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Room to grow
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April 23, 2001: 6:09 a.m. ET
But a successful business struggles to secure a needed loan
By Jane Applegate
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NEW YORK (CNNfn) - Bill Varney is one of those small business owners who understands how difficult it can be to secure capital to finance growth. He's spent more than a year applying for loans to expand his herb farm deep in the heart of Texas hill country.
The Varneys' Fredericksburg Herb Farm has annual sales of about $1 million, yet they have been repeatedly turned down for a $500,000 loan. By Varney's calculations, he has about three times the collateral needed for a loan in furniture, fixtures, equipment and inventory.
"We see a big future with herbs and herbal products," said Varney, "but for growth, you need to have capital."
Small start
Fredericksburg, Texas, is located about two hours from both Austin and San Antonio in a verdant land of rolling hills and lush vegetation fed by slow-flowing creeks and rivers. The hill country has a strong German heritage; shops in downtown Fredericksburg have names like Friedlhelm's Bavarian Inn, the Antique Haus, and the Dog Haus.
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We found people were mostly interested in the herbs and more interested in anything we made from our own herbs. We found the products we made ourselves sold 10 times better than other companies' products.
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Bill Varney, owner Fredericksburg Herb Farm |
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Bill and Sylvia Varney moved to Fredericksburg shortly after they were married in Houston. Sylvia was a financial analyst for an oil and gas company, and Bill was a nurseryman. Bill found work in a local nursery, but Sylvia was not so lucky.
"We put our heads together and thought about what Sylvia could do that the town didn't have, so we opened this little herb shop on Main Street," recalled Varney.
The Varney's started their business in 1985 with a $5,000 loan from Sylvia's grandmother. They named their shop Varney's Chemist Laden ("laden" is German for shop) and began selling aromatic apothecary items from manufacturers like Crabtree & Evelyn and Caswell-Massey. The apothecary shop had a small courtyard behind it, where the Varney's began growing herbs to create their own herbal food and beauty products.
"We found people were mostly interested in the herbs, and more interested in anything we made from our own herbs," said Varney. "We found the products we made ourselves sold 10 times better than other companies' products."
Space to grow
After about six months in business, Bill quit his job at the local nursery, and devoted all his time to the growing business. For the first five years, the Varneys reinvested all their profit back into the business. Neither one of them took a salary. Then in 1991, after six years, the Varneys found they needed more space to manufacture their growing line of herbal food and beauty products and space to grow and harvest their herbs. They sold their home, obtained an SBA loan, and bought a 14-acre farm a few blocks from Main Street, for about $125,000.
"It was like starting over again," says Varney, of the move. "The money paid for the land and building the warehouse. But it didn't pay for the gardens, the other buildings, or any of the rest of it."
After 15 years, the Fredericksburg Herb Farm, has expanded to include the small manufacturing facility, which supplies herbal products for their shops, wholesale clients, and mail-order business, the herb gardens, a greenhouse and nursery, a day spa, guest house, restaurant and two shops -- one that sells plants, books and candles, and another that sells gourmet foods, and bath and body products.
The farm is a sweet-scented oasis of gardens between restored rustic-farm buildings. The farm is a local landmark, with a brass plaque on the old limestone farmhouse, and a brown historical marker sign in town, pointing the way to the herb farm.
In addition to being home to the Varney's shops and businesses, the farm supports a family of rabbits and a flock of guinea hens. The family dog keeps visitors from wandering into their home.
It's easy to see how much Bill Varney loves his work as he moves around the farm, picking leaves from prized plants for a visitor to smell, answering questions about plants, checking in on the bottling station, the candle-making counter, and answering phone calls on his cell phone.
On the map
Despite its remote location, the Fredericksburg Herb Farm has attracted attention in the press. Victoria magazine first wrote about their products in 1991, and since then, the farm has been featured in magazines like Country Living, Texas Monthly and on local television shows.
It helps that the herb gardens, charming buildings and sumptuous grounds make a fabulous backdrop for photographs. Tourists arrive by the busload to stroll the gardens, eat lunch in the restaurant, relax in the day spa, and shop for herbal products.
If the effect on visitors is tranquil, the effect on the owners, Bill and Sylvia, is anything but. Since they moved to the farm, Bill and Sylvia have been living in their business. Their home is in the same building as their manufacturing facility, steps away from the shops, spa and restaurant, which makes for a quick commute, but very little privacy.
Their commitment is constant, and, at times, exhausting. Sylvia is currently taking an extended vacation away from the business. At the moment, it's up to Bill to oversee the business, house, and the care of their 12 year-old son, Roy.
"It's so much fun to see people getting excited about herbs," said Varney. "It's really fulfilling, to feel like you're spreading some knowledge, getting people excited and bringing some peace into people's lives," says Varney, as he looks over one of his gardens. "We all need some peace." 
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