According to Floral Finance Business
Service informal interviews, about one- third of all shops closed completely. The other two-thirds saw sales drop from 40 to 80 percent. It wasn’t pretty. On the bright side, Easter was surprisingly strong under the circumstances and Mother’s Day was amazingly robust. Many florists saw an actual sales increase over the Mother’s Day of 2019. No one knows for certain how the summer months will turn out.
Your Major Challenge Staying afloat will mean careful cash control as you move forward through the summer. As is normal, the two larg- est expenses to control are payroll and Cost of Goods Sold (COGS). What’s not normal is your sales. Lower sales affect both staffing and COGS. In this article we will focus primarily on COGS; however, a quick word on payroll: Every florist has reduced staff since February. Most that went through Mother’s Day did so with limited employees and worked long hours. Of course, it meant higher than normal productivity. You want to enter the summer months re- taining some of that extra productivity, but with a reasonable staff level so you don’t end up exhausted every week. The most important point on staffing is to only add more hours as sales in- crease. Continue to keep your staff as lean as possible.
Establishing Your New Normal Hopefully, your sales will be a moving target as the economy opens up. The goal is for sales to increase. However, to start you need to know where you are right now. You most likely already have a good idea of what is and is not happen- ing. Mother’s Day was a roaring success for most florists. Sales since then have backed off compared to last year. How much will vary by location. In normal times a florist’s sales
can be broken down into holiday and non-holiday sales. Generally, holiday sales make up about 23 percent of an- nual sales, and the non-holiday sales are the remaining 77 percent. Non-holiday sales are everyday items for the florist but special occasions for the consumer: birthday, anniversary, get well, sympa-
Staying afloat will mean careful cash control as you move forward through the summer. As is normal, the two largest expenses to control are payroll and Cost of Goods Sold. What’s not normal is your sales.
thy, wedding and event flowers, to men- tion the most common. When you analyze the numbers,
the result for most florists is that non- holiday volume is surprisingly consistent week in and week out throughout all 52 weeks of the year. There is a small decrease in January because of all the spending that went on for Christmas and in July because of vacations and the availability of flowers from the garden. Every other week is about the same. You can look at weekly sales from March, and they will be about the same in June and October. So, once you know your weekly non-holiday numbers, it’s fairly easy to establish a weekly buying schedule for most purchases. The pandemic shutdown has
changed that at least for the next few months. You are going to have to get new numbers to make sure you don’t overbuy product and lose control of your COGS. Remember, by definition COGS is
strictly the cost of the products you sell. Of all those products — flowers, greens, plants, gifts, balloons, candy and other products you sell — the only category that is really important for controlling COGS is fresh purchases of flowers and greens. These are the items that go into the design of arrangements. All other products you sell are marked up by your pricing formulas, and you can’t go too far afield with controlling those COGS. The problem with arrangements is that you can stuff and that can quickly get expensive. Your goal should be to purchase
flowers and greens that represent only 25 percent of your arrangement sales. If you hit that target or better, you will have controlled your fresh purchases correctly. The way this is done in the design room is to make sure every designer counts and charges for every stem. That’s good control once the flowers are purchased. However, what we are looking at is set- ting a buying budget, adding control from the purchasing point of view.
Current Non-Holiday Arrangement Sales You’ll have to do a little homework. Don’t worry, your POS has all the num- bers you need. Starting with the first week after Mother’s Day, May 11-17, and the following two weeks in May, get the total arrangement and loose flower sales for each week. Since the last week will include Memorial Day on Monday the 25th, you will need to add the average sales of the first two Mondays to that final week to get the normal weekly count. Next, get the average sales for
each week by adding all three weeks together and dividing by 3. Take that average fresh sales number and mul- tiply it by 0.25 to get your flowers and greens buying budget per week. Example: Suppose your average ar- rangement and loose flower sales for the three weeks was $10,000 per week. Your fresh buying budget for a week is $2,500 ($10,000 x 0.25 = $2,500). That’s all you should spend per week in the month of June, unless you see your sales picking up. As the economy opens up, you can
expect your sales to pick up as well. To stay on top of this, you will want to keep tallying arrangement and loose flower sales by week going through the summer. As sales rise, increase your buying budget accordingly. Remember that normally July sales will fall some- what from June and then come back in August. Keep that in mind as you track the numbers for July. You can expect a decrease unless that is offset by a gen- eral sales increase.
Paul Goodman, MBA, PFCI, is a former CPA and the founder of Floral Finance Business Services based in Tulsa, Oklahoma, editor of Floral Finance and author of The Profit-Minded Florist.
plgoodman@aol.com
The magazine of the Society of American Florists (SAF)
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