help me with some New shop decisions

[wildflower]

hello everyone,

My name is Edward, and I am in the process of purchasing an existing flowershop, which my wife manages, from the owners. She's not from the flowershop background, but instead a professional manager, and has been working there for about 6 months, learning the business but of course running it under THEIR rules. Now as we are about to enter escrow for the purchase, I am trying to learn everything so that we can start making our own decisions. I introduced myself earlier today in THIS thread, check it out, it's interesting

Let me give you the current situation, and then I could use advice. The shop right now is run on Teleflora's POS system (dont remember the name) but it is Windows based and runs everything for them, including sales, employees and all the other stuff. The problem is that most of their orders come from FTD, but they are getting charged TONS by both companies, I think the old owners are pretty gullable. I looked at the recent invoice for FTD and they had 2,500 in sales (after 20% discount and some other dubious looking charges), that, after Website, marketing, and directory charges (including a FULL page add in directory, who does that) became a $1,000 net check. To me that is ridiculous, $3,000 in sales (before the 20% discount) becoming $1000 take that probably cost about $500-600 in flowers and labor to produce. They are also getting reciprocal charges because they send all outgoing using Teleflora because of the POS system (easier they say). They also have 2 websites, both through the WS, one each, and both cost about $200 per month each. It's quite insane, actually.

I think this shop does well with WS, so it's not one of the "Get rid of them" situations. They are a big shop and do alot of charge accounts and weddings, but they do a TON of holiday business using WS and it's a big portion of the income.

They obviously have a contract with TF. I dont know how it works with them when a new owner takes over, if we can break it and start over. Also, the problem is that there is a LOT of customer data already entered into the system. My gut feeling, without much knowledge, is to go with a Third party POS system that can connect to WS, and then use only FTD for WS and skip TF, as it is really a small portion of their orders, about 25%. But I am open to suggestions and value your help.

OK< Pile on

 

[Tracy D'Amico]

Congratulations, Good Luck ... it's a lot of fun, and a lot of work.

I also took over an existing store, with two wire services, and after almost two years, are getting rid of one. From everything that I've read here, it does not make good sense to have both services anymore - they do primarily the same things, and you're dividing your sending out between them, or sending only though one so you are paying a penalty to the other.

We have no POS yet, but will also be looking for independent. Years ago, I wrote an on-hold script for our phones at another store, and I remember proudly mentioning AFS,Redbook, Teleflora and FTD. Within two years of that, AFS & Redbook were completely out of the picture. This tiny example stuck with me as to staying independent in technology, no signs with wire service logos, no decals on the vans, no wire service POS ... it's too transient. So, yes, go independent for your POS if you can afford the switch.

I think being from a non-floral backround can have its advantages - you and your wife will look at things from a more generalized perspective.

I don't know about the POS contract issues, but you can drop a service anytime as far as I know - just watch the timing in terms of their "deadlines" for codification. For instance, drop after June 6th for FTD, or June 20th for TF and you'll still be paying member dues till the next coding deadline, which is three months down the road. So drop that full page ad quick if you can.

Also, some florists have great success negotiating with the wire services as far as fees are concerned. We're pretty small time, but one wire service dropped all reciprocity charges for the year when we proved that we send majority through them. They'll bend if you push.

Check out the wire service threads in here ... if you scroll from the "beginning" in the search options, you'll learn A LOT, especially about how receiving any check from the wire service is not typically a good sign. Confusing ... I know lots of other much more knowledgeable will chime in soon.
You've already found the best resource out there, so you'll do great!
tracy

 

[K A Hall]

Great post's, this one and the one of your photos. It sounds like you might be one of the few who stops by here and says they are getting into the biz that actually does alright.

You have also analyzed the current owner’s problems and I suspect the reason they are selling in the first place. They are getting hosed by the WS’s. I am not saying that you can do without them completely if the shop does any volume at all. You must fill incoming orders to participate but you certainly do not want to beg for them with a full page ad in a printed directory that hardly anyone uses. Hello this is 2006 and the shops that do not have a POS with the directory downloaded wish they did.

