My wife, Rachael, was a year into being the lead designer at a shop when their ownership changed. She would come home frustrated after dealing with new under-prepared management who thought owning a flower shop would be a breeze. So we branched off and started Twisted Willow Design with only Rachael’s floral skills, my business skills, and our house. As the company (and our family) grew, we recognized the need for full-time help beyond just freelancers. We took several steps to take control of our growth as a business. From 2016 to 2017, we increased our net profit by $30,000 - enough to hire our first full-time team member. Even better, our new team member was able to start taking consultations while Rachael took off for maternity leave. These are the two things we did that made it possible for us to hire an additional employee:
1. Think like a big business
We realized about a year into starting our company that if we wanted to be an established business, we had to start acting like it. But it took us forever to create accurate proposals that actually calculated our COGS (Cost of Goods Sold) and we were losing clients from the wait.
Our friend Sarah Campbell is currently touring the U.S. teaching floral design-intensive and business-intensive classes. She has a phrase that best encapsulates what we had to do. We had to “Think Like a Big Business.” For us, this meant investing in Curate (we actually are the company where it started!). Curate helped us cut down wasted time calculating what we should charge, virtually eliminated time spent ordering, and gave us better financial reporting. Because the stem counts were automated, we were able to spend less time ordering and stopped wasting thousands of dollars in leftover flowers.
In short, we found tools to optimize our processes, which cut down on wasted overhead time, and were able to use that time saved on designing and booking more clients.
Are you a caterer, florist, or rental company looking to take control of your COGS or rentals? One of our consultants at Curate would love to chat!
2. Price what you’re worth
Seriously, you do a lot of stuff. If you’re an event professional (florists, caterers, rental companies, the list goes on), you have to deal with so many moving pieces and people. From the initial consultation through the final strike, you flawlessly pull together the thousands of pieces that go into creating unforgettable events.
In 2016, we were a couple of years into the business when we started using a COGS management software and were able to see the honest numbers laid out. We realized that with everything we were doing, we were charging way below what we were worth. Here are five things we did to start charging what our true value was:
- We rejected the idea that we had to live by someone else’s “industry standard.”
- We calculated the net profit we needed to make for our family, then worked backward to calculate what our margins should be.
- We raised the prices of our rentals to reflect the profit margin we desired (rather than just aiming to break even on that moon gate arch).
- We changed our labor from an hourly estimate to 20% of the event. An hourly projection certainly works for some businesses, but we found that we were able to more simply calculate an appropriate charge for labor. We actually have it automatically factored into our invoice items so clients only see the final price of the item.
- We reduced our COGS on florals from 36% to 33% of our revenue; or, said another way, we increased our floral markup from 2.8 to 3.
Was it hard to make the jump to a software that helped manage COGS, rentals, and the thousands of little pieces that make up our work? Yeah, definitely. It’s a big investment. But, as Sarah said, it was time to think like a big business. And that turned out great for my wife, for our family, and for the business.
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Ready to start increasing your profit enough to hire another employee?