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The Tricky Balance of Scaling a Floral Business

Looking for something different for a ceremony space? Try a floral chandelier!

The term scaling can seem intimidating to many small-business owners, particularly in the floral industry.

Visions of complex profit-and-loss statements, stakeholder meetings, and annual reports might surface in your mind. But, in reality, scaling is simply a matter of growing your company to a point where you need to introduce new resources to accommodate an increase in business.

Naturally, introducing resources (like personnel, software, etc.) requires an increase in operational expenses. When florists start scaling, the biggest pitfall is finding a balance between the cost of growth and the profits that come with the process. Too many expenses can make your advancements pointless if you do not actually get to see more money in your bank account.

Say your business does 50 events per year, and you would like to double your revenue in the next year. That’s 100 events per year, which can bring in a pretty chunk of change. But now you have to consider doubling your floral costs, materials, and labor hours. 

Otherwise, you might be raking in cash—but if your expenses are through the roof and eating into your margins, is it worthwhile? There is no point in bringing in additional revenue if it is immediately absorbed in staffing and material costs. It is really hard to get off of that treadmill, so always mind your margins when planning a growth move.

That leaves the million-dollar question: How can you scale your floral business effectively and profitably? What can you do to achieve balance?

It’s all in the numbers. Here are some profit-driven strategies to earn more money without stretching yourself too thin and expending all of your time and resources. 

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Increase your pricing

When told to charge more, many creative professionals have a knee-jerk reaction. There tends to be a lot of fear that setting a higher price point will push you out of the market. But scaling a business means increasing your profits. To put it bluntly, if you do not have the skill or value to charge more for your services, you have no business scaling your business. Not yet, at least.

Higher price points provide you with a larger profit margin. That’s the difference between a $5,000 event and a $20,000 event. The latter provides you with a much larger margin to work with, and you do not have to take on a high volume of events at that rate. You can be selective, drawing in only your ideal clients at that price point and give them your full attention.

If you want to earn $100,000 in a year, you would only need five $20K clients instead of 20 $5K clients. Now, say you want to increase your revenue to $200,000. Wouldn’t you rather book 10 clients per year instead of 40?

The same goes for retail floral companies, too. Say your starting arrangement is $50, and you sell an average of 100 products in a month. That’s $5,000 for a lot of work. But, if you guide your customers to upgrade to a $200 or $300 product, you will earn $20–30K for the same amount of work. At that level of revenue, you can even consider hiring some associates to help out — something you would never have the overhead for at $5,000 per month.

All of these flowers are round in shape, but they each have varying petal counts and types which offers diversity in the arrangement.

Review your flat fees

On the topic of raising rates, it might not even be about increasing your base price. You can still keep that price point for your customers but increase your profit margins by raising your flat fees. Maybe you can make a greater margin by charging more for deliveries or installations.

Installations are a common area florists lose money. Install fees are sometimes only based on labor costs and can end up being around 10 percent of the total invoiced amount. But this doesn’t always provide enough margin to cover the work of an installation.

You aren’t just delivering flowers; you are installing them! You are not an order-taker; rather, you are creating art. Charge accordingly.

I have seen florists charge 20–30 percent of the total invoiced amount for certain installations, particularly those for large-scale events that involve a fair amount of legwork. 

Always purchase with intention and strategy

Margins are everything. Most florists know this. But it may not always be at the forefront of your mind—and more often than not, it’s due to a lack of time. It’s busy season, you have deadlines to meet, and you give in to the idea that you need to pad your purchase orders in case you did not order enough. But that just shows a lack of trust and respect for your process!

You already know what your floral recipes require. You know what you need to order for any given arrangement. You have already mapped out your events’ demands or your retail needs. But you end up buying out of nervousness and add on a bunch of stuff that ends up being unnecessary. Do not become a victim of the “just in case” mindset—this is how your expenses become inflated, blowing your profit margins for the quarter. 

Another common pitfall is “gifting” your clients with extra resources than what is listed in their contract. This is not a matter of a bottle of wine before their event day. This is when you have contracted, say, 12 daisies for an arrangement. But then you do a mockup in the office and realize 12 looks rather sparse. So, you order 15 daisies instead, just to keep the client happy. But those extra blooms are coming right out of your pocket!