Having one WS web site is bad enough, but 2. Get rid of them both and find someone who can take your own fabulous pictures and put them to good use selling a butt load of flowers. You can use the WS images if you remain a member but you have the means to get rid of them as soon as possible. We use Media99 and they are great people, sadly we must still use the WS images on our site due to time, space and lack of skill. There are many other vendors doing sites of various qualities so shop around.

I would also suggest that you do not take over the current membership of either WS. There are just too many loose ends you could get stuck with. Just start over, they sign new people up all the time now and will probably do it over the phone. That way you can participate only in the parts of either WS that you want to.

If you only want to go with FTD and think you would only want to send and receive your orders through them your options are going to be limited as far as a POS goes. Again you will want to stay away from anything offered by the WS’s. We use MAS as do many here. It is not perfect but none of them are. There are a few more as you probably already know and I cannot comment on them as it has been too long since I have seen anything other than MAS. I can only say we love it.
You current data and accounts can be converted to almost any POS such as MAS with little or no problems at all.

Good luck to you and we all look forward to your progress reports.
Kirk

 

[Luc]

I am glad that

You take the time to read those statements. THat tells me you are a person looking after yourself first. THe first step is drop one wire service. Go with the one you think will give you the best bang for your buck. Find out if there is any money owing on the POS system from Teleflora. If their is, make sure the owners payit off before you take it over or tell teleflora to take it back.
THere is many independant system out there that you can use. Talk to Mark in midland or even Ryan in toronto about their POS SYstem.

Another big step, can Full page ads..... in fact cancel anything you don't think will bebenificial to you.
My thoughts on web site, one is enough. If it is done properly the site should be benificial. I am not for a wire service web site. Maybe other can direct you on that one.

DO NOT LET THEM TALK YOU INTO ANYTHING YOU DON"T WANT.
THey may think you are a newbie and dont know much. THey may be able to get you to sign up something you dont want or wish for. Even if it free at the begining. If you dont cancel by a certain time, you will be stuck paying for it for at least three months before they can cancel it.

Come her as often as you wish and ask our opinons. I am guided by a lot of opinoins here. People who have been in the industry for years and have seen the changes. Get them to call you back for answer after you check info.

Make sure in your agreement witht he lawyers that you have aclause that all taxes are paid or not delinquent. If not they are resposible for it. Also that they are not to open another flower shop with in so many miles in your area for a few years.

Best of luck....
Luc

 

[CHR]

I looked at the recent invoice for FTD and they had 2,500 in sales (after 20% discount and some other dubious looking charges), that, after Website, marketing, and directory charges (including a FULL page add in directory, who does that) became a $1,000 net check.

$2500 in 'sales' would equate to roughly 45 incoming orders at an average of $55.

The cost on each of those orders (flowers, supplies, labor, delivery) would add up to well more than your estimated $500-600 dollars. Industry average is 30% in flowers/supplies, 20% in labor and $7.00 or so per delivery which totals out to $1565.

Take out the 27% WS commission/clearinghouse fees and $1 per order 'receiving fee' and your $2500 is reduced to $1780. Subtract the $1565 estimated cost and you have $215. IIRC that doesn't even cover dues or Mercury, let alone the full page ad.

When we quit FTD in 1999 we figured we needed to fill $30,000K in orders to break even with all the base dues and fees.

The money in wire services is on the sending side, not the fulfillment side (despite feeling busy) so most florists agree that one wire service is plenty ( or one too many, depending with whom you're talking. )

Here at FlowerChat we have a Wire Service Cost to Overhead Calculator you might want to run your numbers over. The results will probably surprise both you and the present owners.

About those websites:

A customer searching for your shop in Google today will be offered a link to what used to be the shop's FTD hosted site. (see result #3) Follow the link and *bam* your customer is offered links to your competitors and to FTD itself.

