Maximizing Profit in the Times of COVID-19
Heading into the fourth quarter, we are all looking at how to end this crazy year on a high note. We have seen surprises at every corner. Who would have thought Valentine’s Week was our last “normal” time as we previously viewed “normal” at the flower shop?!?!
Looking into the fourth quarter, we want to maximize profits (as always), but we are weighing the risks of not knowing the future. We cannot predict if we will have another waive of shutdowns in our future, if we will be able to provide holiday installations, if there will be holiday parties, and so many more unknowns. That being said, the safest advice is to focus on your customers and stick with what you know.
There is some debate as to whether you should stick with what you know or take a risk since customers appear to be more forgiving during this trying time. You can possibly do both. If you have a great idea for the end of the year, go for it; however, do not go crazy and put all of your ornaments on one tree. No pun intended! As you look at your holiday pre-books and upcoming holiday orders, consider the purpose related to what you are buying. Do you purchase for annual parties? Do you purchase for orders that you just know will come in, rain or shine, pandemic or not? Perhaps you take the time to make a few calls, giving thought to each purchase, as well as just where and how each product may generally be used if cancellations occur.
By reevaluating your previous year’s sales, you can have a better understanding of what you need to plan for this year. If you are going to plan big and can afford to do so, go for it! If you take this path, try to purchase items that can be reused next year no matter what the trend may be. Keep your options open and be flexible with your purchases. Consider other expenses that may come up and how you can pivot your business to meet your customer’s needs. Start thinking now, just how the holiday season may look. Develop a Plan A, Plan B and a Plan C of just how you will react to this ever-changing time.
This also applies to the Thanksgiving season. This may be harder to predict than Christmas sales and the holiday season that surrounds this time, because families may send more flowers to each other if unable to gather in one place. This may cause a similar rise in sales, as many experienced during Easter 2020. On the flip side, less people may celebrate the Thanksgiving holiday and simply do their own thing, not needing flowers at all. Again, to maximize your profits, stay focused on purchases that can be used for a variety of designs and for a number of purposes. Consider taking a transeasonal approach. The key to transeasonal design is much like transeasonal dressing. Simply stick to timeless staples! This way, you can create a design from your inventory, adding seasonal flair with related florals and foliages and perhaps an accent to highlight the holiday, just as you can build a wardrobe straight from essentials, oftentimes with seasonal accessories. The more flexible you keep your inventory, the more valuable it is to you and more helpful to your bottom line.
The end of year is not just centered around Thanksgiving and Christmas. In Texas, many look to Homecoming sales to add to the bottom line. How Homecoming will be celebrated this year may still be up in the air. Reach out to your local school district regarding the social gatherings planned for Homecoming weekend and the related rules and guidelines. At the same time, it is important to understand that the district may not yet know their plans and may also face a situation where plans are ever - changing. Opening the lines of communication fosters a relationship with the district, so that you are informed of updates and related requirements to assist with proper planning.
In a time of constant change, it is difficult to plan ahead and prepare a solid business plan. It is most prudent to create multiple plans or a plan with many options so that you can react to the ever-changing environment as COVID-19 continues to change our everyday lives. Take time to think about the what - ifs and prepare accordingly. Remain as flexible as possible so that you can react to whatever may be going on in your community throughout the fall. While it is often hard to “go with the flow,” take time to plan for the numerous options to provide a strong response to whatever comes your way.
I know this year is not what we all expected – I know it surely is different for me! The craziness of COVID-19 and the subsequent life and business changes made it impossible to have a proper budget coming into the year. However, budgeting and donations are still important, even in these uncertain times. On a “normal day” when someone came in and asked for a donation in 2018, you may have considered if you wanted to donate and what that would be. It would not have been a huge decision for you. On a “normal day” in May 2020, you may have had a different thought process. Some donations are random requests. For these, it is difficult to set aside an item or money. Others may be requested in advance, allowing you to plan ahead. Most are crucial to your business, increasing your visibility within the community while ensuring customer loyalty.
PLAN. With perishable goods, planning is often very hard if you are entering uncertain times. This year has proved that for both new and established businesses. That being said, take the opportunities you have in front of you. If you planned for a bigger week than you had, make up a couple of arrangements and give them out with your name on them. You can give them to whomever you want: friends, nearby businesses, front line workers, nursing homes, the elderly. The list goes on forever. Do not let those flowers go to waste. Take the opportunity to donate them and advertise your services while getting credit for advertising with those available fresh flowers and other goods.
