final bonsai plan

January 7, 2009 [VKALP – BONSAI NURSERY]

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ACKNOWLEDGEMENT

Through this acknowledgement I would like to express my sincere gratitude towards all those

people who have been inspirational and instrumental in drafting this project.

I would like to express my heartfelt thanks to Mr. Parag Mehta (Member of Ahmedabad Bonsai

Club) for his unstinted support, which he offered right from the conception to the completion of

this project report.

I would also like to thank Prof. Sameer Pingle for his valuable suggestions and their time.

I would finally like to thank Prof. Satish Nair for helping me out in the project and also for

giving me suggestions wherever I was going wrong.

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Table of contents

SR. NO. PARTITULARS PAGE NO.

1 EXECUTIVE SUMMARY 52 MISSION AND VISSION STATEMENTS 6

2.1 Mission & Vision 72.2 Idea & Core activities 82.3 Product Offering 93 INDUSTRY OVERVIEW 10

3.1 Description of Primary Industry 113.2 Design Industry in India 133.3 Retail Industry in India 143.4 Life style and service industry in India 154 TARGET CUSTOMERS 165 MARKETING PLAN 17

5.1 Marketing Communication Mix 185.2 Advertising 19

5.2.1 Advertising in Magazines 205.2.2 Leaflets in Newspapers 225.2.3 Advertising in Radio Stations 245.2.4 Creating Vkalp's Website 245.3 Word of Mouth publicity 255.4 Publicity 266 COMPETITIVE ANALYSIS 27

6.1 SWOT 296.2 Product life cycle 306.3 Poter's 5 forces 327 MANAGEMENT TEAM 34

7.1 Management & Ownership 357.2 Partner Network 368 ORGANISATIONAL STRUCTURE 37

8.1 Organisational Structure 38

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9 OPERATIONAL PLAN 409.1 Cultivation of Bonsai Trees 419.2 Techniques to grow Bonsai Trees 429.3 Taking Care of Bonsai Trees 469.4 Requirements of Bonsai Trees 4810 FINANCIAL PLAN 50

10.1 Assumptions 5110.2 Cost of Project 5310.3 Revenue Chart 5410.4 Expanses 5610.5 Cash Flow 5710.6 Profit & Loss Account 5810.7 Balance Sheet 5910.8 IRR Calculations 6010.9 Interest Calculations 6110.10 Depreciation Calculations 62

11 EXIT STRATEGY 64 11.1 Exit Strategy 65 12 Bibliography 66

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Executive Summary

My idea is to open a bonsai nursery called “Vkalp”. A bonsai tree is an ornamental plant.

Most of the nurseries present in and near Ahmedabad focus mainly on selling their plants. Vkalp

would go a step ahead in not just selling the plant but also educating them as to how to grow

bonsai? How to maintain these bonsai trees {this is a very critical issue as most of the people

cannot maintain these trees and these trees terminates their beauty}?

Vkalp also intends in giving short term certified courses in Bonsai culture. This would

bring awareness in the mind of people regarding Bonsai trees. Growing Bonsai trees is basically

an art so Vkalp also intends in organizing competitions to promote the Bonsai culture.

Bonsai (pronounced bone-sigh) is an ancient oriental horticultural art form. The word

Bonsai literally means, in both Chinese and in the Japanese language, tree-in- a-pot. Contrary to

popular belief, bonsai is not the art of stunting a tree's growth. The characters for "bonsai"

translate, roughly, to "pot" and "to plant." As such, bonsai is the art of growing trees in a

confined space (usually a pot or a tray); so as to recreate some of nature’s most stunning and

beautiful effects on trees, which are reduced in scale. Originally developed in the Orient almost

2000 years ago, today the sublime art of bonsai is practiced throughout the world. A tree planted

in a small pot is not a bonsai until it has been pruned, shaped, and trained into the desired shape.

When undertaking bonsai, you may find a new sense of appreciation for nature; you may start

looking at trees, bushes and shrubs differently. Bonsai will surely change the way that you look

at things.

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Mission statement

To provide information to our customers so they can make informed, environmentally sound decisions about their landscape project.

Vision Statement

The Vkalp is a highly respected, ethical nursery. We are clearly structured and organized to promote success of our team members in an atmosphere that highly regards and encourages the sale and use of plant material to strengthen, rebuild, maintain and support our ecology and economy. Our most successful tool is knowledge of our product and how to help our customers use it successfully. We have a synergistic relationship with suppliers and customers.

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Idea

“My idea is to open a nursery cum retail outlet catering to ornamental plants especially

concentrating on Bonsai. The scope of the idea is not just limited to selling the plant but also to

provide services related to it.”

Core activities of proposed business

The core activities of Vkalp would be opening a retail outlet of nursery which would

basically focus only on Bonsai trees. Its activities would include selling out Bonsai trees and

other saplings. It would also be renting out Bonsai trees to corporate and event organizers. I

intend not only in selling the Bonsai trees but also educating them how to maintain them, for this

I would be providing them certified courses in Bonsai culture.

Offering / productBUSINESS PLAN 8

http://en.wikipedia.org/wiki/File:Bonsai_IMG_6402.jpg


The offering would broadly include the following 4 categories.

Bonsai (for sale) – These Bonsai trees would be available to the customers for sale.

Bonsai (rent) – These Bonsai trees would be strictly available only for rent to the

corporate.

Samplings (assorted) – These samplings would be sold in the initial stage only; just

as in nurseries.

Courses in Bonsai culture – These courses would be given to those customers and people who are interested in understanding and managing Bonsai trees.

