UPDATED 5.8.2022
Read some of the papers and you could be excused for thinking the world was on the brink of collapse. Journalists are having a field day in writing the most awful clickbait headlines and you can see why people are saying we run the risk of talking ourselves into a recession.
But let’s be honest, it’s not good. Globally the economy is causing concern, here in the UK inflation is at a 40 year high, wages aren’t keeping pace with the rising cost of living, the energy crises is now getting seriously damaging in all countries – it is and will continue to have a huge impact on Dutch growers - and it could get a whole lot stickier.
Indeed given the successive interest rate rises and the Bank of England’s seriously gloomy predictions on August 4th it is not exactly encouraging. They’ve gone from saying we are OK-ish a couple of months ago to now predicting a year long recession starting in the autumn – exactly the time the flower industry – indeed all retailing would be gearing up for the Big Festive Bonanza. And the media frenzy of doom and gloom is not exactly helping matters.
But remember what goes down goes up. Despite yet more interest rises we are still a long way off the dark days of the 80’s when interest rates were 17% or Black Wednesday on 16th September 1992 when interest rates rose from 10% to 15% in the morning only to be back down to 10% that evening; now those were scary times!!
That said, the drawn out 2008 recession is still a painful memory for many never mind the fact we are all still reeling from the pandemic. So whilst there is no reason to panic there is no excuse for complacency either.
Not only are we being given clear warning signs but being in business means being aware of everything that is going on in the world, understanding how it will impact on your business and most of all being prepared for it.
Yes you can hope for the best but you must always plan for the worst!
Here are our top 12 tips for getting those ducks in a row!
1: Do not panic.
However gruesome the news you need to calmly think how the current situation is, could and will REALLY impact on you.
There are all sorts of uplifting quotes about not worrying which personally drive us nuts because we know how easy it is to worry ... especially when it’s your name on the lease/loan and bank account! We've been there.
However it really doesn’t help so find ways to keep calm ... and give yourself some breaks. Baths and bubbles can help!
2: Do not over-react
We are seeing a lot of shops seeing this latest situation as the last straw and closing down because they just can’t do it anymore and the fun has gone out of it. After Brexit, Covid and now a war impacting on everything we get it ... we are not surprised.
But before you make a big decision to shut the shop ask yourself if it’s really necessary or because you are just weary of battling. You can read what we say about closing the shop here but don’t make a decision you may regret in a few months’ time.
If you can weather the storm you could find it pays back in shedloads further down the line as long as you keep your finances in order.
3: Do a SWOT analysis
Look at the business coldly and think of all the good things - your Strengths, be it you own the shop, you have a solus trading position or know your nearest shop is struggling or you have cash in the bank.
What are the Weaknesses? Be honest and see if hand on heart you are really running the business as tightly as you could or are you letting things slip.
Think about your Opportunities; be it expansion - no we are not being mad, people do expand in hard times - or new types of products.
And finally coldly and calmly look at the Threats. What exactly would a downturn in sales really mean in terms of your overheads, how much does it have to drop before it makes a real impact. How will the rise in costs really impact on you over a 6 month period given you should get a December boost and there are the two big peaks of Valentine's and Mother's Day.
Is it really bad or because the press keep saying things are bad? If the majority of your work is gift and funeral you have a protection factor simply because those events keep happening and even if customers reduce the spend it is unlikely they will stop completely. If however you are only reliant on impulse sales or corporate work that may be stickier. Work out exactly where your sales some from and what a 10/20/30/50% decrease would really mean.
4: Check the numbers – count the cash
Yes we know we are always banging on about the numbers but they are even more crucial than ever.
Unlike Covid, even if the Chancellor does do some sort of reversal on recent tax hikes, there are not going to be any big handouts so you need to make sure your finances are in the best shape possible.
Because truth is profit shouldn’t be your main concern, regular cash flow is what you need to keep strong.
Cash in the bank is what will keep you operating through the lean times so make sure you don’t spend a penny more than you need.
Make paying off any loans etc that you can a priority, even if it’s only a bit. The ideal is to go into the next few months with as little debt as possible.
And don’t expect extended supplier credit to see you through. Wholesalers are just as pressurised and concerned and if they haven’t already instigated a cash with order policy or reduced their credit terms be sure they will. They are flower wholesalers not bankers!
5: Cut costs – but only where it counts
Very few people really look at their fixed costs- either because they are busy or because they don’t think it will be worth it. Having heard of one florist who saved a cool £1.1k by simply shopping around for a new insurer and credit card provider we know that isn’t true.
And when the same florist was faced with a potential £5k rent hike they stood their ground and negotiated it to a more manageable £1.5k. EVERYTHING is worth scrutiny and discussion ... it may take a little while but it could be worth it.
However NEVER EVER stint on flower quality ... that’s what sets you apart from the mass market players ... but equally know how to buy cleverly. You need A1 long for your gift bouquets (anything less than 60cm is moving into supermarket territory in our book) but always buy A2 grades where you can ... the shorter, wonky stemmed ones, may a bit bruised on the edges but nothing a bit of de-petalling can’t solve.
These are especially useful for funeral and wedding work where you don’t need long stems and the savings can be vast ... we saw one florist save 40p a stem on some Red Naomi which on a big wedding order would be huge. In short be canny with your buying; after staff it is probably your biggest expense so you cannot afford to get it wrong!
On gift work always offer florist choice and only buy flowers that are a good price rather than being ruled by a menu of content.
Do not get fixated that you must have gerbs or lisi every week. There are hundreds of gorgeous flowers and foliages out there at decent prices which means the bouquets will still be exciting and lush - just what your customer is used to - but the profit margin won’t be hammered because you are only buying the same old same old or peak demand products.
