the Butler Report?

[bloomz]

In the new Flowers& Tom has an article called Are Wire Orders Profitable? When he falls on Paul Goodman's studies as well.

His presumption:

$35,000 in incoming nets 25,550 less 33% cogs and 20% labor profits you $7000.

"That's a nice return on the cost of your membership".


My question is...

Did they figure out a way to make incoming wire orders deliver themselves?

Or do they come from another planet that has free cars drivers and gas?

I am a bit surprised Paul Goodman would put his stamp of approval on this.

I can see the labor part being negotiable but not cost of delivery.\

Maybe I'm missing something

But I don't think so.

 

[alisonm1215]

Is the cost of membership included on this mysterious planet as well? Or the cost of time Which IMO is money) it takes haggling with the OGs about the fact that regardless of their free delivery policy--I don't have one. Does it take into consideration that I have probably lost customers while dealing with the WS service and billing departments? What about the cost of paper, software, credit card fees, 27% of extra cooler space and other over looked overhead. Grant it, some of these costs are offset by our mark up, But the WS advertised prices are so low that my mark up wasn't anywhere near 3.5X.
No! apparently the planet they are from must be a glorious utopia full of fat and happy florists.
I'm so glad I cut all of my services. They just keep feeding us this BS and luckily I'm full.

/rant off

 

[BOSS]

Smoke and Mirrors...

I think Mr. Butler has his head further up there than Bad Bobby did...

Even if we allow the number of $7000.00 to be true...with the faulty labor factor he used...the number is still WRONG.

Take that $7000.00 and deduct the annual membership fee $1799.00 (aprox) and the actual cost of delivery of $8400.00 (aprox, based on 700 $50.00 orders to get $35K)...you end up with.... drum roll....

A LOSS of $3,199.00 for your $35000.00....

Smoke and mirrors.....same old same old LIE!

 

[TOTO]

Just like NO-bama's TAX PLAN!

Only goes to prove the point that, if you tell a LIE often enough, the SHEEPLES will begin to believe it.

http://www.youtube.com/watch?v=491_5WxfcgI

 

[BOSS]

John, the reason it says I edited your post is because I was going to delete it, since it has nothing to do with this thread...

But after second thought, since emotions are running higher each day the closer the election becomes, I decided I just don't give a rip anymore about politics and could care less where you decide to derail threads...

 

[SpringCity]

I smell desperation, it's coming from my right.

Anyway back on topic, the Butler report is hardly neutral and unbiased, is it? I will give you the Spring City Report, things are GREAT!!!

 

[TOTO]

Sorry Mark!

John, the reason it says I edited your post is because I was going to delete it, since it has nothing to do with this thread...

But after second thought, since emotions are running higher each day the closer the election becomes, I decided I just don't give a rip anymore about politics and could care less where you decide to derail threads...

You're 100% correct Mark!

I just couldn't help myself considering the fact that, there was a COMMON THREAD in both cases.

Both you, I, and a few other GOOD FOLKS, have been OUTING the DOG's, OG's, Non-Local Phonies, and the WS's who enable them, or in fact, have MORPHED INTO THEM and for years now.

Goes back to the days of small bob when he couldn't take the heat and refused to answer the questions posed on the DEFUNKED FTDI BOARD.

Do you remember when small bob BLOCKED TOTO from the FTDI board, after I had taken him to task while asking the HARD QUESTIONS?

And then, only a few weeks later, small bob KILLED THE FTDI BOARD just like he KILLED the ASSOCIATION with his VNS SCAM.

And, here we be, almost seven years later, looking at a spokesperson for a wire service STILL FUDGING THE NUMBERS with their usual SMOKE and MIRROR WS WAMPUM GAME, while attempting to keep the wool pulled over the eyes of the REAL FLORISTS who DOO THEIR DOO!

COGS at 33% and labor at 20%? Try a 25% cost of labor in 2008, and a 20% cost per average order delivery.

And then, ADD the ANNUAL COST of their membership and apply that as an ADDITIONAL INCOMING ORDER ACQUISITION CHARGE, and the LIE smacks us in our wallets, thus begetting that HUGE SUCKING SOUND.

 

[BOSS]

COGS at 33% and labor at 20%? Try a 25% cost of labor in 2008, and a 20% cost per average order delivery.

And there you have it... there's the rub.... the wire services do not want florists taking the time to figure out what their actual expenses are, so they give them to you...or they try to tell you what they are, when in reality they have no clue.

 

[TOTO]

Reckless with THE TRUTH!

And there you have it... there's the rub.... the wire services do not want florists taking the time to figure out what their actual expenses are, so they give them to you...or they try to tell you what they are, when in reality they have no clue.

As my good friend OZ, a REAL FLORIST in NYC, puts it:

" They are RECKLESS with the TRUTH! "

I'm thinking THEY HAVE A CLUE, but keep working at KEEPING DA FLORISTS CLUELESS!

However, and due to the severe effects of the current RECESSION, (thank you Fannie Mae and Freddie Mac), REAL FLORISTS are taking an even harder look at their VARIABLE COSTS versus any RETURN on their investments.

I'm afraid the WS's are finding out, they can no longer bank on what was once considered by them, to be a PASSIVE STREAM OF REVENUES flowing from their members into THEIR COFFERS, and without them having to provide any VALUE ADDED $ERVICES in return.

Should they ever be able to redefine THEIR MISSION STATEMENT by putting their MEMBER'S PROFITABILITY FIRST while making OUR CASH REGISTERS RING with consumer 100% SALES, they must just get to ride on our coattails once again, but I DOUBT IT!