BUDGET FOR DONATIONS. However, remain flexible. Maybe you ended up giving away an overage last month, so you are cutting your planned donations this month. That is perfectly fine. Just make sure you have those numbers on hand. You do not want to feel generous only to realize at the end of the month, the quarter, or the year that you gave away much more than you planned.
BE FLEXIBLE. In our ever-changing market, we must be flexible. Flexibility does not mean we cannot plan; it means we plan with a purpose and goal. Keep your eyes on the goal and change your path as you need. While we all struggle to get through the pandemic in a number of ways, keep your head up and make the best of the situation. You may have more orders than expected, and you may have less. You may have more product than you can use, and you may be frantically searching for ways to get flowers. No matter your situation, plan with a purpose and do not forget the cost of donations but also the benefits of providing. The benefit of giving away a single rose may far outweigh the cost of that rose in the long-run.
Looking Ahead to Summer
While the spring brought us many surprises, we reviewed things to do to stay busy – such as cleaning out your store and perhaps your storage spaces. Hopefully, we were all too busy to do that, got it all done, or both! No matter what, there are still many things to do in the summer to stay productive and get ready for the fall.
Marketing. While everything we do markets ourselves – from our designs to our delivery vehicles and uniforms, we have many other ways to market. Take the time to look at your storefront as well as your website. Do they align and send the same message, promoting your brand? Have you taken the time to visit major vendors you work with throughout the year? Have you visited the vendors you would like to partner with in the coming year? Use this down time to get your name out there and make yourself accessible to both your customers and vendor partners.
Education. Many professions require continuing education – this is not by accident or just because someone wanted to make some extra money off of that profession. Education helps you grow as a designer and/or business manager. You can always learn new tactics, new designs and new approaches. Sometimes you walk away from educational sessions learning what you do not want to do – but you still learned. Take this time to be productive and help yourself grow. You may not be a designer, but take the time to take a design class so you can learn something new and make you a better manager/owner. Step out of your comfort zone to help you and your team become stronger.
Planning. Re-evaluate your business plan. It may have changed (and probably has this year for sure) from January until today. You need to consider how your first two quarters went and what needs to happen for your next two quarters. Adjust your team and planning based off of your new strategies and goals. Most importantly, communicate these goals to your team. If they are educated and understand what is going on, they will more readily work with you and help you reach those goals.
Organize your office. This does not mean tidying up and getting close with Marie Kondo. This means making sure you have a calendar of when your contracts expire, what contracts you have with suppliers and vendors, and what you need to address now or in the future. If you have this all in one place, you are less likely to be caught off-guard when your dumpster rate goes up or when you suddenly do not have phone service.
Check your prices. This is checking both the price you are paying, do not be afraid to shop around. Make sure you are getting the best price for your business based on the quality that you want, remember cheaper is not always better. Verify the prices you are giving customers. Do you need to raise your prices? Or maybe even lower them? Are your delivery prices on point? Do the math, sit down, and analyze how things are going and make any adjustments as needed. Make the most of your down time. While it is not always the most fun, it can definitely make the rest of your year easier, more profitable, and more productive.
All things we want to see!
Business in Uncertain Times
At the time of this publication Governor Abbott has suggested that calling his order a "shelter-in-place" or "stay-at-home" order could leave the false impression that, for example, residents can never leave their homes. In reality, they can actually go to the grocery store, the doctor's office and conduct a handful of other essential activities. For complete reference visit https://www.texastribune.org/2020/04/03/texas-under-stay-home-order-itsrules- match-those-other-states/
This year we have faced issues that most, if not all, of us never expected. We went from hearing about a virus in China to some being shut down by governmental orders in an attempt to stop the spread of what we now commonly call COVID-19. Even those still operating are working in limbo as we are unsure if we may go into lockdown, how long our lockdown will last, and when life will
resume as “normal.”
As in many professions, this will change the way we do business to a certain extent. You may have seen some memes touting that we will now know how many meetings could have been a simple email. While funny, this is the tip of the iceberg. Many florists are finding creative ways to stay open and busy while others are closing the doors temporarily hoping this too will pass. No matter which category you fall into, take this time to evaluate your business plan, your goals, and your structure. First, make sure you are fully researching everything that comes out. Many saw headlines and thought they were going bankrupt because they would have to pay all employees 80 hours of sick time. Others saw the promise of SBA loans that would be “forgiven.” Remember, if something sounds too good to be true, it probably is. On the flip side, if something sounds completely awful, take a breath and look deeper. Before you act on any of the new legislation, loans, or “grants,” please contact an attorney and review what is actually going on and how it affects you. Many of these have loopholes that protect the government, require paying back loans or are really not as bad as they sound.