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Industry description and outlook

Description of Primary Industry

The primary industry for my business would be Horticulture industry. National

Horticulture Mission was launched during 2005-06 for doubling the horticulture production

through holistic development of Horticulture. Quality planting is crucial for area expansion,

replacement of senile orchards and it also gives export competitiveness. The projected demand of

various horticultural produce by 2011-12 is as follows:

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Commodity Production (Million tons)

2001-02 2006-07 2011-12

Fruit 43 59.36 81

Vegetables 88.6 115.52 185

Spices 3 5 5.5

Coconut 8.8 18 20

Cashew nut 0.5 1.5 1.7

Others 2.2 6 6.8

Total 146.3 205.38 300


A few states such as Maharashtra, Andhra Pradesh, Uttar Pradesh, Punjab and Orissa, are

self sufficient in production and distribution of planting material in some of the crops. Other

states like Gujarat have to outsource their plantings to private and public nurseries.

Total nurseries : 6339

Public Sector : 1594

Private sector : 4607

Top 5 states in Private Domain

Maharashtra : 1300

Andhra Pradesh : 970

Himachal Pradesh : 684

Jammu Kashmir : 384

Gujarat : 335

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So we can see that there is a huge demand for nurseries in Gujarat. And the horticulture

industry is also growing at a continuous rate. In this industry the demand is much higher than the

supply so there are many gaps which can be fulfilled. My aim is to open a nursery concentrating

only on Bonsai and thus capitalizing on this opportunity.

Design Industry in India

My product is directly related to the Design Industry. Bonsai is an ornamental plant so

they are considered as decorative plants in the house. Even while maintaining these plants it

needs huge amount of creativity in the owner so if the Design industry is booming it will directly

affect my business.

The AMCON meeting held in Delhi on the sidelines of CSID Board Meeting brought in

considerable participation from Asia and Asia Pacific Region and underlined the importance of

such regional meetings to foster regional cooperation by sharing local concerns in a globalizing

world. The reassurance of Asian design and the increasing globalization of markets like india

and China have opened up considerable opportunities for designers and design-led companies.

Similarly the focus on “service design” and “design for quality of life” including “sustainable

Design” are becoming important strands as economies like India are becoming service driven

and it is estimated that by 2010, service economy will form 65% of India’s GDP. The design

scene in Asia is undergoing rapid change from one of being the follower to assuming more

leadership in different product and service categories signaling a brighter tomorrow for Indian

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design as well as for the countries in Asia around. (design plus june 2007 by dr. Darlie o koshy)

In the new age consumers are aspiring for holistic lifestyles and experiences. Consumer

has become more discerning and selective these days this adds significance to multitude of

parameters in products such as aesthetics, comfort, performance, value and above all service and

experience. With the merchandising formats becoming more horizontal and retailers offering

variety and choices, consumers are getting confused day by day.

“Necessity is no more the mother of invention” it has move far from its conventional meaning to

its new form, with the universal nature of products and services and in the “shopping area”,

exclusivity would find more value than sheep mentality. Shopping is not only service provider to

the consumer, but also retaining social, cultural and ethical values that restore a nation, its well

being in terms of heritage and culture and contributes to cleaner and healthier environment.

Retail industry in India

The Retail Industry is also directly related to my business. My plants and most

importantly the Bonsai would be sold to new houses and offices as a symbol of good charm. So

if this industry is growing then my business would also capitalize on it.

With property boom spreading in all directions, real estate in India is touching new

heights. However, the growth also depends on the policies adopted by the government to

facilitate investments mainly in the economic and industrial sector. The new stand adopted by

Indian government regarding foreign direct investment (FDI) policies has encouraged an

increasing number of countries to invest in Indian Properties.

India has displaced US as the second-most favored destination for FDI in the world. As

the investment scenario in India changes, India which has attracted more than three times foreign

investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion

during the corresponding period of 2004-05, making India amongst the "dominant host

countries" for FDI in Asia and the Pacific (APAC).

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The positive outlook of Indian government is the key factor behind the sudden rise of the

Indian Real Estate sector - the second largest employer after agriculture in India. This budding

sector is today witnessing development in all area such as - residential, retail and commercial in

metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier access to bank

loans and higher earnings are some of the pivotal reasons behind the sudden jump in Indian real

estate.

Flying high on the wings of booming real estate, property in India has become a dream

for every potential investor looking forward to dig profits. All are eyeing Indian property market

for a wide variety of reasons.

It’s ever growing economy which is on a continuous rise with 8.1 percent increase

witnessed in the last financial year. The boom in economy increases purchasing power of its

people and creates demand for real estate sector.

India is going to produce an estimated 2 million new graduates from various Indian

universities during this year, creating demand for 100 million square feet of office and industrial

space.

Presence of a large number of Fortune 500 and other reputed companies will attract more

companies to initiate their operational bases in India thus creating more demand for corporate

space.

Real estate investments in India yield huge dividends. 70 percent of foreign investors in

India are making profits and another 12 percent are breaking even.

Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its

expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery

where it can match the best in the world. These positive attributes of India is definitely going to

attract more foreign investors in the near future.

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Life style and Service industry in India

As the overall disposable income of population in India is increasing the growth of

lifestyle industry is also increasing as people tend to spend more on life style products. On the

other hand service industry is considered as the most potential industry to grow at the highest

pace till 2012. The company would offer various services like garden designing and maintained

which is the service which would be catered to high level customers.

Target customers

The target customers for the different products would be different.

Bonsai (for sale) – The targeted customers for this segment would be majorly high

end customers because it would be a costly product and would also be considered as a status

symbol. To reach these customers I would take help of other nurseries and retail outlet of

plants which have a direct access to the customers. These nurseries and flower shops would

also be my customers. Moreover decorators and other retail outlets keeping decorative items

would also be my customers.

Bonsai (for rent) – These Bonsai trees would be given on rent only to corporate

and also to parties and events. So here my customers would be big corporate and also event

management committees. I would rent by product to them so more the events more my

product would be rented.

Saplings (assorted) – This would cater to the masses as it would be a cheap

product. Here my customers would be nurseries and retail formats to sell plants. Here to sell

these plants I would also have an agreement with builders to take plants and other decorative

plants to be sold to them. They would use them in landscaping of their diverse projects.