Any florist that uses an FTD subdomain instead of their own URL - and then leaves FTD's webhosting program - suffers the same fate. No redirect to your own domain is offered AFAICT. Existing shop customers that bookmarked that URL may very well think you've gone out of business.

I can't find the Teleflora-hosted site in the first three pages of that search either but did locate it at the bottom of this page. It's a boilerplate template that has all the problems outlined here.

Get rid of them both and find someone who can take your own fabulous pictures and put them to good use selling a butt load of flowers. You can use the WS images if you remain a member but you have the means to get rid of them as soon as possible.

Uh*huh. All those hosting fees for 'results' that are currently working against the business.

As to the POS system, it sounds like Eagle. We have a user's forum here so you may want to ask other members for opinions on specifics about it.

You're asking the right questions and will get a range of answers. Bottom line is to understand the numbers, smoke and mirrors. Sounds like you're well on your way.

 

[Dazeal]

but they do a TON of holiday business using WS and it's a big portion of the income.

Income and profit are two differnt mosters, be sure and look at it in that light. I'm glad you are asking these questions.

 

[Rock]

Edward,

Are you buying an Incorporated Company (I'm not familiar with US rules)? If so why not just buy the assets? Here in Canada, if you buy a company, you are inheriting the past which may come back to haunt you. Having said that I guess your lawyer has already pointed this out to you.

If you don't buy the company then TF and FTD would have no hold on you; it won't be easy to stop the fees from either - they'll at least drag it out by "you missed the deadline anad have to pay for 5 more months etc".

To say that some WS fees are dubious is being kind! Most are far worse, since they are very good at inventing new services (not for your benefit), and increasing fees at busy times when you are less likely to notice and especially using that money to compete with you!

You don't need 2 WS (questionable whether you need 1!) or any directory ads and their reciprocal charges are some of those dubious fees. And when they call with a "good deal", think Swampland (for sale).

You need to USE the WS, if you decide to stay a member, only as long as you NEED them. NEVER promote them or their logo; brand yourself, spend your money on promoting your own brand, make the public want "Edward's Flowers" not FTD's etc. The WS try to convince you that they're your partner and they EXPECT you to believe it. They are only another supplier, NOT a partner (at least not one I would want), and must be held up to more regid requirements since they call you a "Member"!

AND get your own website COMPLETELY independent and in your control, seems that generally non-WS website do better.

Edward, I think you'll find that many things in this industry are INSANE! Problem is many shops are owned by NON-business people who operate with all the skill THEY have. :>

Rock on.................

 

[goldfish]

Hello, welcome to FC!

Your situation sounds almost identical to our situation when we purchased this store 9 months ago. The previous owner of our store carried both FTD and TF (Teleflora) services as well as two websites hosted by FTD/TF. She also had her store listed under 20 different towns in FTD/TF directories. Her business was heavily dependent on incoming orders from FTD ($5-15K a month), not much from TF, although she was using TF's Eagle POS, which charges $100 rip.. uh... "maintenance" fee.

I also confess that, right after we took over the operation, there was a nose-dive in the volume of local orders. Whether this will happen to you or not, partly depends on how helpful the current owner is. But even if s/he is extremely helpful, I think it's unavoidable to experience some painful decline in local revenues at least initially.

Largely because of that decline in local orders in our case, there was a steep increase in the percentage of wire-in sales realtive to total sales. In our case, it shot up to as much as 60% of thte total revenue at one point. At this level of WS-dependence, it was not possible to just get rid of WS, even though we knew from the beginning that it is difficult to make money with wire-in orders.

Our game plan since then was to gradually remove our store's heavy dependence on wire-in orders, as we gradually cultivate local customers, which as you know won't happen overnight.

The first thing we did was to cancel the WS-sponsored web sites, both of them, and re-allocate the money to host our own web site. Initially we didn't get any orders, but now 4 months later, we have about $1,000 in sales from our web site, which is about 5 times more than TF/FTD-hosted web sites used to generate. Besides, it costs only $35 to host a yahoo site, not 2 x $150 for FTD/TF sites.