Webinars. With the bans on social gatherings, many have turned to the internet to grasp what is happening and how to move forward. TSFA hosted a webinar with Glenna Hecht on human resources issues during COVID-19, and with Derrick Myers about navigating the CARES act. Our goal is to help members stay informed of their options providing new information to include the payroll protection plan, small business loans and other stimulus packages. As always, TSFA is here for our members. We continue to speak up for and represent our membership so that each have the information to determine how best to do business and have the opportunity to do business. TSFA does not advocate for staying open during this time nor does it encourage businesses to close. Our purpose is to ensure that all florists have the opportunity to choose, the knowledge to make an informed decision.
In short, TSFA has been present for the Texas floral Industry and and will be here in the future for the Texas floral industry. We thank you for your membership.
"Where flowers bloom, so does hope." -Lady Bird Johnson
Second, view this as a wake up call. While some businesses were financially prepared, I do not believe that anyone really believed a shut down could happen in the United States, much less Texas. Yet… here we are. If you were financially prepared, kudos to you! What does prepared mean? We will only know when it is over and when is that? I tried to contact the manager of COVID-19, but I did not receive a response. I’ll keep you updated if I do ;). In all seriousness, get with your accountant and see what steps you can take to prepare should something like this occur in the future. Are you protected? Is your business? Are your employees? Are your customers? Finally, take the down time to be productive. If you are shut down, you have more time to sit down and work on a business plan moving forward. This can include: marketing, staffing, organization, suppliers, styles, etc. If you are still open, you can still plan AND you can take the time to clean. Go through the storage room and organize, throw out what you are not using and cannot use. Train your staff, whether it is in the form of cross-training or bringing in new concepts or designs. This is the time that we always “wish” we had where we can get hands-on with our employees to ensure that things are running the way we want. As many have said, we will get through this together. There is not a truer statement. If any part of the industry tried to get through this alone, we would all fail. Instead, you are seeing all parts of the floral and agricultural industry banding together as one. Stay positive and take the time to improve, plan and come out of this better and stronger than before.
Cost of Goods (COGS): Why Is It Important and How Does It Affect My Business?
You often hear the words cost of goods (COGS) thrown around by accountants and those analyzing the profitability of your business, but what does this term really mean and how should you use the information? The cost of goods is the cost of the items you are offer for resale. This is NOT your rent, mortgage, electric bills, and other overhead costs. It is the amount of money actually going into the items your customers are buying. Floral tape for a corsage would be considered a COGS, but the needle-nosed pliers, using to twist the wire for boutonnieres, is not. When looking at the accounting side of the equation, you are reviewing the cost of goods as to what you are paying for the components of your retailed items. This would mean the actual price you are paying – not what the sticker says or what you think it should be. The actual price paid is used for the purpose of determining your profitability. Taking into account the cost of labor is also a consideration. If you are not considering the COGS when pricing, then you may be taking a loss on sales without even realizing it. Be sure that you understand your retail price calculations and the COGS involved so that each item is profitable. If you are pricing to “break-even” on an item, be sure that you have actually made the decision to do so. Take the necessary time to understand this analysis. Schedule time to review these details with your accountant.
These points of analysis will provide opportunities to tighten things up and lead to becoming more profitable with even the smallest of changes throughout your operation. When reviewing the sales side of the equation, you may not choose the price that you actually paid for the item as the baseline to mark-up. There are times that you should use the full wholesale price for the item and mark-up from there. For instance, if you purchased an item on sale, price the item based on the regular wholesale price, not the price you paid. While some may choose not to follow this method, it will most definitely lead to more profitability. It may seem like you are doing a great service to your customer when you pass along the discount, but you do not want that same customer to come back in two months, request an identical item, and you need to charge more because you are no longer receiving at a discount.