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Courses in Bonsai culture – This would cater to mainly those people who are

really interested in understanding Bonsai and want to take up it as a hobby. Here my targeted

customers would be only high end customers so they would be belonging to the upper class

and upper middle class.

Overall I intend to target the upper class and upper middle class. My product would

be a status symbol so I don’t want it to get diluted by selling it to the lower sections of the

society.

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MARKETING COMMUNICAITON MIX FOR

Vkalp Bonsai Nursery

The strategic development of the Marketing Communication (MC) plan generally goes through two

phases:

The first phase is determining which MC functions and which media to use

The second, which is more creatively challenging, is the phase where ideas would be created for

how each MC function and medium will be used.

Various MC functions and their mix called the Marketing Communication Mix would be used to achieve

the above stated MC objectives.

A Marketing Communication Mix is the selection of MC functions used at a given time as part of

Marketing Program.

The Marketing Communication Mix for Vkalp Bonsai Nursery would include:

Advertising

Word of Mouth

Publicity

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ADVERTISING


Vkalp initially to make the target audience aware and to attract them would focus on Advertising and

Publicity but its main emphasis would be on Advertising. Here the main emphasis is to educate the

targeted customer base about the Bonsai trees.

The various media that Vkalp Bonsai Nursery would resort on for marketing and advertising Vkalp would

be:

Advertisements in local newspapers

Leaflets placed in newspapers

Advertisements in Radio Stations

Creating Vkalp’s website

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Advertisements in Magazines:

Two different advertisements each 3column X 5 Cm long in Magazines of Ahmedabad, Rajkot,

Bhavnagar, Baroda as also either of Times of India or Business Standard would be required to make

people aware of the establishment of Vkalp Bonsai Nursery.

One would be to invite the target audience to apply for the membership and the other would be for

attracting people to have educate the people about the Bonsai Culture.

This advertisement would be floated on Friday, Saturday and Sunday editorials of magazines like

Today, Sputnik, Stardust and many more relevant magazines which would reach to the targeted

audience. These magazines would also attract corporate to place orders.

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Advertisement featuring attractive Bonsai Trees available at Vkalp Bonsai Nursery:

Advertisement featuring to invite the target audience to apply for the membership of Vkalp

Bonsai Nursery:

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Vkalp – Bonsai NurseryA Nursery Specializing in your needs

“FOR WE ARE HERE TO MAKE YOUR EACH MOMENT A MEMORY” (Address)

Bonsai (pronounced bone-sigh) is an ancient oriental horticultural art form. As such, bonsai is the art of growing trees in a confined space (usually a pot or a tray), so as to recreate some of natures most stunning and beautiful effects on trees, which are reduced in scale. A tree planted in a small pot is not a bonsai until it has been pruned, shaped, and trained into the desired shape. Bonsai will surely change the way that you look at things.

WE WOULD PROVIDE YOU WITH THE BEST OF THE BONSAI. IT IS UPTO YOU HOW YOU GROW THEM AND MAKE THEM OUR PRODUCT.

Vkalp – Bonsai NurseryA Nursery Specializing in your needs

“FOR WE ARE HERE TO MAKE YOUR EACH MOMENT A MEMORY” (Address)

OPENING SHORTLY

Bonsai (pronounced bone-sigh) is an ancient oriental horticultural art form. As such, bonsai is the art of growing trees in a confined space (usually a pot or a tray), so as to recreate some of natures most stunning and beautiful effects on trees, which are reduced in scale. A tree planted in a small pot is not a bonsai until it has been pruned, shaped, and trained into the desired shape. Bonsai will surely change the way that you look at things.

WE OFFER YOU WITH FREE MEMBERSHIP WITH EVERY PURCHASE OF BONSAIAND A LIFETIME MEMBERSHIP ON PURCHASE OF 3 BONSAI TREES

http://en.wikipedia.org/wiki/File:Bald_Cypress,_1987-2007.jpg

http://en.wikipedia.org/wiki/File:Black_Hills_Spruce_bonsai_forest_planting,_July_13,_2008.jpg


Leaflets placed in Newspapers

The most easy and less costly medium to aware people of the establishment of the Vkalp Bonsai

Nursery would be placing colourful brochure kind leaflets in the most popular newspapers. This is

different from advertising in the magazines in the sense that only the target audience would be made

to come in contact whereas in case of advertising in the magazines all come in contact with the

advertisement (also those who are not the target audience).

These leaflets would be placed occasionally in the peak season like Diwali, summer vacations,

Christmas and weekends.

The newspapers in which such leaflets would be placed would be local newspapers like Gujarat

Samachar, Divya Bhaskar and other local newspapers as also either of Times of India or Business

Standard. These leaflets would be circulated to the newspaper providers of the middle, upper middle,

upper and elite class areas like selected areas in Navrangpura, Naranpura, Thaltej, Gurukul, and S. G.

Road, Vastrapura, Paldi and the like in Ahmedabad and similarly in other cities like Bhavnagar,

Rajkot, Baroda.

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Front side of the leaflet: Back side of the leaflet:

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WELCOME TO Vkalp – Bonsai NurseryA Nursery Specializing in your needs“FOR WE ARE HERE TO MAKE YOUR

EACH MOMENT A MEMORY”

Offering / product

The offering would broadly include the following 4 categories.

Bonsai (for sale)

Bonsai (rent)

Samplings (assorted)

Courses in Bonsai culture

“WE ARE NOT INTO SELLING OF BONSAI TREES.”

WE HAVE MORE THAN 100 BONSAI TREES TO CHOOSE FROM.JUST ROLL OVER TO EXPLORE EACH OF THEM

Address:

http://en.wikipedia.org/wiki/File:BonsaiTridentMaple.jpg


Advertisement in the Radio Station

The modern radio stations are quickly penetrating the entertainment industry. These are source of

entertainment for all from kids to elders in the family. These entertain women while they are cooking

or while they are doing household chores, drivers while driving cars and so on. This medium has

now become an efficient source of advertising with its far reach.

