Lee Tree Service has offers to sell for other transplanting businesses.However, those businesses then have the problem of fulfilling the contract –which they do not have the time to do so. Lee Trees Service prides itself inits ability to sell its service and fulfill the contract.Besides the quantity price difference previously stated, the final differencebetween Lee Tree Service and the others is in its landscaping expertise. Oursalesman will be a Certified Landscaper. Many customers feel they mustcontact a separate service to design their landscaping. Lee Tree Service canprovide that service, creating one less step for the customer to take.Prospective customers will be identified by new developments built in the40-mile area. One salesman will walk door-to-door with flyers and businesscards on a day when there is potentially a homeowner home. The flyer willbe given depicting the promotion offered at the time. It is important tospeak to the homeowner near the time when they are thinking about theirlandscaping. Sometimes they want landscaping ideas. Sometimes theyhave ideas, but are unsure of what can be planted where. The salesman willassist in this initial consultation for a potential sale. The business cards willbe given only if the potential customer is interested and it’s too early for an 4
exact decision to be made. Sometimes it’s a matter of getting the neighbors together for a cheaper price and not all neighbors are ready to make the decision. The only other advertising will be in the Yellow Pages and periodically a newspaper ad will be run. Once the potential customer decides to purchase trees, the transplanting date will be set depending on the schedule of the customer, the neighboring customers, the business timeline, and the season for transplanting. V. Technology The pod system has been designed, however, the patent hasn’t been applied for. The next system designed will be larger to handle the root of a 44-inch spade, rather than the current 30-inch spade root system. The pods will be of heavier steel and mounted on a trailer, rather than a flatbed truck. The trailer is lower to the ground and would be more wind resistant for hauling taller trees.VI. Production/Operating Plan The 5-acres of land for 1,000 nursery stock and transplanted trees will be leased at $60 per acre for a total of $300 per year. Lee Tree Service also has three suppliers with a total of 60,000 trees available for a cost of $20 each. Lee Tree Service will trim 500 trees and tag them for potential sale. Some of the trees will be transplanted to the leased land. The truck will cost approximately $10,000 and the pod trailer and flatbed will cost approximately $10,000. The skid-loader will cost approximately $20,000.VII. Financial/Administrative Lee Tree Service will get assistance from accountant and banker for financial statements in this category. 5