There are a few ways to avoid this situation. First, quote accurately. Do not send out a contract for 12 daisies if you know that it might need more. Or, if that’s a realization that comes later in the process, consult with your client to see if they would like to add the extra daisies and pay the difference. Let it be their decision to spend more, not yours! 

Bud vases paired with a collection of varied votives is a simple and dainty alternative to large, luscious centerpieces.

Avoid overbooking yourself

Taking on more than you can handle is a recipe for burning out your team and spending far more than necessary. This is especially important to remember in 2021 and 2022, as all of the postponed events from 2020 have been pushed to this year and beyond.

There are a finite number of days and hours in a year, and you can only do so much.

Be mindful of your capacity when you look at your calendar. If you are starting to approach max capacity and you only have limited availability for 2021, raise your minimums!

When demand exceeds supply, you must be certain that every customer is worthwhile. If your event minimum is typically $5,000, double it and make $10,000 for the last several dates on your calendar.

Make it clear that those remaining dates are priced at a premium. You can always adjust this over time, based on demand or changes in the economy. But, for future years, we are seeing a surge in demand, and minimums should correspond.

When you consider how exhausting this season in the event industry has been and will continue to be, you should only be accepting top dollar for your products and services. 

Be smart about staffing

As you scale, you will need to hire staff to support your growth. Of course, the more people you hire, the greater your overhead costs and the more complicated your business structure. 

If you have a lead designer that is paid $70,000 for their vision and strategy but they end up getting their hands dirty making floral arrangements, your labor costs per arrangement are going to be astronomical! Plus, they will not be able to dedicate themselves or their time to the high-level responsibilities they were hired for. 

This situation may be just fine as a stopgap for busy or transitional periods, but it will run you dry if you keep it up for the long haul.

Just as you price for your value, pay your staff for their value. Avoid paying employees at higher rates than their output demands and be cautious about overtime. This goes back to avoiding overbooking—the money might be coming in, but if you are paying everyone time and a half, are you making a profit?

More often than not, ballooning labor prices are usually what break florists’ profit margins. You may have a great bulk supplier and a great rent or mortgage rate, but if all of your revenue funnels right into payroll, there will be little left over to scale and make the moves you want in business.

The sweetheart table—the most visited table at a reception!

Get strategic with your money moves

Knowing the numbers is not the same as planning around the numbers. I encourage florists (and any creative business, really) to get crystal clear in their scaling strategy. Start mapping out the numbers and forecast: “What cash do I have coming in over the next six months? Who will pay me next month? What about the following month?”

Charting those payments in a spreadsheet will help you visualize your cash flow and better understand how much cash you will have in the bank at any given time. In turn, you will feel more secure in some of the bigger, costlier scaling decisions that you need to make.

Taking on risk can be intimidating, but you can take each step with intention and purpose once you clearly define the road ahead. You cannot grow a business blindly! You have to know what your dollars are doing over time.

Keep this strategy close, referring to it and updating it throughout the year as your business grows. Let it be your guiding light, showing you a glimpse at what you can expect financially in the months ahead.

This is an important element of scaling a business in any year, but especially in one that is still reeling from the effects of the pandemic. If there is one thing we learned in 2020, financial sustainability is not a subject to be taken lightly.

If you have big dreams for your floral business, know that they are well within reach. But, before making any major steps in scaling your company, be prudent and audit your finances to ensure that you can accommodate the expenses that are inextricably linked to growth. (More money, more problems, right?) 

Run the numbers, develop a strategy, and raise those prices. Do not be afraid to “lose” business because you will not need as many clients when you start charging three, four, or five times your old rates. Accept that you provide a lot of value to your customers and clients! 

Pricing is all about perception: If your prospects recognize your value and see that you are priced accordingly, they will not question it. You can charge enough to cover your expenses, pay your staff (and yourself!), and still have profits left over to stash in the bank. It all starts with charging your worth, which is ultimately more of a mindset shift than anything.

Photo Credit: Design - Kelly Perry of Philosophy Flowers; Photography - Boone Town Photography