The advertisements running in radio station, especially like Radio Mirchi, Radio One, SFM and My

FM in Gujarat, for “Vkalp Bonsai Nursery” would inform the audience of the nursery and the Bonsai

trees and would invite them to come to the nursery and buy the Bonsai trees.

The other advertisements in radio stations of other states would also invite orders from outside and

expand the operations of Vkalp.

Creating Vkalp’s Website

To attract a large number of target audiences Vkalp is planning to float a website.

This website would contain the content that is sufficient for the clickers to educate them and also

place orders through the website.

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ENSURING WORD OF MOUTH FOR


The most effective way of attracting potential customers at Vkalp Bonsai Nursery would be with the help

of WORD OF MOUTH.

This technique helps not only attracting the new customers but also helps in retaining the most lucrative

current customers for the Nursery.

The word of mouth can be accomplished by providing quality services to the customers and members of

Vkalp Bonsai Nursery.

The market research would be conducted time to time to understand and analyse the preferences of the

customers and Vkalp Bonsai Nursery would try and fulfil and even overdoing those expectations of the

customers and consumers making them satisfied and delighted with its services.

A satisfied or an overwhelmed (delighted) does not simply become a loyal customer who would

frequently buy products from the nursery but would bring and inform others of the nursery. It is seen that

1 satisfied customer brings atleast 13 other customers.

This method is a cheap source of attracting new customers though retaining and satisfying the current

customers sounds a bit costly.

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PUBLICITY FOR


The publicity is the use of non-paid media messages to deliver brand information designed to positively

influence customers and prospects. Publicity is a free tool to attract and influence the customers and

prospects.

Vkalp Bonsai Nursery during its inauguration that is initial stage as also later stage nursery on publicity to

attract and influence prospects and customers as this source is the most renowned and people give their

full consent to such publicity.

For creating publicity Vkalp Bonsai Nursery would on a regular basis conduct various events in the

premises like “Most Creative Bonsai” and “Bonsai Fair”.

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Competitive analysis

Competition

Bonsai – For this segment there are no players concentrating basically on Bonsai

trees only. There is an “Ahmedabad Bonsai Club” running in Ahmedabad but its

objectives are very different, they are running it only as a hobby. My objective is to

create a culture of Bonsai trees.

Saplings ( assorted ) – Here there is huge competitions as there are many

nurseries operating in Gujarat.

Courses in Bonsai culture - There is as such no competition as no player is

interested in educating the buyer about the product.

Competitive advantage

I would like to create a competitive edge over my competitors by creating a Brand name for my Bonsai trees and also by making aware of the product I would like to create a culture for such ornamental plants.

I would also target my bonsai trees as a status symbol.

I would also keep a customer database which would help me increase my sale by increasing the number of purchases per customer.

My main competitive advantage would be creating a retail format. No other player has thought of going into a retail format. The existing players operate in a very conventional and traditional way; I would have a completely different view towards the nursery. My main aim would be customer satisfaction and create a culture for Bonsai trees not just by selling them but also educating the customers on how to maintain them.

SWOT ANALYSISBUSINESS PLAN 29


Strengths:

• Varied Agro-climatic conditions • Available surplus in Spices, Kharif Onion, Pea and Cucurbits.

• Strong cooperative credit and marketing structure

• High productivity for plants.

Weakness:

• Poor irrigation facilities• Erratic monsoon

• Shallow and undulating land and with low fertility

Opportunities:

Scope for Area expansion in fruit crop Potential to increase production and export of Banana , Mango, Potato, Cumin , Fennel

and Isubgul

Sradar Sarovar project will provide irrigation facilities for additional 17.90 lakh ha.

Good potential for cultivation of medicinal and aromatic plants

Investment in green house , floriculture projects , tissue culture units , fruits & vegetable processing units

Threats:

• Drought prone• Prone to cyclone and locust

• Depletion of water table

• Deterioration of soil and water

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PRODUCT LIFE CYCLE

Development:

For the 1st 2 years I would be growing Bonsai trees and so I would not be selling the plants. This would be in the development stage where I would be developing and growing the bonsai.

Introduction:

In the introduction stage I would be introducing the Bonsai trees in the market. In this stage I would be incurring a lot of marketing expense as this product is very new to the market. So to make aware the customers I would have to work too much for the market penetration.

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Growth:

This would be the stage when I would capitalize on all the fixed cost I would be incurring. I would try to stretch this stage as much as possible. This stage is the time when I would gain my maximum revenue. Once I would start making profit I would attract competition.

Maturity:

This would be the stage where many players would enter the market and competition would increase. I intend to diversify into other field of miniature during this stage. I would concentrate on other business and keep this business as a secondary source of income.

Decline:

In this stage I would close down this business and the other business which I have diversified I would concentrate on it.

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Porter’s 5 forces model

1. Bargaining power of customers:

Here the customers do not have any bargaining power in the Bonsai section as me being the only supplier of Branded Bonsai trees I would have the bargaining power in deciding the price. Even when supplying Bonsai trees to the corporates on rent, I would be the 1st of my kind doing it so I would have an edge in deciding the price.

When selling the saplings, I would not hold the bargaining power; it’s the customers who would have the right to decide the price as there are many players already supplying the same product.

2. Bargaining power of suppliers:

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Here the suppliers do not have any bargaining power with them because the basic raw material needed that is the saplings and the seeds are available very easily and their price can be bargained down as there are many suppliers in the market.

3. Threat of Substitute products:

There is not much threat of substitute for Bonsai trees. Bonsai trees are basically ornamental plants, they in fact are the substitutes for “Bamboo Shoots” whose market has already been saturated.

While in the saplings and nursery section there is a high threat of substitute as people might be intended towards artificial plants and decorations.

These artificial plants may also pose a threat to the Bonsai section.

