Trim your business to make it light and effective
What is a crisis? A crisis, as defined by the dictionary, is a stage in a sequence of events at which of all future events, especially for better or for worse, is determined. It is a turning point of decisive change.
The COVID-19 crisis, the 2008 financial crisis, the internet bubble of 2001, the 1973 oil crisis, the 1929 crash: all of these moments in history, and what happened after, deeply altered business models. And although we have seen how to initially respond to this current crisis to save our businesses, we need to do much more.
It is essential to manage the aftermath after the crisis blows over. This will be done by regaining your liquidity and managing it well. For this you need to look at your organisation and make it efficient, not only during the crisis, but also during the recession and whatever recovery time comes after.
Leaner and Meaner
As florists, the vast majority of us concentrate on what we love the most: flowers and plants. This is our passion and what we live for, daily. It’s why we are in this business. But our business needs to survive, and the only way to do so is by focusing on the least enjoyable side of our work: numbers.
You must start looking at your data. Using this data and interpreting it is paramount in creating a better runway so you can safely land your business, but from which it can also take off.
It is important to understand how you organised this data up until now. You may have done the bare minimum just to get by, with spreadsheets that cover your income and outcome. Or, you may pass on all this information to an accountant that works with the data in way that is unknown to you. In either case, you are not completely in control. You must be.
In order to create a lean business – one with minimum costs – and one that is also mean - efficient under minimal costs, with good margins –, you need to organise your costs into manageable groups. You must understand how your income is organised, what it pays for and how such payments are done. Without this level of understanding and management, you cannot begin to analyse your business’ shortfalls.
So how do you start? Firstly, you will some good sales software, specific for florists. It must help you manage your income extensively. There are plenty out there, some more complete than others. This software should let you know what comes in cash, cards, cheques, credit and the purpose of each sale: retail, weddings, funerals, etc… It should also allow you to create invoices seamlessly, provide you with good sales reports, and be able to give you information of any owed dues.
Your second most important tool is a structured cost-sheet. This sheet can be made using specific accounting software, but if you don’t deal with a great number of suppliers and bills, any spreadsheet will do. Your cost sheet should enable you to determine your costs and align them with your key performance indicators (KPIs).
Your KPIs are key when creating a lean and mean machine. They address the current flaws in your sales and any costs involved. Perfecting your understanding of all your KPIs will allow you to reach your objectives and address the fundamental flaws in your business. These flaws will indicate what changes are necessary for your flower business to stay on sound ground.
Keeping an eye on your KPIs will help you gain financial stability, and not just for your end of year results. Keeping tabs on your KPIs will allow you to achieve the end profit you’re aiming for.
How can we become a leaner and meaner floral business?
Each KPI is affected by certain sales and costs data. Therefore you will need to identify any key data and make any necessary adjustments. You must create a sheet that allows you to keep your KPIs in check. By knowing each one in-depth, you can manage them to ensure they all work in unison. This will enable you to become a more savvy and versatile florist. When you come out of the crisis and into the recession, you will have benefited from trimming the non-essential. You will have become more efficient and productive.
Are these KPIs similar amongst all businesses?
Yes, but each business has its own particular elements and each flower shop its own business model. If a florist has a business model that is more focused on retail, its KPIs will be used and structured in a specific way. Those florists who specialise in weddings and events, will have KPIs centred around those services. As a result, how each KPI (cash flows, margins, costs of goods sold, etc…) is managed, will be different from the rest.
Finally, this process will enable you to create a more competitive business. In a market that has changed drastically since 2008, competitive businesses are essential. That period taught businesses that offers are based on value, and the better the value, the better the chance of selling. A leaner business can offer a better price compared to other business, offering the same product or service. This will be one of the success factors for florists during and after the COVID recession.
Did you know we have a course on how to manage the COVID crisis as a Florist? NO?! Well, what are you waiting for? Visit the course section of my website and click on The Florist's COVID Management Course.