How I took out a loan of 66 million and wanted to earn 40 million by growing tulips

DISCLAIMER: The article was written by the author of the blog based on an interview with entrepreneur Maxim Verevkin, founder of the agricultural holding.

For the 4th year now I have been growing and selling tulips. The search for cheap greenhouse rentals led me to Simferopol. Here I planned to grow 3 million flowers and make 40 million profit.

On the left are planted bulbs, in the center is a flower almost ready for cutting, on the right are my dreams of a big jackpot.

To make money in agriculture, namely growing tulips, you need:

– buy all entrepreneurship courses

– take personal mentorship from Transformer or Mitroshina

– be sure to buy the Blinovskaya marathon.

Show up, form an intention for the universe and wait for a sign from above. If suddenly you still haven’t run out of money, then you can start a business.

But seriously, prepare for the fact that farming money is some of the most difficult and unpredictable money in your life.
Quotes from the greats

Agribusiness plan

I decided to use the simplest and most effective business strategy: grow a large volume of flower in order to get a low cost and dump the market with a cheap flower of acceptable quality.

There is an opinion that agribusiness, in particular, growing tulips, is rural romance, the smell of the earth, working with your hands, and now a large crisp tulip with a large glass is sent to a satisfied buyer.

And an impressive amount is sent to the account of the happy farmer, rewarding his work.

What is it really like?

Growing 3 million heads of tulips from scratch

I will tell you about each stage of growing a flower, I will show you what the cost of each stage I planned and what I received. I recalculated all expenses for 1 tulip.

We find money

To sell and grow 3 million flowers, I need 96 million working capital for expenses. Of this money, I have, God willing, 30 million. Of this, the Ministry of Agriculture gave me 21 million under the state program, and I earned another 9 by selling nuts, growing strawberries, chrysanthemums and tulips. Where can I get the rest?

Non-loans

– Early flower sale. We start selling tulips at the end of August for several rubles above cost, only in order to get cheap working capital and pay less interest on loans.

– Delays from suppliers. This is not always possible, for example, this time we ran into a cash gap because the supplier from Holland set the condition for 100% prepayment, although we had always paid after March 8th. Since at the last moment I could not pay, I had to put pressure on the supplier and offer either not to pick up the order or to give a delay, they were forced to agree.

– Bulb cooling in Holland

Mature bulbs require cooling to develop their root mass.

If you do it locally, it will cost 30 kopecks/flower; if you buy chilled water in Holland, you will pay 1 ₽/flower. But if you take a non-refrigerated one, then you will need about 37 million in September, and you will pay for the refrigerated one in December. Therefore, we sacrifice savings.

Loans

– Loans for the company, we received the last 5 million at 15%.

– Personal loans persons This is cheap money, so I just take out consumer loans for my grandmother, girlfriend, best friend and myself.

In general, take out loans for all your loved ones with strong nerves and a good credit history.

– But all of the above is not enough in my case, and then I have to work with private investors. This is already painful and expensive. This year I took it at 5% per month.

In total, I paid about 1.5 million to provide the enterprise with money and cover cash gaps.

1.5 million is only a percentage of loans and credits.

In January and February you already have the largest expenses, but you have not yet received money from sales. You have to cover the cash gaps at the expense of your ass.

In total, to sell 2.7 million tulips, you need to buy 66 million in credits.

2. Buy bulbs

Tulips grow from bulbs. Therefore, the bulb is what you need to think about first. For a hundred years now, the Dutch have been the first in the world to sell tulip bulbs. That’s why we go there for purchasing.

Growing a tulip bulb means literally burying a sensitive amount for 3-4 years. The Dutch have established sales for a hundred years, and investors are ready for this.

The larger the caliber of the bulb, the larger the tulip and the more expensive it is.

After 2022, the 5th package of sanctions was introduced, and the Dutch are less and less eager to sell bulbs to the Russians.

Previously, anyone could order 50,000 bulbs, there were Russian-speaking managers, but now this is impossible. But if you take 3,000,000 bulbs, the Dutch still love you.

Expectation: onion for 20.35 RUR
Reality: an onion for 16.8 ₽

I expected to receive 3 million bulbs, but in the end 1.8 million arrived. We began to feel something was wrong in advance when the Dutch manager, out of the blue, called just to chat, and complained in letters about the crop failure.

To still increase the volume, we took a smaller caliber of bulbs (11/12), they turned out cheaper. Another 400k bulbs were refused, some Englishmen said: “Thanks, we don’t need them,” and I gladly took their order at a good discount. As a result, the purchase of bulbs was even cheaper than estimated, but the volume had to be compensated by buying a ready-made flower in Holland for 34 ₽.

3. Disembarkation

You can plant a tulip the old-fashioned way, on the ground, or you can use boxes – hydroponics. I tried this and that. I know many who will now throw stones at me, but I have not found any difference in quality on the ground and in hydroponics. But the landing speed increased by 30%.