4. Threat to new entrants:

There is a very high risk on new entrants in the field. As this field does not need any huge investment or does not have any huge entry barriers, this field is a very volatile market.

One of the positive points that can be stated is that there is a death valley of 10 lacs for a period over 2 years. This discourages investors to invest in the field as there would be no returns or very nominal returns in the 1st 2 years.

5. Competition within the industry:

In the saplings section there is a huge competition within the industry as there are many players and most of them are trust based. Most of them have also acquired land from AMC on lease for a very long period which would decrease their cost and give them a competitive market.

But in terms of Bonsai trees section there is very less competition in the market as there are very less players supplying Bonsai and among those who are supplying most do not have authentic Bonsais.

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Management and ownership

The ownership of my business would completely be in my hands. I would hold the complete equity. I would also take a loan of 20 lacs to fund my project.

Capital Structure Contribution

Equity 22 lacs

Debt 20 lacs

Subsidy 6 lacs

Total 48 Lacs

Here I would be putting a total of 22 lacs as my own equity. I would be

taking a soft loan of 20 lacs from Central Bank of India at a nominal rate of 7.5%p.a.

(under the National Horticultural board). I would also get a subsidy of approximately 6

lacs for the drip system and also the green house.

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Partner Network

My partner network would include the following partners:

A Bonsai Specialist that would help me to gain important know-how on how to grow Bonsai and also on how to maintain them.

An agricultural specialist who would assist the local semi-skilled workers in growing the Bonsai trees.

Central bank of India (Bank) which would provide us with the necessary finance

needed to fund our project.

These partners would not be contributing any capital towards the capital structure.

They would be hired on pay basis. They would be paid salary for their proprietary

knowledge. The reason why they would not be contributing any capital is that I want the

complete hold of the business in my hand. Moreover in future if I am not satisfied with their

contribution towards the business I can easily change them and keep new advisors. This

would give me enough flexibility to run my business. Moreover I can even hire the best

advisors in the town for my business. This decision is taken keeping in mind the future

growth of the business, if in future the business expands I can hire advisors from China or

Japan.

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Organizational structure

The industry to which my business is related to is currently a new concept and has

very limited players involved in it so the critical factor for the organizations will be to

have the structure which complements the business in long run and have a sustainable

competitive advantage.

For the start of any new business or industry the organizations are having sole

proprietor ownership, same is the case in my business. As the company is in the seed

stage of its business life cycle it would be having sole ownership under the owner there

would two specialists one would be bonsai specialist and another would be agriculture

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specialist. This two specialist would be guide the production department for getting the

right quality of product the production department would be having 7 another

subordinates who would do the production work.

The marketing department would have several different activites which are as

follows.

Developing the retail market.

Developing the corporate relationship chain through the communicators.

Searching for the new markets.

Developing a network through which the company would rent the bonsai plants.

Moving forward the finance department would have a chartered accountant and a

cash manger that would do the payment collection and accountancy work.

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Cultivation of Bonsai Trees

Bonsai are not necessarily genetically dwarfed plants. They can be created from nearly any

perennial woody-stemmed tree or shrub species which produces true branches and remains small

through pot confinement with crown and root pruning. Some species are more sought after for

use as bonsai material, because they have characteristics, such as small leaves or needles that

make them appropriate for the smaller design scope of bonsai. The purposes of bonsai are

primarily contemplation (for the viewer) and the pleasant exercise of effort and ingenuity (for the

grower). By contrast with other plant-related practices, bonsai is not intended for production of

food (although some fruit trees can be used as bonsai bearing limited amounts of seasonal fruit),

for medicine (although some woody herbs can be made into bonsai), or for creating yard-sized or

park-sized landscapes. As a result, the scope of bonsai practice is narrow and focused on the

successful long-term cultivation and shaping of one or more small trees in a single pot.

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http://en.wikipedia.org/wiki/File:Black_Hills_Spruce_bonsai_forest_planting,_July_13,_2008.jpg


Techniques to grow Bonsai Trees

This juniper makes extensive use of both Jin (deadwood branches) and Shari (trunk deadwood).

The practice of bonsai incorporates a number of techniques either unique to bonsai or, if used in

other forms of cultivation, applied in unusual ways that are particularly suitable to the bonsai

domain.

Leaf trimming

This technique involves the selective removal of leaves (for most varieties of deciduous

tree) or needles (for coniferous trees and some others) from a bonsai's trunk and branches. A

common esthetic technique in bonsai design is to expose the tree's branches below groups of

leaves or needles (sometimes called "pads"). In many species, particularly coniferous ones, this

means that leaves or needles projecting below their branches must be trimmed off. For some

coniferous varieties, such as spruce, branches carry needles from the trunk to the tip and many of

these needles may be trimmed to expose the branch shape and bark. Needle and bud trimming

can also be used in coniferous trees to force back-budding or budding on old wood, which may

not occur naturally in many conifers. Along with pruning, leaf trimming is the most common

BUSINESS PLAN 44

http://en.wikipedia.org/wiki/File:Sargent_Juniper,_1905-2007.jpg


activity used for bonsai development and maintenance, and the one that occurs most frequently

during the year.

Pruning

The small size of the tree and some dwarfing of foliage result from pruning the trunk,

branches, and roots. Improper pruning can weaken or kill trees. Careful pruning throughout the

tree's life is necessary, however, to maintain a bonsai's basic design, which can otherwise

disappear behind the uncontrolled natural growth of branches and leaves.

Wiring

Wrapping copper or aluminum wire around branches and trunks allows the bonsai

designer to create the desired general form and make detailed branch and leaf placements. When

wire is used on new branches or shoots, it holds the branches in place until they lignify (convert

into wood), usually 6-9 months or one growing season. Wires are also used to connect a branch

to another object (e.g., another branch, the pot itself) so that tightening the wire applies force to

the branch. Some species do not lignify strongly, and some specimens' branches are too stiff or

brittle to be bent easily. These cases are not conducive to wiring, and shaping them is

accomplished primarily through pruning.

