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									                      “RISK MANAGEMENT – A JIGSAW PUZZLE”


       Sometimes we have a picture in our minds of something we want to accomplish, but we

don’t know how to get there. We know what we want but there is no set path or single way to get

to the destination. Like the jigsaw puzzle, we need to set boundaries and create a foundation.

Once the border is established, we can start to work inwards piece by piece to complete the big

picture. Developing a risk management plan for my Supervised Agricultural Experience (SAE)

program is like putting a jigsaw puzzle together. According to an extension factsheet that I read,

risk is defined as the chance of loss or an unfavorable outcome associated with an event or

action. Therefore risk management refers to managing your business against the chance of loss

from an unfavorable event. The first thing I did was to create the border and boundaries by

developing business goals and determining how much risk my business can tolerate. After

assessing the likelihood of what risk could occur and what impact risks would have on my SAE’s

if they did take place, I developed risk management strategies to reduce the impact. Once the

border is constructed of the jigsaw puzzle all the other pieces interlock with each other to

produce the desired outcome or “the big picture”.


       Reviewing the “Introduction to Risk Management” publication, I focused my risk

management plan on five identified areas: production, marketing, financial, legal, and human

resources. Managing these risks can make the difference between my Supervised Agricultural

Experience program just surviving or thriving through these tough economical times.          I try to

minimize my risk in my horticulture SAE by providing services as well as products. Maximizing

productivity, diversifying, and taking advantage of trends has spread out risk factors, ensuring

that I have better opportunity for success. If one element fails, I can fall back on the others.




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       My first risk management puzzle piece targets the production strategies that I have

established for my Supervised Agricultural Education projects. Before planting a seed or

propagating a plant I feel it is important to have a clear understanding of ever-changing

consumer wants and needs especially in the landscaping business.            Trends tend to drive

customers expectations so I attend workshops, seminars, home and garden trade shows to stay

current on the latest craze in the horticulture industry.


       When I first started my SAE I mainly grew plants for water garden ponds. Choosing

enterprises that complemented each other, I diversified my horticulture operation to include

raising goldfish for garden ponds, and growing bedding plants and ground cover. These choices

allow flexibility and help mitigate risk in my landscaping/lawn service business.


       Most of the plants I grow and goldfish I raise can be used in conjunction with the services

that I provide with my horticulture business. JCON Landscaping / Lawn Service offers a wide

variety of services including, but not limited to: mowing, trimming/edging of lawns, tree and

shrub pruning, water pond maintenance and construction, weed control, removal of leaves and

limbs, planting flowers, shrubs, and trees, and mulch handling. Expanding my winter services, I

recently added to my business snow removal and putting-up and taking down Christmas

decorations.


       One of the “Going Green” or “Environment Friendly” trends in my area is incorporating

wildflowers into the landscape. Including wildflowers as part of a yard provides options for

adding color and variety to your landscape. The diversity of species in wildflower lawns

increases pest and disease resistance while attracting beneficial insects and birds. Substitution of

different plant varieties permits easy adaptation to local sun, shade, and moisture conditions. And



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since wildflowers are not usually mowed, they are perfect for slopes, ditches, and other hard-to-

manage areas.


       Record keeping and pricing strategies are the next important pieces placed into my

puzzle. Becoming proficient in computer skills as well as cell phone applications is crucial to

being competitive in today’s market. Keeping good records for each enterprise allows me to

assess the profitability of the different areas in my landscaping / lawn service business. Knowing

the costs for the services I provided or for the plants I grow, both fixed and variable, is the first

step in developing my pricing strategy. Also I calculate my break-even point on each enterprise;

while no profits are made, no money is lost either. In general, I set prices by production and

marketing costs at the lower end, while the upper limit is set by what my customers are willing to

pay. I figure my costs and set my prices accordingly, rather than just going by what others are

charging; steady, consistent prices encourage steady, consistent customers.



       Cost estimating and job bidding are among the most perplexing and time-consuming

tasks of my landscaping business. Another risk management tool that I utilize in my business is

using previous records or data as a “bench-mark” to calculate potential job estimates. Accurate

cost estimating is one of the most crucial elements for my business’ success.



       Another puzzle piece is managing my risks to meet financial obligations. During the

months that my landscaping/lawn care business is slow I earn wages working for my father’s

construction company. The extra income reduces the need for me to borrow money for operating

and capital expenses for my business, plus ensures I can manage monthly cash flow. In addition,

I have an easily accessible saving account for unexpected expenses or emergencies.



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       The next couple of pieces for my risk management puzzle concentrate on marketing and

customer service. Marketing does not begin after production, but well before I plant my first

seed or mow a customer’s lawn. As a risk management tool the importance of marketing cannot

be over-emphasized. Consumer-focused marketing is the single most important factor that

determines the success of my business. Marketing is not just about selling. It requires me to

establish a clear and astute understanding of what consumers want and the ability to deliver it to

them through the most appropriate channels for a profit. It includes the planning, pricing,

promotion and distribution of products and services for consumers, both present and potential.