6: Put your prices up but add in lipstick lines
When everyone is talking about cost of living increases and less money in the pocket it’s easy to get frightened and think you should drop your prices .
Noooooooooooooo .... completely the reverse. You are in business to make money so if it is costing more to run your business your pricing MUST reflect this ... you may not be able to pass on a 9.4% increase (the current rate of inflation) but then again why not. Do not assume all your customers are skint, will run a mile or think you are trying it on.
With a tank of petrol easily breaking the £100 barrier delivery charges should go up. If you haven’t already increased those do it now (circa £12 same day/£9 next day depending on where you are based) but offer a ‘no rush’ service too which is free or maybe just £3. You promise the gift will be delivered within 5 days of order but it allows you to consolidate your deliveries into a cost effective run ... a sort of non-Prime service. Not every customer will want it but it both shows the value of same/next day and potentially saves you messy delivery runs.
ALWAYS ALWAYS have a Big Bucks Bouquet (BBB) on your site – circa £150 +++ as this will make everything else look reasonable! However also look at having some cheaper, impulse lines as well. People may cut back on luxuries and the discount stores will do roaring business from people who normally wouldn’t step foot in them but flowers don’t necessarily fall into that category!
There is something called the Lipstick Index that reckons people will spend more on cosmetics during hard times because they are relatively cheap. Given make-up sales have dramatically fallen since Covid as people realised they didn’t need it (see our News story) but flower and plant sales have stayed high by comparison, you should trade on that pick-me-up need and have ‘Little Luxuries’ on offer.
Nosegay posies, pimped up plants, special offers ... the good old BOGOF is always popular. A £5/£10/£15 sale isn’t perfect but if it keeps people coming into the shop it keeps them onside for when they need the BBB!
7: Review your staffing and your own finances
Painful but essential and particularly hard when staff are like one of the family. It may be you already changed working patterns during the pandemic but if you didn’t, and even if you don’t make changes instantly, at least think about it and have a plan B if it becomes necessary.
There are certain rules and regs you will need to follow in terms of changing contracts, making redundancies or putting people on shorter working hours but planning for the worst is part of getting your ducks in a row however hard it is. Our partners at the Floristry Trade Club have a number of articles on the subject which are part of their membership package.
However be careful about subsidising the business from your own wage. It is a natural thing for an owner to do but you need to live as well. Yes you may have to draw on savings but make sure it doesn’t go on too long ... keep monitoring the situation on a monthly basis.
8: Do more advertising – but make it count
Another thing we bang on about but truth is an economic downturn is not the time to draw in the horns when it comes to promotion ... if anything the reverse.
Remember not everyone is hard up, not everyone is cutting back. Make sure you are out there loud and proud and not just on social media.
You are a local shop, not an anonymous online player hiding behind a website so get out there and be visible. Use every avenue of promotion you can, social media should never ever be your only route to market.
If trade is quiet on a Monday or Tuesday use that time to work up marketing strategies rather than hanging about the shop worrying no one is coming in.
Develop a e-mailable newsletter ... you probably have hundreds of emails somewhere ... make sure you use them! Chances are there a lot of customers you have engaged with who would love to hear from you. Customer retention is a lot easier than finding new ones!
Start planning for Christmas, organise workshop dates for Halloween or a Back to School class for kids. Gen A (2010 – 2024) is a target market you should be nurturing now and chances are you’ll get the Mums too.
Heck maybe even shut the shop and go out leafleting or giving away free flowers at train/bus stations with a voucher attached. It may not be terribly British but you need to hustle!
9: Have you got a side hustle?
Talking of hustles have you got another idea on the back burner. Again if the shop is quiet maybe this is the time to investigate if it is viable.
Doesn’t necessarily need to be floristry ... in some ways it’s good to have a different string to your bow ... but use quieter times to come up with a Plan C. It could be hugely exciting and make money!
10: Buy another shop
No we are not mad. Well maybe a little!
We know two shops can be a double headache and there is the whole rates thing to consider, but it can also bring economies of scale for buying, give you greater flexibility with staffing and potentially give you a better balance of work output – if one is quiet it can be making for the other one.
It can also open up your catchment area, and, depending on where you buy, open up new contracts and connections plus with so many owners looking to retire/pull out there are more decent shops on the market.
You don’t even have to take on the premises. Some owners are happy to sell the number/website etc which could be another way of expanding and obviously a cheaper option.
You’ll need to make sure you have a really strong non-compete clause in place and be sure the old owner isn’t going to hive off any lucrative deals – we’ve heard some real horror stories in our time - but we would never discourage opportunistic expansion if properly researched and planned.
11: Get out there and talk
When times get tough it a natural thing to hunker down and focus on your own world. We actually think that can be dangerous as you stop seeing the wood for the trees and the mind monkey's start playing games.
You need to mix and talk with like minded people to not only realise that you are not on your own but pick up new ideas on how to get through it.
So whilst spending money on events and conferences may seem like the last thing to do truth is it WILL pay dividends and you should do it. Be it our Florist Event, BFA Fleurex, taking time out to sit in on the FTC Flower Lounge Lives or joining local business groups, be proactive and invest in your business. Facebook groups can help but nothing beats meeting real people!
12: Finally please read #1 again.
Panicking about the potential downturn will not help. In all our years of working in the industry we know that recessions can be painful for florists but not necessarily the end of the world especially if your core base of business is the gift and special event market. However do be prepared - that IS the key.
This article was written by Caroline Marshall-Foster, Editor of The Florist Trade Magazine and someone who has had shops and, as her Blog says, someone who knows just how tough it is. But she's survived ... not always brilliantly ... three recessions and still loves her job! If you need more advice email her at caroline@purplespotted.com It may not be instant but she'll do her best to help.
