How to make a profit and is a loss a disaster?

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In this final module, we're going to pull everything together, and make sure that by the end of the session you have a finance plan for next year that tells you who you're going to be selling to, and how much profit that mean's you'll make.

First though, we're going to look at the steps that will mean you can work towards making that profit.

1) You're going to know what your job description is, and how that benefits the customer, so you're concentrating on SELLING the flowers, not just the growing. (go back to module 1, and contact me if you're not sure about this)

2) You're going to work with the ideal customers for you.  They will be the ones you are comfortable and you'll enjoy working with. (See see module 2 for suggestions) 

3) You're going to know exactly what terms and conditions you are working under for each customer, so that you know what is expected of you and your customer is totally clear what they will be paying and when.

4) You're going to know exactly what your costs and expenses are, so that you can confidently set a correct price. (having worked through module 4)

5) You're going to keep all your costs to a minimum, by reducing, reusing and recycling wherever possible, and by not forgetting the hidden costs. (Module 2)

Is a loss instead of profit a disaster?

When you are first starting your business, there are lots of outgoing expenses... You are setting up your area, buying plants, and getting selling spaces and growing spaces organised. Unless you already have all  the equipment lying about and your customers all lined up, then there is likely to be a lot more money going out than there is coming in.

So when you do your first budget, or tally up the finances for your first few years, you are likely to have made a loss.

Is that a disaster?

Well No... It's normal for any business.

Actually for a lot of large businesses, a loss is a tax benefit.

For us as small businesses, it usually means that we don't get to pay ourselves, and we've already talked about having a salary as a way to value ourselves and our flowers.

The way not to make a loss is to either 

  • Take more as turnover (incomings)

  • Keep your expenses even lower (outgoings)

Yes, it is that simple - either take more, or spend less, is the way to profit. So if you havn’t made a profit this year, you need to sell more flowers next year. Often this just means more marketing.



Budgeting, managing cashflow and seasonality

Budgeting

Budgeting often means guesstimating what you are going to sell. However i'm hoping that what you're going to spend is now a lot more clear.

When I started out, I had very little money to spend, I was still working doing garden design, and I had £3000 in savings. I thought you might like to see my first budget from my first year. I was wildly optimistic about how many bouquets of flowers I would sell, (I actually made my most money that first year from Contracts, and Markets and party flowers). But right from the beginning I was tight with my money, so i actually didn't spend as much as this budget predicts (I did practically all the work myself, or drafted in my family for free, and I took pride in getting recycled/ swaps / freebies  where i'd planned to spend money.

I ended my first year having made a turnover of £4000 from my flowers, and although I was still working my gardening and garden design jobs, my savings were intact.

See my first Budget here



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Seasonality and cash flow

One of the disadvantages of our business is that it is seasonal.

The main selling season is April until the first frosts in October/ early November.

What are you going to do out of the main selling season?

Questions to ask yourself

  1. Will you buy in from other sources? Will they be only British Flowers or from elsewhere?

  2. Will you make wreaths to sell to the Christmas markets?

  3. Grow dried flowers?

  4. Propagate plants to sell?

  5. Do a different job in the winter?

  6. Will you sell enough flowers in the peak season to mean you can work less / not at all, in the winter?

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The main problem with seasonality is that although the sales are less in the winter, there are still costs to be paid. This is where cashflow is an issue, and many a good and successful business has gone bust because of lack of cashflow.  Here are some of my ideas to keep costs in the winter months as low as possible, and to ensure you get as much cash in as possible

  • Get staff and help seasonally, rather than all year round.

  • Ensure Insurances and Vehicle costs are timed to be paid in peak season.

  • Budget for bulbs and plants that need to be paid for in winter and save the money for them.

  • Ensure you keep up to date with your finances all year so that you have any taxes due available by October, so there is no financial panic on January 31st

  • Make sure you chase any monies owed to you, however small.

Cashflow is really important, and there will be times when there is more money going out than coming in. So it is really important to make sure that any money comes in to you as soon as it is due. 

There are 3 reasons that customers don't pay on time

  1. They can't pay (they don't have the money available)

  2. They won't pay (they are disputing the amount, or the result)

  3. They don't know they have to pay (have they got an invoice, when is it due?)

This is where you need good terms and conditions. Have you got them written?

