The following is from Chapter 14 from Alan Yong’s book “Improve Your Odds – The Four Pillars of Business Success”. This chapter describes how Smokey’s Gardens started from humble beginnings and grew into one the largest daylily growers in the country through the hard work and determination of everyone involved.
Smokey’s Gardens – A Tale of Hard Work, Clear Vision, Strategic Execution, Tenacity, and Team Work
Smokey’s is a case in point about a typical hard working small business owner with the tenacity to hang on for over two decades, never giving up hope that success was right around the corner. There was good team work and strong support from family and friends, but that was not enough to cross over the chasm to the promised land of true business success. This is a story about starting over after a long struggle for success since 1981, in a different business. It is about designing a new company from the ground up with a clear vision and a relentless commitment to be the best in class coupled with a fundamental mission and purpose of providing great customer experience and satisfaction.
Smokey’s original product was stoves, fireplaces, and chimney sweeping. The business was getting by but after many years it became clear that it had no opportunity to get ahead. Each year was a struggle. Since stoves are largely a seasonal (winter) product, Kevin, the owner, believed that an additional product was needed as a supplement during the off-season (summer). I was consulted about what that additional product might be.
Kevin still remembers the day he agreed to give my seemingly outlandish suggestion a try.
“Here we were, owning a fireplace shop for over twenty-five years, had fifteen to twenty employees, and you WANTED TO SELL FLOWERS? I thought you were nuts! We had no equipment, no knowledge of the business, AND no daylilies! I still remember the day I “got it”. You took me out to the warehouse, and pointed to a wood stove sitting on a rack. You said, what if you bought that stove, and had a choice…. you could sell it now, and have no more stoves on the rack. OR….you could leave it on the shelf, and in one year, there would be two to five stoves sitting on the shelf!! Then, I could sell two or three of them, and have five or ten stoves sitting there the next year. The light bulb went off. If I paid a thousand dollars for a stove, I usually sold it for about fourteen hundred dollars. If I bought a thousand dollars’ worth of daylilies, I could sell that daylily FOREVER, and never buy that particular cultivar again! I got it right away…….forty percent gross profit VS ninety-nine percent gross profit. That is what really sold me on it.”
A successful business starts with a great idea of a product or service, often reflecting a unique opportunity based on a better solution to an existing problem, fulfilling an unserved need or a drastic improvement in efficiency. To give you a better understanding of the thought process that led to the selection of the new business almost nine years ago, here is a brief background of the daylily industry.
Daylilies are among the top perennial plants, but are yet to be discovered by most gardeners, a fact that would weigh heavily in Smokey’s Gardens’ decision to grow them. Their stunning beauty has attracted a large number of breeders or hybridizers with a passion to create their own flowers. They are often registered and named after loved ones and sold as newly registered cultivars online for as much as $100 for a single plant.
According to the American Hemerocallis Society (AHS) founded in 1946, there are 81,972 registered cultivars of daylily as of February 2016. Popularity of daylilies spread rapidly as breeders discovered how rewarding and easy it is to create unlimited variations of colors, forms, substance, texture, styles, bud counts, heights, and blooms. With some planning and garden design skills, daylilies, supplemented with a small investment in annual flowers, are the most cost effective means to showoff gorgeous gardens with dazzling colors.
The scientific name for daylily is Hemerocallis and it is derived from two Greek words meaning “beauty” and “day”. Each flower only lasts a day, but is replaced by many new flower buds opening each day for a period of two to three weeks. Depending on the characteristics, the cultivar may be considered as a re-bloomer, with more than one bloom cycle each season. Daylilies are among the hardiest perennial plants and propagate to form a clump of ten or more fans, each of which can start a few whole new plants in a couple of years. They are able to survive with very little care in wide ranging climates. Daylilies are also drought resistant, and for the most part, free from plant disease or insect attack. They are very adaptable to almost any soil conditions except very dry rocky environments.
Daylilies are commonly used for commercial landscapes, generating large orders with requirements of several thousand plants per order. Many highway departments in the United States are beginning to use daylilies to prevent soil erosion and to serve as fire control barriers while providing great beauty during the bloom season.
Stella de Oro is by far America’s most popular daylily and almost always used in landscape projects with any daylily selections. It is highly valued as a compact, most reliable re-bloomer, with preference for full sun yet excellent tolerance for shade and dry conditions, making it a hardy plant that requires little maintenance. Stella de Oro is Smokey’s Gardens best seller. Being one of the largest growers, with over three million plants in inventory, it positioned Smokey’s Gardens to offer their customers the best prices around for small or very large orders.
