How do you determine the size of your floral business?Mar 07, 2021
This was a question posed in a floral Facebook group last week. They were trying to gauge if they were considered a medium or small shop, especially in the light of how many employees she should have based on the size of her business.
It got me thinking and I did respond to her as she was getting answers from all over the map!
A couple things came up for me as thought about her question:
- The size of your floral business (according to an accountant) is generally determined by the volume/sales you have yearly. My accountant would tell me that anything under 300k-500k was considered a smaller business. The mid-size was between 500k-750k and larger shops were generally over 750k-1m, etc.
- The number of employees wasn’t the best number to look at, but it was the size of the payroll percentage as compared to your gross sales (total sales). For a retail shop the percentage of payroll should be less than 33%. For event-driven floral shops the labor is often higher due to the amount of labor/delivery/management the events often incur.
However, location often has a lot to do with the percentages too. If you own a business in a busy metropolitan area, your labor percentages are often higher as well as the overhead with rent and utilities. So managing ALL of these expenses are incredibly important.
I will say that I found my best years of profitability were under 500k and when I was able to break past the ceiling of 750k and hit over a million in sales. Traditionally, throughout the United States, my accountant had seen this across the board at many floral shops. And, I was part of that same generalization. The 500k-750k was super difficult with managing to keep payroll and expenses in line.
Overall, this florist asked a question, but it was a loaded one! Not just a simple answer without getting some more information.
Thinking through how you can really grow and scale your business is paramount to your success. Are you ready for the year ahead? We are going to see some growth especially when the US opens back up for events. The floodgates will open, so be prepared and know your numbers!
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