       However, finding the right niche and marketing directly to the public is a hard and labor-

intensive job requiring time and effort.       Through my participation in the FFA Career

Development Events, I have acquired the skills needed to communicate with people in a positive

business manner.     The one advantage that I have over larger landscaping / lawn service

companies is the ability to build a relationship with my customers.


       Word-of-mouth advertising has proven the most effective and inexpensive way for me to

attract new customers. Advertising by satisfied customers is priceless and cannot be purchased

or engineered except by providing good service and exceptional products. Because an estimated

80% of my business comes from return buyers, I reward my loyal customers by offering

discounts for new customer referrals. Printing and handing out business cards with my business

name, phone number, email address, and a short list of services and products available has also

been a cheap way to advertise. Business cards have a way of sticking around in people's wallets

long after they have been distributed.




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       The purchasing insurance risk management puzzle piece allows me the ability to transfer

a portion of my risk to the insurance companies.       Since my business is small, it would be

financially unfeasible to insure against all possible risks. I carefully investigate the pros and

cons of the risk before purchasing insurance. Currently, I carry a general liability insurance

policy on my business in case of property damage. Crop insurance for nurseries is available in

all fifty states. This risk management tool protects against losses caused by inclement weather

and other unforeseen natural disasters. Insurable plants are listed on the Eligible Plant List

(EPL) approved by USDA’s Risk Management Agency (RMA). For a business to be eligible it

must derive at least 50 percent of its gross income from the wholesale marketing of plants. Since

my business does not meet this requirement at the present time I am not eligible for crop

insurance for my nursery crops. But it is comforting to know that this risk management tool is

available if I choose to increase my nursery crop production.


       For my legal and human resources risk management puzzle pieces consumer education

plays a major role. Most homeowners are uninformed about environmental and health concerns

surrounding lawn care chemicals. At the present time, I do not have a chemical applicators

license. So I do not apply herbicides and pesticides to my customer’s lawns thus reducing risks

associated with environmental liability. Instead I use environmentally friendly management

practices like mowing correctly which can kill weeds, save water, reduce diseases, stimulate root

growth, and provide grass cuttings for fertilizer. If a problem arises that can’t be controlled by

management practices, I recommend one of the green pesticides and herbicides available on the

lawn care market. From the research I have done “Going Green” provides a healthier

environment for my customers plus reduces my liability risks.




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       An open line of communication is the key to dealing with human resource risk. Working

closely with my FFA advisor and family has allowed me to establish short and long term goals

for my landscape/lawn service business. In addition using industry standards as a guide we

developed procedures for the day-to-day operation of my business. To minimize personal risk, I

attend safety workshops and perform preventive maintenance on my equipment ensuring all

safety guards are in place.



       Even though my Supervised Agricultural Experience program is considered non-

traditional it still has risks, but it is something I love and enjoy doing.      It’s obvious that

agribusinesses have some variables that we cannot control, but with proper management and risk

protection we are still able to be successful. Just like it takes time to put together an intricate

puzzle, it also takes time to establish a well devised risk management plan. As each piece is

carefully put into place in a jigsaw puzzle, the big picture develops. The pieces of my risk

management puzzle are also interlocking into place revealing “the big picture”. This “big

picture” just happens to be a guide for my journey into long term entrepreneurship.




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                                        BIBLIOGRAPHY


CAN Risk Control Industry Guide Series. (2008). Landscape, Lawn Care, and Plant Nursery
     Industry. Retrieved December 18, 2010, from
     http://www.cna.com/vcm_content/CNA/internet/Static%20File%20for%20Download/Ris
     k%20Control/Industry%20Guide%20Series/LandscapeLawnCare&PlantNursery.pdf


Introduction to Risk Management. (December, 1997). Understanding Agriculture Risks:
       Production, Marketing, financial, Legal, Human Resources. Retrieved December 18,
       2010, from http://www.ffa.org/documents/rme_introbooklet.pdf


Oklahoma Cooperative Extension Fact Sheets. (nd). Micro and Home-Based Businesses: the
Basics of Marketing. Retrieved December 20, 2010, from http://osufacts.okstate.edu


Pesticide Education Center. (August 2002). Lawn Care Chemicals. Retrieved December 20,
        2010, from http://www.pesticides.org/docs/website-lawn-care.pdf


Risk Management. (nd). Overview of Core Analysis. Retrieved December 21, 2010, from
      http://www.uaex.edu


USDA Risk Management Fact Sheet. (Jun 15, 2010). Nursery Crop Insurance. Retrieved
     December 18,2010, from www.rma.usda.gov/policies/nursery




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