Many florists learned during the pandemic that they were able to generate unexpected profits by keeping a close eye on labor and facility costs. In the September/October issue of Floral Management CPA Derrick Myers, PFCI, poses important questions to help florists generate a healthy profit.
Are you charging enough?
The average florist lost event business during the pandemic, but gained everyday sales that made them more profitable. Translation: florists weren’t charging enough for weddings, events and corporate work. Many florists tend to provide corporate work at a discount, in the hope of gaining business from the visibility of their work. Florists need to make the appropriate profit on every order. Exposure — and maybe even some business as a result — is the icing on the cake.
Do you accurately account for staff time?
In addition to the cost of a design, make sure labor costs are built in as well, especially for event work. Florists should charge at least three times an employee’s hourly pay to cover the cost of the consultation, setup, teardown, restocking, etc. This ensures that profits are strong enough to make the event work worth doing.
Is too much of your space dedicated to showroom?
Eighty to 90 percent of business is conducted online or on the phone, yet many florists devote as much of their square footage to the showroom as they do to the design/production areas. Consider devoting more space to production, with a smaller showroom for walk-in customers.
Do you have the right number of locations?
For many years having multiple locations was the model for growth and expansion. But online sales have enabled shops to grow very large in one location. At the same time, the internet gives shops with several locations an advantage when marketing in multiple areas.
How far apart should locations be?
Traditional locations are close enough that they can be supported by one another so product and orders can be easily moved back and forth between shops. This usually means the shops are about 20 minutes apart. Alternately, some florists spread their locations further out so they can expand into new markets and continue to grow their company.
Should locations stand alone, or have a central design center?
Ideally, each location should have enough business to support all of its costs and make a good profit. When there are several stores, it requires a manager at each store making a reasonable salary. Another method is having a central design center with centralized management running the satellite stores. In this scenario, the stores have lower overhead, no manager on site, and can therefore be profitable at lower levels of sales. This model uses the satellite stores to drive business to the company, while the orders are processed and delivered through the design center.
For more tips on controlling labor and facility costs, check out the September/October issue of Floral Management online.
Molly Olson is a contributing writer for the Society of American Florists.