Smokey’s Gardens, now one of the largest daylily growers in the world, became a success story by exploiting a void in the daylily industry. In reality, the daylily industry was quite fragmented back in 2007 when Kevin and I were discussing the reproductive capabilities of stoves vs. live plants. It was a patchwork of hundreds of backyard gardeners selling daylily plants online as a hobby. There were also a few wholesalers who carried daylilies along with many other types of plants. What was lacking was any kind of specialization, as in a grower dedicated to the production of daylilies. Smokey’s Gardens decided to fill that void. They made an initial investment of just $500 and have never looked back.
Kevin recalls that first purchase very well.
“Alan convinced me to spend five-hundred dollars to buy some daylilies from a local Mom and Pop daylily “farm” located about twenty minutes from our store. I say ‘farm’ because it was only about a half acre of flowers. It seemed like a lot at the time.”
This initial purchase was supplemented with daylilies from my own gardens, which ended up completely taking over what was supposed to be a vegetable garden for Kevin’s wife, as Kevin recalls:
“Alan started bringing his daylilies from his house. He had been a big fan of daylilies since moving to the United States. He ended up bringing thousands of flowers and planting them in our “vegetable garden.” That fall we ended up buying all the daylilies and some old equipment from the Mom and Pop farm.”
After acquiring those initial flowers, Kevin and his employees had to figure out how to plant, harvest, and clean them more efficiently. Kevin recalls buying and modifying a vegetable harvester from a farm in Illinois.
“The folks there had a “vegetable harvester” that was made in Canada by a specialty shop catering to the vegetable industry. I made a deal to buy that machine for five-hundred bucks the first time I saw it being used. We contacted the manufacturer, and they helped me design improvements into the machine to make it more durable. We still use this machine today.”
The modified harvester immediately gave Smokey’s Gardens an advantage over their competitors, as Kevin explains further:
“The way 99 percent of our competitors harvest daylilies, is to send two strong, young guys out there to dig. If I were to have them dig a row of mature clumps in a wholesale field, these two strong guys would take at least eight man-hours to complete the job. Using the tractor and digger, two men can dig and collect one row in less than thirty minutes. So, one row would take eight man hours to do by hand compare to one man-hour with machinery.”
The next improvement was with the way daylilies are planted. The industry standard up to that point had been to hand plant the flower fans. Kevin bought a strawberry planter from a neighbor and then took it to its original manufacturer who modified it so that it could effectively plant daylilies. This modified strawberry planter could plant up to ten times as many plants as could be hand planted in the same amount of time, as Kevin explains:
“As an example of the difference this machine makes, to hand plant flowers, it would take a person at least two hours to plant a row of 200 flowers. Now, with the planter, we can plant 2000 to 3000 plants per hour, using a 3-man crew. So now, instead of costing one hour of labor to plant 100 plants, one hour of labor will plant 660 to 1000 plants.”
Next came modifying the washing process, which has to be done, in order to satisfy laws that prohibit shipping any soil across state lines. Daylily hobby farmers typically hand washed the plants they wanted to ship with a garden hose. Kevin located a manufacturer in Canada who had already designed an automatic washer he thought would work. He bought the washer on the spot and it paid for itself within one month.
Kevin remembered that, “We used to have six full time people washing plants. Now one person can wash for four hours a day and keep up very easily. So now, instead of being able to wash about 100 plants per man hour, we can wash well over 1000 plants per man hour.”
Smokey’s Gardens seized the opportunity to turn a popular hobby into a business with a commitment to be the best in class. By reinvesting its earnings in acquisitions, equipment, and well refined processes, Smokey’s has reached the scale of efficiently planting, harvesting, and shipping more plants in a week than most of the competitors in an entire season. The company is positioned for high growth for many years to come. Once established the plants multiply quickly with nearly zero cost of goods sold. With more than 3,000 cultivars and over three million plants in a single 38-acre farm, Smokey’s Gardens is now the lowest cost producer with the largest selections of popular to premium daylilies.
A new business starts out with an idea of a product or a service. It may be a proverbial “better mouse trap” or an improved product or a solution to an existing problem. In the case of Smokey’s, it identified an opportunity to solve an inefficiency problem inherent in highly fragmented industries. Initial research suggested that other than a few large commercial growers that supply a limited selection of daylilies as one among hundreds of other annual and perennial plants, no one else specialized in large scale production of daylilies. Smokey’s decided to be an exclusive grower of daylilies. To make the opportunity even sweeter, initial research concluded that despite many beneficial features, daylilies are virtually undiscovered by most gardeners, giving Smokey’s a huge potential for future growth.
