The latest issue of Floral Management offers advice on key areas businesses can cut expenses.
The boom years for blooms may be coming to end — at least for now. After two years of strong sales, some florists are seeing fewer transactions alongside higher expenses, writes Derrick Myers, CPA, CFP, PFCI of Crockett, Myers & Associates, Inc., a financial management and accounting firm that has served florists for more than 30 years. In the latest issue of Floral Management, Myers, a contributing writer, encourages businesses to reevaluate their prices and expenses to account for the changing market.
“Take an in-depth look for at least one month to see if there are any expenditures to eliminate or reduce,” writes Myers.
One of a florist’s largest expenses is labor. Myers suggests evaluating all employees — salespeople, designers, drivers — to ensure they are reaching their productivity potential. “This is the time to look at each of your employees’ strengths and weaknesses and their goals and do what you can to help them achieve them,” he writes.
In addition to labor costs, florists should review monthly and annual fees to ensure they’re getting the best value, writes Myers. Some recurring expenses, including bank fees, lines of credit, loans, insurances, and utilities such as phone and internet, may have been agreed to years ago without another thought. There may be better providers, plans, interest rates, or service options available today.
There are mandatory expenses that florists cannot control, however. According to data from dozens of florist clients, shipping and gasoline are up 50 percent over the past two years and the cost of raw goods are up 2 to 3 percent, notes Myers. Because florists cannot change these rising expenses, he suggests mitigating them by adjusting the prices for the goods and services they offer.
“If you are not adjusting sales prices at the same pace as cost increases, your gross margin will drop very quickly,” writes Myers.
For more information about these and other money-saving tips, read “Tighten Down with the Slow Down’” in the September/October issue of Floral Management.
Laurie Herrera is a contributing writer for the Society of American Florists.
