Least expensive outbound wire service

[CHR]

Continued from above...

Many have been operating without selection guides and found no problems in sending orders

Of course it's possible to send without a nationally produced selection guide but florists need some kind of visual selling tool - catalog - for reference both for local and out-of-town deliveries. In-store, it helps consumers visualize style, online - it's a must. (Can you imagine a florist's site without pictures of flower arrangements?)

IMO the best resource for selling is a collection of photos of a shop's own work but that takes time and/or money and is generally beyond the reach and skills of new shop owners.

As has been discussed elsewhere at FC, there are options available to purchase non-WS images but IMO none of the alternatives are comprehensive. I crack up when reading rants by various florists about being WS-free and then view their sites filled with with bootleg copies of licensed WS images. It's not uncommon.

This individual was asking about least expensive SENDING and there isn't more than ONE answer.

Yes there is: Tell customers to call the other florists direct - then you'll have zero expenses. (You'll also risks losing future sales to individuals and companies that want one-stop purchasing.)

My point was that cost should be measured not only in monthly fees but in time, benefit and ancillary resources as well. I'd prefer to give answers that challenge florists to weigh the variables/benefits and understand the underlying premise so they make informed choices.

Coming to FC for opinion from other florists is one thing, careful analysis of a shop's own, real numbers and circumstanced is another.

Quitting or changing a WS is not without some risk - even for a new shop that may have promoted their affiliate brand identity from day one. We made the decision to leave FTD years ago - after careful analysis of the costs/benefits.

I urge others to do the same homework.

I forgot my manners.... Ken and Patty, welcome to FlowerChat. Hope this little discussion has added more light than heat in your quest to assess your WS options.

 

[Dazeal]

Coming to FC for opinion from other florists is one thing, careful analysis of a shop's own, real numbers and circumstanced is another.

Amen Cathy. This is something that is hard for me to remember, but so true.

 

[Griff]

The question is working capital...

and how much can you afford to spend.

Some of the florists that are asking "new florist" questions have bought existing businesses and others are starting from stratch. Much of my responses will always be based of how much working capital a new owner has to invest in their new business.

If you buy an existing business, you have the opportunity to see up close the problems you are faced with and possibly determine what steps you have to take to correct. It will always take time and money to fix problems, but one thing this new owner has going for them is a "current customer base". Whether the new company is not profitable, or has a bad reputation or has alot of unneccessary expenses on the books such as multiple WS, these problems can all be addressed. The good thing, that existing business has some revenue coming in every day.

Starting from stratch, has very little advantages. All the same expenses will occur every month and their is NO current customer base to provide revenue. Both these situations will chew up working capital or your investment money. The second situation just eats it up faster!.

My philosophy has always been that you had better conserve this money as best you can because when it is GONE, it's GONE!

For a person buying an existing business or starting a new flower shop, I can't recommend buying an POS as any first step. Yes, a florist needs a computer and a good basic accounting system. Dell offers complete systems these days for less than $1,000 and you can have Quick Books Pro and Photo Shop and anyother thing you think you need loaded at the factory and still be under $1,700 or $1,800.

If any florist is convinced they need a selection guide, I again would recommend buying a John Henry or even an old WS book from another florists. You don't need to join any service just to get a book so you can send orders. Please remember, once you get out of the major sized towns, many florists really don't have alot of walk-in so no one is going to see the book.

Yes, as you commented, "quitting or changing a WS is not without risk", however, burning up valuable cash to keep a "parterner" for questionable reasons is also a very great risk.

Here's an interesting example. A new flower shop opened near here and the rent alone is $2,500 a month for a 1,000 sq ft and that does not include CAM expenses. This is a town of 20,000 population with 1 existing shop and 4 grocery stores and 2 of those GS are within throwing distance of this new shop. One of the WS has already convinced the new shop owner they can help get him business. Just based on the rent and utilities alone, how much business do you think this flower shop has to generate from day one just to pay these select expenses? Do you also think this business should invest in a POS system to help market?