Yes, hydroponics is more expensive at the start, since you need boxes (500 ₽), but due to the reduction in labor costs for planting, it is more profitable.

Then we fill the water, watch, observe, enjoy.

Planting, waiting: 0.42 RUR per flower
Planting, reality: 0.7 ₽ per flower

I planned for 30 kopecks to plant 1 bulb on hydroponics, since a person plants 10,000 bulbs a day. This year we planted 137 varieties and this amount has doubled. When you plant one variety, plant everything evenly. But when there are many varieties, they plant one variety, and everyone stops and checks so as not to confuse them.

Everything needs to be carefully marked, because there are early varieties, there are late varieties and they will need to be removed at different times.

4. Forcing

Tulips, like other bulbous plants, are unpretentious; the bulb already contains all the nutrients. But you still need to control the growth of the flower.

– Ventilation

The greenhouse requires a humidity of no more than 75% and access to fresh air. We solve this with fans.

– Temperature

It is necessary to keep the temperature in the greenhouse at 10-15 degrees. I bought a solid fuel boiler. Don't do this. Only gas.

A person must throw wood into the stove for 24 hours. No days off, no illnesses, no binges. This is not as trivial a task as you might think. Each mistake costs you part of the harvest.

One day we raised the temperature late, which is why not all the tulips rose on time. We were left out of season with 30 thousand flowers. So we found out that after March 8th it is easier to throw away tulips than to try to sell them.

Another time, when it was minus 25 outside, the boiler died. The temperature began to drop rapidly. By some miracle, at 3 o’clock in the morning, guns were found and brought in, which stopped the temperature drop to near-zero and maintained it until the boiler could be revived.

– Greenhouse integrity

One day, the snow was not cleared from the roof of the greenhouse in time – and right before the start of the season, on the eve of planting, half of our greenhouse collapsed.

We cut off the collapsed part, and installed a tiered system in the remaining part, suitable for growing, so that we did not lose any volume. Photo from the day before the collapse.

– Lighting

The flower reaches for the light, and if the sun is on the side, the necks of the tulips will grow crooked.

Tulips are unpalatable to beetles and generally very picky plants; one can imagine what happens in business with more fastidious crops.

The tulip grows at night; in one night a glass of flower can rise 2 cm.

Penicillosis, one of dozens of problems that a flower can suffer

Forcing, waiting: 0.44 ₽ per flower
Forcing, reality: 0.4 ₽ per flower

Since there is no big difference in pushing out 3 million flowers or 2.2 million, this figure has only decreased slightly.

5. Flower collection and packaging

Depending on the variety, a tulip grows in 1.5 – 2 months. Next you need to cut off the bulb and collect the flowers in bunches. The mass collection begins on February 20 and ends on March 1.

– Manual collection

We pick the flower directly from the bulb

We cut the onion, wrap it in a 10-piece, tie the 10-piece with a rubber band and tie 5 dozens into a bunch.

1 person can collect and pack 1,500 stems per 12 hour shift

The collected tulip should be placed in open boxes and the excess moisture should be expelled for another day in the ventilation. At first we didn’t know it, the boxes got wet and fell apart.

– Conveyor collection

This year we connected automation (3 million rubles). Automation does not speed up the process, but rather provides stability and standardization.

If the output is planned to be 4,000 stems per hour, then we get 4,000 stems per hour, whereas with people this will always change depending on the employee, the circumstances, perhaps the lunar day.

Collection and packaging, waiting: RUB 2.08 per flower
Collection and packaging, reality: 6 ₽ per flower

There were a lot of errors and corrections; a new team and 137 varieties worked in Simferopol. From here, I think, the cost of the stage has tripled. I prefer to blame myself, I think next time we can organize this process better.

6. Storage and shipment

The problem with shipment is that during the season every day is very important, if a store is waiting for a flower on March 4, then this means that it is waiting for a flower on March 4, not 5, not 6, not 7, but precisely the 4th.

Last year we made a big mistake with shipping. We have a conversation where the client scolds the manager for 2 minutes. Therefore, this year we were very scrupulous about deadlines.

It is better to store the tulip dry, as it goes into suspended animation. If we put it on water, the flower will continue its vegetative development

Storage and shipment, waiting: 0.2 RUR per flower
Storage and shipment, reality: 0.4 RUR per flower

Customers always come to the greenhouse to choose flowers. When there are, for example, 15 varieties of tulips, then 1 employee can ship and pick flowers for 10 customers, and when there are 137 varieties, the employee spends more time.

7. Cleaning the premises

The rented greenhouse must be returned in the same condition in which it was taken.

Shelves need to be assembled, boxes need to be stacked, trash needs to be swept up.

Cleaning, waiting: 0.15 RUR per flower
Cleaning, reality: 0.1 RUR per flower

It turned out without incident.

