BlogRunning the place, updated
Growing on spec is a bet
Few growers would call growing on spec a bet, and that is part of the problem. A nursery that pots a block of liners with no order against them has committed cash, space and several seasons of labour against a guess about what somebody will want in two or three years. If the guess is right the block earns a margin, and if not, the nursery sells at a discount or writes the crop off. Most growers are good at this, but businesses tend to manage the things they have named and absorb the ones they have not.
Growing too much and growing too little
The two ways of getting it wrong do not cost the same. If you grew five thousand and the market wanted three, the extra two thousand have cost the production, the carrying and the space, and that cost grows with every season you hold on in hope of a buyer.
If you grew three thousand and the market wanted five, it feels better and is often worse. You sold out, so it looks like a good year, but you never see the orders that went to somebody else, or the customers who went with them and stayed. Surplus stock sits in the yard where everyone can see it, while lost orders leave no trace, so over time growers drift toward growing less than they should of the things that sell.
When a contract grow makes sense
Growing to a signed order moves the bet to the buyer. Your margin is thinner and most of the risk goes, and whether that is worth it depends on a few things. After fifteen years with a plant and its market you have an edge growing on spec, whereas for a crop new to you the contract price is cheap insurance. A one-season crop can be read with some confidence, while a five-year tree is a guess about a market that does not exist yet.
Specialisation matters too. A standard #3 shrub has a thousand possible buyers, but a species specified for one job has roughly one, and the more specific the plant, the less sense it makes to grow it without a customer's name attached. If the yard has room, spec costs less than it looks, but once you are full every spec block displaces something else.
Knowing your current mix
Few nurseries should be entirely one or the other, and most growers could not tell you their current mix offhand. Work out what proportion of the stock in your yard has a customer's name against it, meaning an actual order rather than a forecast. A very high figure may mean you never back your own judgement and leave margin on the table. A very low one means the business carries more risk than its owner probably realises, spread across a hundred small decisions nobody added up. Answering it needs a record of what is standing in each block, what is spoken for against it and how long it has been there, and a nursery that can answer in a minute makes better decisions than one that needs an afternoon.
In Sprout, a plant on an open order is committed, and every screen shows the committed and the free stock apart, so the part of the yard with a name against it is there to read rather than to work out. Each lot's history records when it was planted, counted and sold, which shows how long a block has stood. A grower on a few acres can see at a glance whether the spec blocks are running ahead of the orders. A larger operation selling from several locations sees the same across all of them, and whoever takes the next order sees only what is free.