The second thing we did was to cancel all those WS directory ads and removed all the "also-served-by" listings. If the current owner of your store is as addicted to WS as our previous owner, chances are that your store is also listed under many different towns in FTD/TF directories. I think you need to analyze the orders going to each town and decide whether it's worth listing your store in these towns.

We are currently in the third phase, that is, to become more and more selective in accepting incoming orders. We used to be taking all of them. Sooner rather than later, we will be getting rid of one of the WS.

Change of POS is a difficult matter. While it should be possible to migrate from TF's eagle POS to a different POS, I'm not yet convinced this can be done without causing a major headache. So for the time being, I will stick with TF's Eagle.

I wish you a good luck and hope that you will help us to make FC grow.

 

[Kristine]

Question, I can't remember because we fired the wire services several years ago. But is Edward legally bound to continue the previous owners contract with the wire services. Will he not have to resubmit paperwork as a new owner and sign to continue with the wires? If he does, why bother to reup? I wouldn't think he would be bound by the old contract.

Just my thought.

and Good luck with the new venture

 

[theRKF]

Correct - if the company is changing hands, the WS membership terminates. Usually, this is just a formality, but it can be an opportunity for Edward to escape the TF membership and POS agreement.

We recently purchased another shop, and their FTD membership terminated. We didn't need to re-up, since we closed that location. In the mail that was forwarded to us were monthly offers from FTD for free months, low rates, etc, etc ... Make them earn your business, don't accept the status quo.

Ryan

 

[12BucksFor2Dozon]

First of all mega-kudos for your initial analysis of the financials of the WS shell game. If you know only one thing about the existing Order Tranfer Systems (OTSs), know this, the OTSs are, nowadays, very much like MLM operations, where the big guys at top suck dollars from the dupes at the bottom with deceit and hard-sales tactics. As much as you may think that you absolutely *need* that "income" (and I say that with some scepticism), IMHO, the sooner you ween your shop and mentality from being a generic "wire" shop to be WILDFLOWER-brand-here shop, the better off you are.

I'm known as somewhat a radical here on FC, and believe strongly in the tenets of open source/open network. You should avoid as much as possible to be tied to ANY technology, and while life after wire-POS may seem impossible, the only stuff of any real value in your existing POS is the data and there *has* to be a way to export it(?) and use it in a new, lower cost option. Hell I built my POS with an old PC, a nice drawer and receipt printer bought off ebay, and a nice $99 POS system from Denver Research. Works great!

I started my shop 3 and a half years ago and am still wondering why the hell I did it. My idea was to escape the corporate world, but ironically enough it turns out that the local politics of being a business owner aren't much different than being back in the rat race, so I guess I got mine there. I make bubkis compared to what I used to earn, but get to work 60/70 hours/week instead of 45! What a deal, what a deal....

Remember, a lot of "old timers" are selling out of the business right now because the easy easy wire money that used to keep em floating has been sucked away, so keep that in mind as you sign the final agreement. Any plan based on the WSs keeping you afloat should be carefully reexamined.

Good luck!

 

[CHERYL BAKIN]

New shop ownership

Welcome to you and your wife, Wildflower!
You are very correct to go over the financials with a sharp evey & pen.
You do not need 2 wire services. Both wire service memberships will terminate upon the sale of the shop to you, unless the old owner is willing to sign a "guarantee of accounts" -- this means that tf/ftd will get their money for 1 year from the old owner, if they cannot get it from you. Most sellers will not do this now, so this is your ideal time to "pick a team", and drop one or both. YOu will be required, as the new owner, to complete an application & post a small deposit/guarantee/application fee.

You did not state if the old owner is retiring from the business, or if any of the employees are staying. A "non-compete" clause in the sales agreement can help to make sure that you don't lose any business to someone's "kitchen" -- and make sure you know who is staying with you & who is going to leave when you take over. Make sure that all customer lists, etc. are sure & that no-one has taken a copy, with their "good customers" with them.