Take time to regularly check the market rates to be sure you are properly pricing your retail items. These numbers vary greatly when it comes to major holidays, such as Valentine’s. Your COGS increases on roses and a number of other items. Many florists pass this increase onto the consumer and others do not. This decision is based on what is ultimately best for your business. Take the time, in making these decisions, to keep in mind the accounting side of things to be certain that you are not loosing money. Some florists wish to increase the price year-round so as to not increase prices around the holidays. Others train their sales team to explain the reason for the increased costs to the consumer. Neither option is wrong. Whatever your decision, it should be well thought out, clearly understand and determined in advance. COGS is extremely important in all aspects of business planning and in evaluating profitability. Take time to know your COGS (both what you pay and what the wholesale rate is). It is only then that you can accurately price your consumer goods and fully understand your company’s greater earning potential. Understanding the logistics of your business may not be the most fun and is definitely not the most creative, but it is one of the most important aspects to master. Proper analysis of your COGS can lead to better inventory management and higher profitability.
HIPPA & Personal Information Disclosure
Working in the flower shop, we quickly come to think of our co-workers as family. If someone has a sick child, we all do. If someone is hurting, we all feel it. It is great to have a caring environment that can support employees; however, we have to keep in mind it’s a business too! What does that really mean? It can often put owners and managers in a tough situation. Since Morgan is going to be out, you know why – she’s battling cancer. You know that co-workers would want to be there to support her, but she’s asked you not to say anything. You are legally bound to not say anything. Even if it comes up in conversation as to how Morgan was looking the other day, and someone is worried. The best answer is to make no comment at all or encourage the employee to check on her.
You may ask yourself why and think that you are being heartless. If Morgan has disclosed this health information to you for employment purposes, that does not give you carte blanche to go and tell co-workers what is going on. You cannot comment or add to the conversation. Morgan may have told you that you can share with employees – if that is the case, do so with care. You don’t want to disclose more than you are allowed to disclose. This is why the safest route is to say nothing. Keep in mind this applies to family members health, mental health, substance addiction and physical health. Less is more. The less you say, the safer you are in the legal world. Even if you disclose, with permission, in good faith and get the information wrong, the employee may be upset with you as he/she sees what you stated as placing a stigma on that person. While it’s very hard when others are asking about a co-worker, keep in mind that you are still running a business and are in control of sensitive information. Alice may not want Charles knowing that her brother overdosed last week, and that she is attending a funeral. While this is not necessarily a protected statement, why let it cause problems? Instead, if Charles asks about Alice, just reply that she is unable to be here and encourage him to reach out if he is concerned about her. If he does not have her contact information, DO NOT provide it. Again, this is information given to the employer that you can only share with the employee’s permission. When talking about employee information, you should also remind your employees not to disclose another’s information – their days off, contact information, etc. You never know what is going on in someone’s personal life. You certainly do not want to be the one who provided a stalker with information to harass your employee. You do not want to help someone learn the schedule to then cause harm – physical, emotional, financial, or otherwise. While it may be hard and you do not want to seem strict for no reason, encourage open communication among your employees and co-workers, just be sure you are not the source of information without the consent of the employee. It will save you heartache, stress and maybe even a lawsuit in the long run.
Build Your Brand
Branding is important, and I am not just talking about branding cows! But… it’s relatable. Especially for those florists not in a large metroplex, I bet you can recognize the brands of major ranches in the area. Why? It is consistent. It is everywhere. It is recognizable. It stands out. It identifies. For all of these reasons, other businesses spend millions of dollars on branding – whether its through radio ads, internet marketing, free pens, koozies, mousepads, etc. Whatever the medium may be, everyone is reaching to get his/her name out there. You want to claim your product. Claiming your product is an extension of yourself and what you represent. If something is not up to your standards or not your style, you do not want your name (read: brand) on it. If it meets your personal standards, then you definitely want others to identify that product with you. Some of you are thinking… of course, Jodi, you have caladium leaves. Remember, that did not come about in a day. Additionally, building your brand is not a one-time feat. You are building or destroying your brand on a day-to-day basis. This can be through your products, your customer service, or even how your driver is driving the delivery van with your name (read: billboard) on the side. People remember how you make them feel. They need to associate your brand with happiness, love, comfort, peace – positive emotions. You can build your brand as a designer as well – it’s not just a brick and mortar thing! Many of you can look at a design and think “oh wow! Stacey Carlton created that!” That comes from years of branding. You don’t think oh that blonde girl did something. She has spent the time branding herself and her designs. While you can reinvent the wheel (and some of you may want to reinvent yourself at some point), keep in mind that brand is fluid. While you can build a strong brand that is easily recognizable, it can change with time. Look at your flower shop’s designs from the 80’s or 90’s and what you are doing now – or even look at the wire service’s featured items and how they have changed with time. Our consumers change, your designs may update; but be sure that you are staying true to yourself and your brand. How you hold yourself out to your customer defines how they view you, why they call you, and what they will say about you. The most valuable thing you have is your name and your brand. It takes years to build and minutes to destroy. Be sure that you are taking the time to cherish and grow your brand and not jump at the next quick money-maker that may destroy what you have worked so hard to establish. If you have this strong brand, look back through your TEXAS in Bloom magazines and check out the article on trademarking. If you are proud of your brand and want to make sure you are protected from others stealing your hard work, be sure you trademark yourself!