Once the idea evolved to become a serious business investment consideration, the initial vague vision was given significant thought and refinement to become a clear vision of where the venture needed to be in ten years. Smokeys’ vision was to become the lowest cost producer with the largest selections of popular to high value daylilies sold at attractive profit margins coupled with sustainable growth. To this end they divided the market into four basic segments: the casual or backyard gardener, the wholesale or reseller market, the collector market, and the seed market, and strove to most effectively meet the needs of each one.
With a clear vision of where Smokey’s needed to be in ten years, the next step was to determine its missions, goals and objectives that needed to be accomplished to make the vision a reality. At the same time, it had to examine its strengths and weaknesses as well as opportunities and threats (SWOT). Early on Kevin realized that they needed a better way to control inventory having unintentionally sold out of a few cultivars and some other plants which should have been held back for reproduction during the first two years. The goal of inventory control was to know in real time how many plants were truly available for sale.
As Kevin pointed out, “Inventory Control is CRITICAL. The worst thing you can do to a customer is to sell them a flower we don’t have. The worst thing you can do to me is NOT LIST a flower for sale that I can sell. If it is not listed, we can’t sell it.”
He turned to a computer savvy friend and employed technology, as Kevin explains:
“This is where Joe came in and played Superman. He developed an Admin Panel that tracks inventory of each flower in real time. It also tracks all the websites in real time (we sell on several of our own websites, E-Bay and Amazon). This Admin Panel automatically pulls a flower off the market when inventory levels fall below a certain level. It also puts up flowers for sale, and offers them in “wholesale lots” when inventory gets above certain levels. It tracks where each sale originates, average sale, running sales information, and MUCH MORE!!”
With the various existing resources retooled for the daylily venture and the process of making each stage of the growing and harvesting season more efficient well underway, it did not take long for the excitement to build. Despite the long hours and hard work the employees are highly motivated with a mission to be the best in class with the goal of exceeding customer’s expectation. Though most employees are only hired for the season, they are well trained, highly motivated, and worked very well in any team they are assigned to. Since many are high school and college students, most of them are returning employees for many seasons. Kevin explains:
“We always share our vision of becoming the largest and the best daylily grower with our employees and consistently promote team work while doing a lot of extras our competitors would not do. Our work force is always excited and committed because we lead by example. In addition to standard employee benefits, all our employees are well rewarded with a significant amount of DNotes the company purchased for the employees’ retirement savings. They are important DNotes stakeholders and supporters. They are among Alan’s biggest fans.”
A highly motivated work force is crucial to accomplishing the company’s mission to be the best in class. Management made the commitment of sharing the company’s vision with the employees, always stressing the vital importance of great customer satisfaction. The mantra that “We will do things that others won’t do, so that one day we can do things others can’t do” was often heard. Many of the employees got to experience how the farm evolved from every plant being hand planted, hand harvested and hand washed to the modified equipment making those jobs easier and less labor intensive. Even during the most labor intensive time, every phone call is immediately answered or promptly followed up with a polite callback. Phone calls are still picked up beyond midnight. All sales come with a 100% satisfaction guarantee with full a refund including shipping and handling charges.
Smokey’s Gardens went on to acquire five daylily growers within the first five years and ended up with ten separate gardens totaling over 30 acres within a three-mile radius in Ashley, Indiana. As it gained the economy of scale, it lost significant efficiency until it sold the fireplace business and moved to a single 38-acre location in Coldwater, Michigan. The relocation and consolidation took two years. The consolidation into a single location allowed for the entire planting and harvesting process to take full advantage of heavy farm equipment, with drastic improvement in efficiency. It also greatly sped up the fulfillment process to the point that orders are now shipped within 24 hours from the time of order, a touch match for the competitors.
This is a true story of a typical small American farm business. With the right leadership and inspiration many are willing to work tirelessly when their hard work is appreciated as they contribute towards the attainment of common goals. It is not the pay scale, status, education, or intelligence that inspired people to contribute their maximum efforts, but the genuine ownership of shared vision, missions, goals and objectives.
Looking back, I am still in awe as to what Smokey’s has accomplished with so little. This is truly a tale of hard work, clear vision, great strategic execution, tenacity and great team work. This is a story of a great American dream come true.