You can buy the Eagle system as part of your store purchase agreement & keep using it with the current software. However, Eagle requires that you clear credit cards thru TF. In order to clear thru TF, you must be a member of TF. So, if you keep the Eagle POS system, then you are stuck with TF for a while. As others have advised, there are other software options out there & your data can be converted to use with another system.

Drop all the display advertising immediately. Drop all the also served by listings immediately.

If you decide to keep both FTD & TF for a while, keep the FTD website because they will allow you to install both FTD & TF pictures on your website & will host it for you. (TF will allow only TF images). YOu must ask for persmission from FTD, but it is granted with no problems. My advise would be to get an independent website quickly....so you can drop both websites.
TF will try to sabatoge you.....FTD will also, but will not be so vicious about it.

Watch your statements...question everything. Also take a look at the CC clearing rate the shop is under. This often negotiable with both wire services.

Make sure that you have adequate commercial liability insurance & life insurance on you & your wife. In the event of a tragedy, you or she need to be able to pay the bills & make decisions without financial pressures.

Register the name of your shop with your state (as a fictious name) and be sure to register/transfer the registration if it is a corporation.

Good luck to you and your wife! Ask for advice and visit often. Everyone here is great & very helpful....nothing is ever too off the wall or goofy.

Cheryl
Parkway Florist
Pittsburgh, Pa.

 

[wildflower]

Thanks guys for all the help, in the thread and privately. I have not replied to anything yet, just soaking it all in.

The situation here is a bit different than usually. The old owners (not the current ones) sold the building to the current owners with the flowershop added as a must. The new owners got excited and thought they would enjoy it, and hired my wife as a manager. They also decided to make it a "new" flowershop and got the POP system, the old owners (who retired) did everything on paper. Unfortunately they did it hastely and did not really spend the time. Maybe it was a bad choice, maybe it was ok, I am not sure, and that is why I am asking here Now, they no longer have the time, and are selling it to us for the same price as they bought it with the building. They will continue being the landlords, so there are no problems with competition clauses. The employees are all staying, they love my wife as a manager (she's really good as a manager in any situation).

Now, regarding the last post comment about them automatically dropping account unless the old owner "guarantees" it, is that true? Because when these guys bought it from the original owners, the accounts just continued, I dont think they started them over. That sounds like an important point.

We are planning a full out website, I am a web pro, so that wont be a problem. It will be a few months before we keep going, 'cause I dont want to redo it several times, so I will look for a good backbone system for a site before starting, the ecommerce solution. If you have any ideas, I would like to hear them, but I will focus on it more later after we get the shop going in the direction I want to take.

As a photographer, I am a very creative person (my full time business is a Comic Book store, another obsession become full time income). I have specific directions in mind, both with the styles of product I want to see the store produced, and the look and feel of the store. But all that is AFTER the store is running.

 

[jeannieballerini]

Welcome!!

Just perused your fabulous photos.....yow! Have you ever got a great eye...my compliments to you and your camera!
There are SO MANY great people here at FC and all are very willing to be of any help they can....tis a great place for learning,venting,laughing,and of course some days just babblin'..heehee.....
Best of luck in your new venture...You seem to have both feet on the ground and are walking into this with eyes wide open!! There will be tons of work,laughter and tears but it really IS one of the nicest ways to make a living I know of (most of the time)
Best wishes to you and your wifey....once again, welcome!
jeannie

 

[CHERYL BAKIN]

store purchase

Call both TF & FTD, and ask for their reps to get back to you. Your membership numbers have never transferred over automatically -- there was always a new application process & a guarantee of accounts to continue under the current membership number. If this is changed, it is changed very recently.

Thant being said, both wire services are eager to keep you as a member, so getting signed up with both or either should be fairly straightforward. There is an app process, etc, but happens very quickly with both.

did not mean to frighten you......just a technicality that I went thru that was complicated & confusing. (My old owner told me one thing, which was not true....caused some legal hassles).