Here's a link to mine for florists 

If your terms and conditions are clear about what your customers should expect, you are less likely to get a "won't pay", if it is obvious about when the payment due date is, then you can chase any late payments immediately. If you take a deposit, then your customer will have proved that they do have money available. 

The downloadable resource below has the questions you need to answer to write your own terms and conditions

Low cost, no cost marketing

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Low cost no cost marketing

Telling people what you are selling, over and over again is the key.

You won't make a profit unless you sell all your flowers, and you won't sell all your flowers unless you find enough customers.

There are lots of methods of low cost (under £300 per year) and no cost marketing. In one of my recent in person workshops, we got up to 52 different types. You don't need to do all of them, and obviously not all of them are appropriate for the group of customers that you've chosen.

One of the questions i'm often asked is

"I havn't grown the flowers yet, should I be marketing them? "

The answer is yes... Research shows that people (the general public) need to be told about a product or brand at least 7 times before they are willing to buy from them. So before your flowers are ready to be sold, you need to have made contact with those customers several times at least. This will mean that as soon as you have flowers available, you can start to sell them. Otherwise those first weeks of flowers will be wasted. 

So if marketing isn't in your budgeting for the months before you have flowers to sell, please do change that in your plan, so that you can be making profit from your blooms as soon as they are ready.

If you need additional help, the online course and mentoring in January will be covering that subject in detail



Value yourself

We talked about this right at the beginning, but i'm just returning to it now you have all the information and answers to the questions i've posed. 

Do you know how much you deserve to be paid? Do you realise that your flowers are a cherished and luxury product that people want?. Do you agree that you and they have a value that you need to stick to?

Take a look at the flowers that you’ve grown this year.

If you’ve created bouquets, think about the reactions that you had when you gave them?

Here’s just some of the things i’ve received from customers recently

Thank you for a brilliant evening Finola and I thoroughly enjoyed ourselves
— Alison
Hi Claire

Hope these photos are okay

They were stunning flowers

Best wishes


— Carol
Hi Claire

I just wanted to let you know how lovely the wedding flowers were. It was a beautiful day and the flowers looked wonderful!!

I’ve attached a photo of me with my bouquet.

Thank you very much!

Christine and Joe xx


Write yourself out a "mantra" to put on the wall that reflects how you feel

Here's one of my favourites

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Whether you think you can or you think you can’t you’re probably right.

When you know that you have a Value, and realise that there are those who will pay for your products, then it’s time to work on your Financial plan for next season.

Your Financial plan for Next year

Your Financial plan for 2023

Attached to this page is a downloadable resource for you to use all the information you've got to make your 2023 business plan.

If you are on a Mentoring plan with me, now is the time to make a one to one appointment.

Let's just recap the information you'll need to fill it all out

First - How much money do you want to make? A lot of business plans start from what you're going to sell and work the other way, but I like to put a figure here to start with.

For the last few years, this has been my calculation

  • The amount I need to pay my son's school fees (my motivation for working as hard as possible) - plus

  • My "Salary" that i pay myself each month, which is my share of the mortgage/ bills - plus

  • Tax and NI on the amounts above - plus

  • My costs and expenses



Yours might be (made up figures to illustrate what i mean)

  • The amount needed for your share of the household bills (£1000 per month = £12,000) plus

  • The amount you'd like for you (£100 per month, = £1200) plus

  • Tax and NI on the amounts above (an average of 30% of everything over the tax free allowance = £900) plus

  • Your costs and expenses (£16,000 -i'm guessing that from my expenses)

Means you will need a Turnover of just over £30,000

Next - Who are your ideal customers? If you are selling to more than one type of customer how much of your sales are going to be to each, and what price point is that going to be at?

If you choose to sell to retail and florist customers, as your ideal customers, this might be the split in your sales.

  • DIY Brides -average spend £250

  • Florists - average spend £45

  • and local bouquet sales / subscription buckets -average spend £40

If you work out (or guesstimate) what % of your takings each type of customer is going to be, then you know how many customers you need.

You can then add your cost estimates, to complete your plan.

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I've completed a plan below, for you to see an example using the figures above.

Does it look feasible? Could you think about selling that many bouquets each week? Would between 2 and 3 DIY brides a week be possible?. Do you know 11 or 12 florists that would buy from you each week?