New Year, New You
It’s a new year and a time for resolutions, change, and oh… Valentine’s! Forgetting the holidays, the new year is when many work towards new goals, new aspirations, and a new life. Why stop with just the personal? Make new goals for your business too! This may sound much easier than it really is, but here are a few tips in getting started. Define Your Purpose. Why is it you are a florist? What drives you to get out of bed and get to work? This can be different for a variety of people, and trust me, some days are easier than others. This definition can come in the way of a business or a personal mission statement. While many may not have a personal mission statement, I encourage you to ensure that your business has one – one that is up-to-date! Your mission statement should define the what, how, and why of what you do. While it may seem corny at first, this mission statement should be succinct and placed publicly in your business. When you are dreading the bridezilla coming in or looking forward to a fun design, you and your employees can glance at your mission statement and remember why you are here and what it’s all about. Set Goals. You may have a 10 year business plan, you may have a get through the morning plan, and if you’re lucky, you have both! Not to worry no matter what category you may fall into. Many shy away from goal-setting and see it as a waste of time. What do you want?: to be more profitable, have more time off, grow customer base, etc. Many just start working to get there. However, when you take a step back and plan out what you can do to achieve these goals, you will get there much quicker. How do you do it? Make clear, measurable goals: I want to increase business by 10% in the next years. I want to get 3 more standing orders by the end of the year. I want to take off a month this year. Put your goals in writing and make them something you can track. Once you have your goals written down, break it down into steps. Take, for instance, growing customer base. How will do you this? Brainstorm – ads, store events, mailers, radio, community events – the options are endless. Look at what works for you and your budget. When you plan this all out, you can be prepared and stay within a budget. If you don’t plan, then it often gets looked over – from the “I don’t want to spend the money” or “I don’t have time” or “I just don’t feel like it.” If you plan and write down your goal and your steps to attain it, then you have something to remind you the why of your actions. This reminder will help you stay on track to reach those goals you set out for yourself and your business. Organize. This is something that you either hate or love. If it comes color-coded with tabs, I am in heaven. If it’s a messy pile, my dad is in his element. While it’s definitely a personal strategy, you need to organize your mind and your space for you. Each person has his/her own organization plan, and that’s great. At the beginning of the year, take the time to do it. From organizing your hardgoods to reevaluating your coolers or how you keep your books. Make sure that your organization is working for your business and is the most profitable option. If you can save 10 minutes a day by moving the vases closer to the design table, then you may want to look at reorganizing. Do some quick math and realize the actual cost of not having things efficiently organized. It can be shocking. Take a morning or an afternoon or even a day and evaluate your business practices and organization tools. You’ll be surprised at the efficiencies you can improve with just a few minor (or sometimes major) tweaks to your shop. New year – new you. While you shouldn’t re-invent the wheel and shouldn’t stress about “spring cleaning” or new year’s resolutions, the new year is a great time to take a deep dive into your business and evaluate how things are done. It’s time well-spent and can drastically improve your profitability and lower your stress levels if you take the time and do it right! Happy New Year! Now have fun with Valentine’s…
Fort Worth Stock Show & Rodeo!
This spring brought cows, horses, cowboys, cowgirls, and… flowers to Fort Worth for the annual Fort Worth Stock Show & Rodeo. Bringing in participants and audience members from around the country, the Texas Department of Agriculture helped TSFA bring flowers to this great event. Jodi McShan AAF CFD TMF presented four shows during the event sharing unique ways to use flowers as a way to bring a bit of fun to life’s celebrations! McShan presented a variety of ideas to include “Floral Headpieces for You and Your Horse,” “Rose Me In Some of Those Flowers,” “These Boots Are Made For Walkin’,” and “Old West Meets New Florals.” The ideas brought the joy of flowers to a new audience and helped brighten the lives of those freezing at the Stock Show in Fort Worth! Thank you Jodi!