The pure fact is most businesses fail within 5 years. It is sad and included in those statistics is existing companies that have been bought by new owners. There is alot of reasons why businesses fail, but at the top of the list is "they ran out of money". There is no embarrassment to run your business frugally. There are people that have posted on these boards within the last 5 years and are no longer in business. I've checked it out and not one of the Pizza places in this town has a website. Nor does the dry cleaners, nor the Jewel or Domineck's grocery stores. They have all found ways to sell themselves to the local public without. I'm not saying that florists should do without a website, but I do think we need to focus more on the local consumer across the street and do it within their financial means. If that means CHEAP, then so be it!

 

[BOSS]

Just based on the rent and utilities alone, how much business do you think this flower shop has to generate from day one just to pay these select expenses?

I'd say in the neighborhood of about $15K, plus holiday for a yearly of about $185-215K...am I close teach?

Do you also think this business should invest in a POS system to help market?

Not for the first year, (unless they are very well capitalized) but I do think they should gather the data.

 

[Griff]

BOSS, I saw you sleeping in the back of the class. Don't be afraid to get into any debate. I'm willing to take anybody on when it comes to subjects like this.

You will have alot of people give you different answers concerning how much in sales is needed to just pay the rent. If the old guidelines are correct,and rent shouldn't exceed 10% of annual sales, that would mean that this florist would have to do $250,000 in annual sales. Ain't going to happen, is it??

Much simpler way is based on figure that if they can keep their COG at 33% or less and their labor factor at 25%, they would need approximately $6,000 in sales to just pay the rent and that is from month 1. That's not including utilities, insurance etc. That's just the RENT!

I'm not against florists owning POS systems, but it's not a cure all. Some view these systems as electronic score boards and THAT'S EXACTLY WHAT THEY DO. They help you keep score on all your activities. They don't THINK for you. Yes, keep all the customer data in a computer and use the accounting system to do something other than just create invoices and after you have suvived for 5 years, then maybe think about POS. Of course that is only if you are able TO PAY YOURSELF weekly after 5 years!!

 

[BOSS]

BOSS, I saw you sleeping in the back of the class.

Busted again :notyet:

Much simpler way is based on figure that if they can keep their COG at 33% or less and their labor factor at 25%, they would need approximately $6,000 in sales to just pay the rent and that is from month 1. That's not including utilities, insurance etc. That's just the RENT!

Anyone starting out in this biz, I think would have a hard time sticking to 33% COGS...heck it's hard enuf for those of us that claim to know what were doing....

The labor factor may come into play here, with most start-ups being staffed by owner/spouse and maybe 1-2 part timers, they may be able to pay the part timers, and eek out a little bread money for themselves, that is if they work all the hours...

 

[Griff]

Anyone starting out in this biz, I think would have a hard time sticking to 33% COGS...heck it's hard enuf for those of us that claim to know what were doing....

So very true, Mr BOSS. I'm still waiting for florists to explain to me when they have even 10% of incoming, how 90 orders at $100 full value and 33% COG and 10 orders at $100 discounted and filled at full value can still give you a 33% COG total or less. In my honest opinion, I think florists may have to abandon many of these old guidelines just to survive.

 

[goldfish]

So very true, Mr BOSS. I'm still waiting for florists to explain to me when they have even 10% of incoming, how 90 orders at $100 full value and 33% COG and 10 orders at $100 discounted and filled at full value can still give you a 33% COG total or less.

Case:
9 x $100 local orders
1 x $100 wire-in order at 27% discount
COGS: 33%

Question:
a) How much is the total sales?
b) How much is the profit?
c) How much is the profit margin?
d) How much is COGS%?

Note that I left the definitions of "total sales" "profit" "profit margin" "COGS%" intentionally vague.

Possible answer 1:
a) $1,000
b) $1,000 - $330 = $670
c) $670/$1,000 = 67%
d) 100%-c) = 33%

In this accounting method, the wire-in discount ($27) will have to be recorded as "expense" after the profit b). So in the end, the overall (net) profit = $670-$27 = $643.

Possible answer 2:
a) $900 (local) + $73 (wire-in) = $973
b) $973 - $330 = $643
c) $643/$973 = 66.0842754368.....%
d) 100%-c) = 33.9157245632.....%

So the COGS% calcualted in method 2 would result in a higher than COGS% calculated in method 1.