Clamping

For larger specimens, or species with stiffer wood, bonsai artists also use mechanical

devices for shaping trunks and branches. The most common are screw-based clamps, which can

straighten or bend a part of the bonsai using much greater force than wiring can supply. To

BUSINESS PLAN 45


prevent damage to the tree, the clamps are tightened a little at a time and make their changes

over a period of months or years.

Grafting

In this technique, new growing material (typically a bud, branch, or root) is introduced to

a prepared area on the trunk or under the bark of the tree. There are two major purposes for

grafting in bonsai. First, a number of favorite species do not thrive as bonsai on their natural root

stock and their trunks are often grafted onto hardier root stock. Examples include Japanese red

maple and Japanese Black pine. Second, grafting allows the bonsai artist to add branches (and

sometimes roots) where they are needed to improve or complete a bonsai design. There are many

applicable Grafting techniques, none unique to bonsai, including branch grafting, bud grafting,

thread grafting, and others.

Defoliation

Short-term dwarfing of foliage can be accomplished in certain deciduous bonsai by

partial or total defoliation of the plant partway through the growing season. Not all species can

survive this technique. In defoliating a healthy tree of a suitable species, most or all of the leaves

are removed by clipping partway along each leaf's petiole (the thin stem that connects a leaf to its

branch). Petioles later dry up and drop off, or are manually removed once dry. The tree responds

by producing a fresh crop of leaves. The new leaves are generally much smaller than those from

the first crop, sometimes as small as half the length and width. If the bonsai is shown at this time,

the smaller leaves contribute greatly to the bonsai esthetic of dwarfing. It should be noted that

this change in leaf size is usually not permanent, and the leaves of the following spring will often

be the normal size. Defoliation weakens the tree and should not be performed in two consecutive

years.

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Deadwood

Bonsai growers use deadwood bonsai techniques called Jin and Shari to simulate age and

maturity in a bonsai. Jin is the term used when the bark from an entire branch is removed to

create the impression of a snag of deadwood. Shari denotes stripping bark from areas of the trunk

to simulate natural scarring from a broken limb or lightning strike. In addition to stripping bark,

this technique may also involve the use of tools to scar the deadwood or to raise its grain, and the

application of chemicals (usually lime sulfur) to bleach and preserve the exposed deadwood.

BUSINESS PLAN 47


Taking Care of Bonsai Trees

Watering

With limited space in a bonsai pot, regular attention is needed to ensure the tree is

correctly watered. Sun, heat and wind exposure can dry bonsai trees to the point of drought in a

short period of time. While some species can handle periods of relative dryness, others require

near-constant moisture. Watering too frequently, or allowing the soil to remain soggy, promotes

fungal infections and root rot. Free draining soil is used to prevent water logging. Deciduous

trees are more at risk of dehydration and will wilt as the soil dries out. Evergreen trees, which

tend to cope with dry conditions better, do not display signs of the problem until after damage

has occurred.

Repotting

Bonsai are repotted and root-pruned at intervals dictated by the vigor and age of each tree. In the

case of deciduous trees, this is done as the tree is leaving its dormant period, generally around

springtime. Bonsai are often repotted while in development, and less often as they become more

BUSINESS PLAN 48

http://en.wikipedia.org/wiki/File:Uprooted_bonsai.jpg


mature. This prevents them from becoming pot-bound and encourages the growth of new feeder

roots, allowing the tree to absorb moisture more efficiently.

Pre-bonsai material known as potensai, are often placed in "growing boxes" which are made

from scraps of fence board or wood slats. These large boxes allow the roots to grow more freely

and increase the vigor of the tree. The second stage, after using a grow box, has been to replant

the tree in a "training box;" this is often smaller and helps to create a smaller dense root mass

which can be more easily moved into a final presentation pot.

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Requirements of Bonsai Trees

Tools

Set of bonsai tools (left to right): leaf trimmer; rake with spatula; root hook; coir brush; concave

cutter; knob cutter; wire cutter; small, medium and large shears.

Special tools are available for the maintenance of bonsai. The most common tool is the concave

cutter (5th from left in picture), a tool designed to prune flush, without leaving a stub. Other tools

include branch bending jacks, wire pliers and shears of different proportions for performing

detail and rough shaping.

Soil and Fertilization

Opinions about soil mixes and fertilization vary widely among practitioners. Some promote the

use of organic fertilizers to augment an essentially inorganic soil mix, while others will use

BUSINESS PLAN 50

http://en.wikipedia.org/wiki/File:Bonsai_tools.jpg

http://en.wikipedia.org/wiki/File:Akadama_dry_and_wet.JPG


chemical fertilizers freely. Most use the general rule of little and often due to the flushing effect

when watering, taking care to use the correct fertilizer at any given time in each season,

depending on the tree's requirements. Bonsai soil is primarily a loose, fast-draining mix of

components, often a base mixture of coarse sand or gravel, fired clay pellets or expanded shale

combined with an organic component such as peat or bark.

Containers

Containers come in a variety of shapes and colors, and may be glazed or unglazed. Containers

with straight sides and sharp corners are generally better suited to formally presented plants,

while oval or round containers might be used for plants with informal shapes. Most evergreen

bonsai are placed in unglazed pots, while deciduous trees are planted in glazed pots. The color of

the pot should complement the tree, and many formal and informal rules guide the selection of

pot finish and color for a particular tree. Pots are also distinguished by their size. The design of

the bonsai tree, the thickness of its trunk, and its height can all be considered when determining

the size of a suitable pot.