Flower failure

I don’t fight theft in greenhouses, it’s simply built into the flower’s impediment.

Flower failure, waiting: 10%
Flower failure, reality: 17%

Out of 2.2 million planting material, 374,000 flowers went into the trash at various stages: topping, stem necrosis, penicillosis, etc.

One variety with 100% failure – 100,000 flowers were thrown out on the spot. I am inclined to suspect sabotage by the supplier.

Cost of a tulip

Total estimated cost of color for a volume of 3,000,000 bulbs = 27.26 ₽

The actual cost for a volume of 2.2 million bulbs turned out to be 26.8 rubles

This is what a complete cost calculation looks like for a rented greenhouse

In order to ship the volume that we planned, we purchased 990,000 ready-made flowers in Holland for 34 rubles. Price including logistics to us.

Income from growing tulips

Tulips are bought by flower bases, chain stores and individual flower shops, and resellers. You could see them in tents with tulips, which appear for 2 days and then disappear. Bulbs are purchased separately by those to whom the Dutch do not sell due to their small volume.

Until March 8, 90% of the tulip is sold, a little more on March 9 – International Day of Mistresses.

Wholesalers take part of the risk of defects upon themselves, and the smaller the purchase, the more carefully they check the supply:

– Anyone who takes a truck is prepared for losses of 2%. The number of pallets converges, and thank God.
– Whoever takes 20,000 stems will check every box.
– When a person takes 1,000 stems, he will check each stem.

As the season approaches, the same story unfolds each time. Tulip producers are sitting in the same trench: they want to sell the flower at a higher price and do not lower prices until the last minute. And in the other trench there are wholesalers who will earn more if they buy cheaper and sell more expensive. Wholesalers hope that producers, desperate to sell at a normal price, will eventually lower the price tag. But this season the problems with the Dutch affected everyone, and I knew there would be no reduction in price.

It is because of these behavioral characteristics that most of the wholesale tulip sales at a good price are at the end of February.

In total for the 2023-24 season we sold 108,561,000
Expectation: 121,500,000

It is advisable to sell the entire flower before March 1, since from March 1 to March 8 crazy things can happen in the wholesale market. A flower may run out en masse and sharply rise in price to 50 rubles, or there may be an oversupply on the market, and then it will be bought for 20 rubles.

Business payback

I expected to grow 2.7 million tulips from 3 million bulbs, but I grew 1,826,000 tulips from 2.2 million bulbs.

Estimated costs – RUB 81,780,000
Real costs – 58,960,000 ₽

But since we sold at the rate of 3 million bulbs, and in the end we received 2.2 million bulbs, in order to ensure the agreement, we had to buy 990,000 additional bulbs. already finished tulips (3 trucks), which together with delivery cost RUB 33,660,000 (RUB 34/piece).

Total real costs for growing and purchasing a flower = 92,620,000 ₽

Forecast revenue: 2,700,000 tulips (minus absenteeism) * 45 = 121,500,000 ₽

Projected profit: RUB 39,720,000

Total income for bulbs, grown flowers and purchased flowers = 108,561,000 RUR

Real profit = 108,561,000 – 92,620,000 = 15,941,000

I did not take into account the sales, marketing, accounting and taxes departments in expenses, but the office is also used for growing chrysanthemums and strawberries, so it would be fair to calculate another 2 million for these expenses.

We add about 1.5 million for interest on loans, thanks to which it was possible to ensure such a turnover.

In total, after deducting these expenses, there remains about 12,441,000 per season.

Last year we produced about 1 million bulbs and earned about 11 million in profit; this year we wanted to grow 3 times, but actually remained at the same values.

What if you grow a tulip on your balcony?

The cost price of 26.8 ₽ was obtained on a large volume. It is thanks to this cost price that a tulip can be sold cheaply. If you grow at home, the estimated cost is 58 rubles per flower.

32 meters can be turned into 12.8 if you make racks on 3 floors

You can plant such a volume in a day, even with teas.

You will be able to get minimal absenteeism, because you will have time to pay attention to each tulip

PS

Despite all the difficulties described, I love growing flowers. I believe that an entrepreneur must create value. I probably would have earned more on marketplaces and shitty information courses, but nothing can replace the pleasure of creating.

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DISCLAIMER: The article was written by the author of the blog “fell, rose” based on an interview with the founder of the Verevkin Khutor agricultural holding Maxim Verevkin.

I blog “fell, rose” with stories about real business, and not this successful success of yours. Stories based on interviews with entrepreneurs are published once a week.

You will read: how I opened and destroyed a chain of nightclubs, how to properly glue cardboard to sell it on marketplaces for 50 million a year, how a farmer spent 250 million in a village, why the production of dumplings in the province is dying, why there is a taxi fleet with 300 drivers and 40 cars are no longer a business, how a technician restored a Soviet camp, but flew into a cash gap of 60 million and other stories.