More importantly, how are you settling your sales, A/r & Ap with the currentl owners?? This needs to be in your sales agreement. Do you have an accountant to help you, as well as a business attorney? Are there any municipal licenses that you need to reapply for or need transferred to you? Have you applied for your state sales tax license, Federal EIN #, etc.? All of this needs to happen about the time that you actually buy the business.

YOu can call me or pm me any time.

Good luck!

Cheryl

 

[Eric S]

Some things I would like to share concerning the POS.

When we purchased our business the original owners included in the price of the purchase of the single computer that they recently recieved from Teleflora for wiring out orders. However after everything was said and done we found out that we were actually being billed by Teleflora for the computer. If you decide to purchase the existing business make sure that the POS is paid in full. I would also recomend that before the purchase is done that you sit down with the Teleflora rep and go over everything with a fine tooth comb and that includes the FTD rep as well. Make sure that there is nothing that the original owners have ordered and not payed for such as Calenders or Wire service containers.

Make sure you go over the existing inventory that will be included with the purchase price. For instance the inventory should include a fully stocked store with plenty of vases and supplies. You don't want the purchase price to include $5000.00 in inventory and then you show up and discover that you have $5000 in old spray paints and left over garge sell containers. You may think that its tidous to go over recipts for the inventory but it is well worth it. Also make sure you show up on your first day after the purchase with FLOWERS!!!! Nothing like walking into your store with some old babies breath in the cornor of the cooler and thats it. The inventory that the owners leave you with should be enough to get you through the first couple of weeks again CONTAINERS AND SUPPLIES......

Oh my good luck with the purchase and I hope your wife really has been paying attention to what the shop actullay does in sales....

 

[Jerry]

Edward, cut and dry, if you want to stay in the wire service and make any money. You will have to have at least 5 out going to 1 incoming. Not to many like to talk about this, and most have no clue why this is. 20% plus rebate, no risk, no inventory, not much labor, = making money in the big game.

So if you are to stay in either WS, build that website, start gathering orders, and make some money not just filling for no profit or a loss.

After the first year, thats when you can start paying me those royalties. Good luck.

 

[wildflower]

Jerry you bring up an intersting point. The current situation is a lot more wire ins than wire outs. I get the whole "free money" mentality of wire outs, and it makes total sense. But the only way to do it, as far as I understand is:

1. Decal your store to death with your WS branding and announce to everyone: "We are an official "insert WS name" store, we'll get stuff delivered anywhere (I am overdoing it but you get the point), or...

2. Create those fake flower directories that show you as the delivery place in every city of every state and gather orders (which I guess is REALLY looked down upon on this site, and I have no problems or desire to do that).

Am I just not aware of other ways of doing it? Most people here say to remove the branding of the WS and to brand "Your store" but then you are not getting the word out that you can do wire outs, thus missing out on this amazing "free money" opportunity.

Now, I am not trying to go against the grain, I am just bringing up a point that to me, a total outsider to this industry, seems interesting. I look forward to seeing you totally destroy my point and explain to me how it really is. I really am, I am here to learn.

 

[K A Hall]

Am I just not aware of other ways of doing it? Most people here say to remove the branding of the WS and to brand "Your store" but then you are not getting the word out that you can do wire outs, thus missing out on this amazing "free money" opportunity.

Now, I am not trying to go against the grain, I am just bringing up a point that to me, a total outsider to this industry, seems interesting. I look forward to seeing you totally destroy my point and explain to me how it really is. I really am, I am here to learn.

3. Take care of your local customers and the wire outs will come. It helps if you save them money in the process by doing it for cheap or even free. The wire outs will come.

 

[wildflower]

That part I already know, I run another Retail Store right now, taking care of customers is what I have been doing for 12 years (it's a mostly periodicals subscriptions business, all return customers on weekly basis). But unless you promote the fact that you ship anywhere, how do they know? that is passive, not active way to gather wireouts.

And, BTW, I know that I should concentrate on building local business, I am not trying to become the next OG that just collects free wire charges. But I do think that Wire outs can become a very valid source of income, just trying to gather ideas on what helps to make it happen.