BUSINESS PLAN 51

http://en.wikipedia.org/wiki/File:Assorted_bonsai_pots.jpg


BUSINESS PLAN 52


Assumptions

Interest rates

long term 7.50%

short term 18.00%

Average price per plant (INR)

Bonsai - for sale 2000

Bonsai - for rentals 200

Saplings - assorted 45

Depreciation SLM RATES

land 0%

Building 10%

Drip sysytem 20%

Shade 20%

Equipment 50%

Vehicles 15%

Cost of Capital

Risk free rate 9%

Market premium 13%

Beta 1

Cost of Equity 22%

Cost of Debt 7.50%

Proportion of Equity 30

Proportion of Debt 20

WACC 16.20%

BUSINESS PLAN 53


Working Capital

Stock in progress 180 days

Finished goods 60 days

Projected sales (1st yr)

Bonsai - for sale 0%

Bonsai - for rentals 0%

Saplings - assorted 35%

Cost (per yr.)(per yard)

Seeds 2500

Fertilizers 15000

Chemicals 25000

Labour Cost (per year)(in lacs)

Bonsai Specialist 1.2

Agriculture Specialst 0.5

Helpers (3) 0.5

Accountant 0.1

Chartered Accountant 0.1

Total 2.4

Tax Rate 35%

BUSINESS PLAN 54


Cost of the Project

PARTICULARS COST (INR) (lacs)

Land (2 acres) 10 (5 lacs per acre)

Building (utility building) 3

Drip system 5

Shade (Green house) 7

Working Capital 10

Equipments and transport facility 5

Cash loss (expected for 2 years) 5

Water reservoir 2

Contigency 3

Total Expenses 50 Lacs

Capital StructureContribution

(lacs)

Equity 24

Debt (7.5%) 20

Subsidy 6

Total 50 Lacs

BUSINESS PLAN 55


Revenue ChartParticulars 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Land (acres) 2 2 3 4 5 5 Sq yds per acre 4048 4048 4048 4048 4048 4048 Land (sq yds) 8096 8096 12144 16192 20240 20240 Less: Common space allocation 30% 30% 30% 30% 30% 30% Land available for saplings 5667.2 5667.2 8500.8 11334.4 14168 14168 No. of saplings per sq yd 3 3 3 3 3 3 Total no. of saplings 17001 17001 25502 34003 42504 42504 Production mix (%) Bonsai - for sale 20% 20% 20% 20% 20% 20% Bonsai - for rentals 5% 5% 5% 5% 5% 5% Saplings - assorted 75% 75% 75% 75% 75% 75% Plants Bonsai - for sale 3400 3400 5100 6800 8500 8500 Bonsai - for rentals 850 850 1275 1700 2125 2125 Saplings - assorted 12750 12750 19126 25502 31878 31878 Plants for sale Bonsai - for sale 0% 0% 20% 25% 35% 40% Bonsai - for rentals 0% 0% 20% 30% 50% 70% Saplings - assorted 35% 45% 50% 60% 65% 70% Plants for sale Bonsai - for sale 0 0 1020 1700 2975 3400 Bonsai - for rentals 0 0 255 510 1062 1487 Saplings - assorted 4462 5737 9563 15301 20720 22314

BUSINESS PLAN 56


Average price per plant (INR) Bonsai - for sale 2000 2000 2000 2500 2500 2500 Bonsai - for rentals 150 150 200 200 250 250 Saplings - assorted 45 45 45 45 45 45 Revenue of sale Bonsai - for sale 0 0 2040000 4250000 7437500 8500000 Bonsai - for rentals 0 0 51000 102000 265500 371750 Saplings - assorted 200790 258165 430335 688545 932400 1004130 Total Revenue 200790 258165 2521335 5040545 8635400 9875880 Revenue in lacs 2.01 2.58165 25.21 50.41 86.35 98.76

BUSINESS PLAN 57


Expenses

Particulars 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Cost of production (A) Seeds 0.05 0.05 0.08 0.1 0.13 0.13Fertilizers 0.3 0.3 0.45 0.6 0.75 0.75Chemicals 0.5 0.5 0.75 1 1.25 1.25Electricity cost 0.2 0.2 0.3 0.4 0.5 0.5 Total 1.05 1.05 1.58 2.1 2.63 2.63 Administration &selling expense (B) Labour Cost 2.4 2.64 2.90 3.19 3.51 3.87Marketing cost 5 5 5 6 6 6Depreciation 4.15 4.15 4.15 4.15 4.15 4.15 Total 11.55 11.79 12.05 13.34 13.66 14.02 Financing Expense (C ) Interest 1.50 1.50 1.28 1.05 0.83 0.60 Total 1.50 1.50 1.28 1.05 0.83 0.60 Dividend 0 0 0 8.75 10.5 12.25 Total expense 14.10 14.34 14.90 25.24 27.61 29.49

BUSINESS PLAN 58


Cash Flow

PARTICULARS 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Sources

Equity 24 5 0 0 0 0

Debt 20 0 0 0 0 0

Subsidy 6 0 0 0 0 0

Total revenue 2.01 2.58 25.21 50.41 86.35 98.76

Total 52.01 7.58 25.21 50.41 86.35 98.76

Application

Land 10 0 5 5 5 0

Building 3 0 0 0 0 0

Water reservoir 2 0 0 0 0 0

Drip system 5 0 0 0 0 5

Shade 7 0 0 0 0 7Equipments and transport facility 5 0 2 0 2 0

Interest 1.5 1.5 1.275 1.05 0.825 0.6

Installment 0 0 3 3 3 3

Seeds 0.05 0.05 0.08 0.1 0.13 0.13

Fertilizers 0.3 0.3 0.45 0.6 0.75 0.75

Chemicals 0.5 0.5 0.75 1 1.25 1.25

Electricity cost 0.2 0.2 0.3 0.4 0.5 0.5

Labour Cost 2.40 2.64 2.90 3.19 3.51 3.87

Marketing cost 15 0 0 24 0 0

Dividend 0 0 0 8.75 10.5 12.25

Total 51.95 5.19 15.75 47.09 27.46 34.34

Op. Cash Balance 0 0.06 2.45 11.91 15.22 74.11

Net Cash Flow 0.06 2.39 9.46 3.31 58.89 64.42

Cl. Cash Balance 0.06 2.45 11.91 15.22 74.11 138.53

BUSINESS PLAN 59


Profit & Loss Account

(in lacs)