Both methods have theis advantages and disadvantages. Method 2, which appaerntly is the method of choice for the previous poster, gives a more realistic picture of how much money you are making. Method 1, which we are using, is misleading but has an advantage of keeping track of wire-in discount as "expenses." You have a lot of wire-ins, your expense will shoot up in this accounting method.

Which method you will use is entirely a matter of preference, in my opinion. it's just that, when we talk about accounting, miscommunication can happen because different people use different accounting methods.

 

[BOSS]

c) $670/$1,000 = 67%
d) 100%-c) = 33%

In this accounting method, the wire-in discount ($27) will have to be recorded as "expense" after the profit b). So in the end, the overall (net) profit = $670-$27 = $643.

Hey "Fish" I like your style....!

I know this will skew the accounting, but for the new kids on the block with regard to shop management/accounting....

Now take that $643.00 and deduct the Wire Service Membership Tax of average $149.99, or worst case $219.99, plus MercDuck at $49-69.99, and since 50% of the total sales were on credit cards, take another 3% plus $0.30 for each transaction, and if you want add in a WS website as well....

I think the COGS just hit about 60%.....

You're right, all depends on how you account for things, hence the necessity when starting out, with most likely low volume locally, that you can not afford to have too much incoming....

 

[Griff]

My apologies to both Ken and Patty...

about letting the thread drift. I bet you thought we were getting away from the original subject, huh? Not really. The subject of least expensive outbound wire service has just been covered by almost everything that has been said.

You, as a new florist, have four choices. You can stay with one of the BIG 3 <FTD, TF or 1-800> OR you can join a pseudo WS such as IFA or FSI. Some cost more than others, but all are 20-80 programs and the subject has been covered about discounted business and how it can affect your new company. Cathy's points are well taken that about some of the advantages and that has to be weighed against the disadvantages of taking on discounted business and trying to pay the bills.

Third choice is calling out the orders as an independent florist. It isn't for everybody, but I'm happy with my numbers and still feel the advantages outweigh any disadvantages. That will go for any new florist starting from stratch or for florists that are trying to get some of the WS costs back under control.

Lastly, is just let your customers call out directly to other florists. Now, CATHY was being facetious when she said that because it is a good way to lose your customers eventually, but this is an option.

Now, so far you have been very quite. If, however, you question was to include a situation where the least expensive way to send orders was to include some universal way to send orders, we could really get the "fur to fly" on these boards. As you may have guessed, I'm usually the pain in the back side to most here, but will always try to keep it interesting. Please understand that most of us never agree on anything and you will have to search out the best answers for YOUR business.

Welcome to you both, Ken and Patty!

 

[Ken and Patty]

Everyone has been very helpful on this topic. I have been rather quiet, but watch for replies as they come in (while working on my program). We really appreciate the time and thought you put into your replies. We've learned a whole lot. To summarize some of the available options of getting flowers from point a to point b:

Teleflora
FTD
Floral Source
Bloomnet (800flowers)
IFA
www.tryblossoms.com
florist-to-florist (was using this at first; a little difficult sometimes)
give'em the phone # (friends and family anyway)

If you don't care about a lot of incoming, IFA or one of the smaller wire services would work just fine. If you want inbound orders to keep inventory moving and don't mind giving up your labor and enjoy delivering for free, one of the larger firms would do. Somewhere in between is where we want to be and we'll find that right balance once we look closer into the details of each.

We haven't decided to give up FTD yet, but if we do, we are assuming there will not be any problems getting out. Let me know otherwise ) We took them up on a trial basis and the trial ends at the end of this month.

Someone asked if our in-house POS integrated with any of the wire services. I'm looking into that now. IFA may be able to accomodate. Bloomnet has an interface that I can probably plug right into. I'm not sure about the others yet. Whichever wire service we end up with, because we do want to be able to wire out, it will be integrated into our application. That way, there's no double-entry. The POS screen is a single screen with all of the information required for entering orders, setting up accounts, etc. My goal is to allow your mother's, mother to be able to enter orders. I don't know about the rest of you, but many of the employees we've ran across are somewhat technically challenged )

I have it interfacing with ICVerify for CC processing. That works pretty slick. Let me know if you are interested.

Thanks everyone!
Ken