Particulars 2008-09 2009-10 2010-2011 2011-12 2012-13 2013-14

Total Revenue 2.01 2.58 25.21 50.41 86.35 98.76

Total Expense (A+B) 12.60 12.84 13.63 15.44 16.29 16.64

PBIT -10.59 -10.26 11.58 34.96 70.07 82.12

less: Interest (C ) 1.50 1.50 1.28 1.05 0.83 0.60

PBT -12.09 -11.76 10.31 33.91 69.24 81.52

less accumulated loss -12.09 -23.85 -13.54 20.37 89.61 171.13

Less: Tax (35%) 0 0 0.00 7.13 31.36 59.90

PAT -12.09 -11.76 10.31 26.78 37.88 21.62

Less: Dividend 0 0 0 8.75 10.5 12.25

B/S Retained earing -12.09 -23.85 -13.54 4.49 31.87 41.24

IRR Retained earnings -12.09 -11.76 10.31 18.03 27.38 9.37

BUSINESS PLAN 60


Balance Sheet

Liabilities 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Equity + Subsidy 30 35 35 35 35 35

Debt 20 20 17 14 11 8

Retained profit -12.09 -23.85 -13.54 4.49 31.87 41.24

proposed dividend 0 0 0 8.75 10.5 12.25

Total 37.91 31.15 38.46 62.24 88.37 96.49

Assets 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Total Assets 15.85 11.7 9.55 5.4 3.25 11.1

Water reservoir 2 2 2 2 2 2

Land 10 10 15 20 25 25

Cash 0.06 2.45 11.91 15.22 74.11 138.53

Marketing Cost 10 5 0 16 8 0

Total 37.91 31.15 38.46 58.62 112.36 176.63

BUSINESS PLAN 61


Irr Calculations

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Outflow 30 5 0 0 0 0

Inflows

Dividend 0 0 0 8.75 10.5 12.25

Retained Earnings 0.00 0.00 10.31 18.03 27.38 9.37

Net Flow -30 -5 10.31 26.78 37.88 21.62

IRR 34%

BUSINESS PLAN 62


Interest Calculations

Debt (7.5%)Loan in

beginning Int. Due InstallmentLoan at End of

yr.

2008-09 20 1.5000 0 20

2009-10 20 1.5000 0 20

2010-11 20 1.2750 3 17

2011-12 17 1.0500 3 14

2012-13 14 0.8250 3 11

2013-14 11 0.6000 3 8

2014-15 8 0.3750 3 5

BUSINESS PLAN 63


Depreciation Calculations

Building (lacs) Value At Beginning Depreciation Value At End

2008-09 3 0.3 2.7

2009-10 2.7 0.3 2.4

2010-11 2.4 0.3 2.1

2011-12 2.1 0.3 1.8

2012-13 1.8 0.3 1.5

2013-14 1.5 0.3 1.2

Drip System Value At Beginning Depreciation Value At End

2008-09 5 1 4

2009-10 4 1 3

2010-11 3 1 2

2011-12 2 1 1

2012-13 1 1 0

2013-14 5 1 4

Shade Value At Beginning Depreciation Value At End

2008-09 7 1.4 5.6

2009-10 5.6 1.4 4.2

2010-11 4.2 1.4 2.8

2011-12 2.8 1.4 1.4

2012-13 1.4 1.4 0

2013-14 7 1.4 5.6

Equipment Value At Beginning Depreciation Value At End

2008-09 2 1 1

2009-10 1 1 0

2010-11 2 1 1

2011-12 1 1 0

2012-13 2 1 1

2013-14 1 1 0

BUSINESS PLAN 64


Vehicles Value At Beginning Depreciation Value At End

2008-09 3 0.45 2.55

2009-10 2.55 0.45 2.1

2010-11 2.1 0.45 1.65

2011-12 1.65 0.45 1.2

2012-13 1.2 0.45 0.75

2013-14 0.75 0.45 0.3

Total Assets Value At Beginning Depreciation Value At End

2008-09 20 4.15 15.85

2009-10 15.85 4.15 11.7

2010-11 13.7 4.15 9.55

2011-12 9.55 4.15 5.4

2012-13 7.4 4.15 3.25

2013-14 15.25 4.15 11.1

BUSINESS PLAN 65


BUSINESS PLAN 66


Exit strategy

If the project fails

If the project fails then whatever investment I have done in the fixed assets of the project would be recovered by selling the land and the utility vehicles and would thus recover my investment in the project.

The rate at which the price of land is rising in that area would any how fetch me a higher price than that of the current price. The price which would be available after 3 years would not only recover my investment in the land but would save me of the complete investment.

Thus these are my plans if the project fails. I would then venture into some other field keeping into mind whatever mistake I would have made in this project.

If the project succeeds

If this project turns out to be a success I would then expand my business into other miniature items and would specialize into miniature items.

After 3 years into the business I would come to know whether the project has failed or not. Once successful I would have a created a brand name for Vkalp. This brand name would be attached to all bonsai trees which are miniature trees. I would then carry this image of Vkalp into offering miniature items like miniature paintings, miniature sculptures and miniature mementos.

This is one more market which has not been tapped efficiently. I would like to capitalize on this market. There is huge scope of business in this area.

These are my future plans to exit the current business and expansion into other venture.

BUSINESS PLAN 67


Bibliography

ISI emerging markets

EBSCO Business source complete

EMRALD management extract

CMIE

Indiastats.com

Google.co.in

Research publications

BUSINESS PLAN 68

final bonsai plan

Documents

word bonsai

bonsai culture

growing bonsai trees

sublime art of bonsai

trees growth

art of growing trees

ethical nursery

vision statementthe