 

[sosas]

I haven't seen the article mentioned, but I find the discussion very interesting. Florists in the UK have exactly the same situation. When you apply for membership with a relay company they send you a letter that supposedly states the profit you will make from them each year. I also found this doesn't include nearly enough staff costs or delivery costs.

When my years accounts were done I had the relay part separated out from my 'local' business and found that from quite high relay turnover the profit was negligible

 

[bloomz]

And there you have it... there's the rub.... the wire services do not want florists taking the time to figure out what their actual expenses are, so they give them to you...or they try to tell you what they are, when in reality they have no clue.

They give them to you - false figures.

I do wish someone would ask Paul Goodman like the article ends with - any clients of his here?

He's the expert cited as backing the numbers.

If bloomz is smarter than that - I know PG is as well cuz he's forgotten more about floral finance than I've ever learned.

 

[Joe Mioux]

you know i haven't missed these debates much, but I fell compelled to speak up on it as I have further refined my position.

All of your (collective you) analyses are flawed.

****** we don't know the size of the shop and that is what makes this a flawed study *****

Labor may or may not be a factor at all in this scenario.

In a large to mid size shop, where total gross sales is $500K and up, incoming wire sales of $35K becomes a less significant part of the the total business.

In other words a shop doing say $500K might have 6 employees. Adding two additional orders per day will not cause the owner/manager to base hiring or scheduling based on that amount of sales.

Two extra orders per day is insignificant from a labor scheduling stand point.

A $1M shop makes it even less of an issue. Say that shop employs 12 people. That shop will probably have 4/5 designers. which takes the number down to less than one extra order per designer per day.

Therefore, these shop could eliminate labor from the break even analysis of this example. If not eliminate, at least cost it out at the percent of the design labor only -- which should not be greater than 10 pct.

the 20 pct or even 30 pct labor cost is total labor - managerial, design, sales, processing, marketing and delivery -- you are not going to eliminate all those positions if you eliminate incoming wire service business.

Now take a shop that does $75K, 50 pct of the orders are comprised of incoming business. and yes then labor should be costed out.

Delivery, factor where most deliveries go. Do they go to the funeral home, hospital or residence. This is something every shop owner should look at and then use that information to determine whether to cost In WS completely, partially, or not at all.

You have to look at your historical data of in WS business to determine that number.

Joe

P.S. Anyone who wants to dump their wireservices, but still wants to offer that service to their customers can clear their outgoing business through me. I will be happy to take the added business.

 

[bloomz]

Missed your rational analyses if issues like this.

But doesn't it still leave those figures in the article as full of bullocks?

 

[Joe Mioux]

Missed your rational analyses if issues like this.

But doesn't it still leave those figures in the article as full of bullocks?

i haven't read the article - yet - Flowers&? --- anyway to answer your question.

Nope.

at least not that i can tell from your OP.

joe

 

[Joe Mioux]

btw;

that
$1M and that $75K may need that additional discounted business to be more profitable, but for very different reasons as it relates to their respective labor costs and ultimately to their net profit.

joe

 

[bloomz]

i haven't read the article - yet - Flowers&? --- anyway to answer your question.

Nope.

at least not that i can tell from your OP.

joe

Ahh but the premise is no cost of delivery.

Like I said I can see the labor being negotiable for reasons we've discussed many times, but delivery is a real cost, unless you're already going to that hospital or the like.

 

[Joe Mioux]

Ahh but the premise is no cost of delivery.

Like I said I can see the labor being negotiable for reasons we've discussed many times, but delivery is a real cost, unless you're already going to that hospital or the like.

I agree. delivery should be accounted.

However, just attaching a flat $8.00 to every single incoming order is wrong. Like I said earlier, if the order is funeral home, hospital or some other destination that you deliver daily, then that cost could be eliminated.

NOTE: this assumes you are not contracting out the deliveries where every delivery is charged a fee.

This isn't a difficult decision either. Most shops would know immediately whether to assign delivery cost or not.

Joe

 

[alisonm1215]

My two cents

All of your (collective you) analyses are flawed.

I wouldn't go so far to claim that our analyses are flawed. Skewed? perhaps due to our subjectivity and uique perspectives.

****** we don't know the size of the shop and that is what makes this a flawed study *****

You are correct. The study quoted $35k net sales. I would asume that a WS brings in about 25% of annual net sales, so in this scenario the shop brings in about $100k--give or take. If a WS did not at least supplement my business by this much, I would look at cancelling the WS.

Labor may or may not be a factor at all in this scenario.

Really? When is labor cost not a factor? Even in this scenario, it is a factor-- it is a varible factor. Labor cost do go down as volume goes up, but it is still a factor.

In a large to mid size shop, where total gross sales is $500K and up, incoming wire sales of $35K becomes a less significant part of the the total business.

In other words a shop doing say $500K might have 6 employees. Adding two additional orders per day will not cause the owner/manager to base hiring or scheduling based on that amount of sales.

Two extra orders per day is insignificant from a labor scheduling stand point.

Yes it may be insignificant at this point from a labor sceduling veiw. I would have to question though, maybe the 2 orders for the day are insignificant themselves considering what you have to pay the WS. Let's say those 2 orders are average $60 orders. From the numbers given to us, the end user is making a 20% profit and no delivery fee is included. So is it worth the 25 bucks a day to keep an employee on the clock for an extra 30-45 minutes?

Delivery, factor where most deliveries go. Do they go to the funeral home, hospital or residence. This is something every shop owner should look at and then use that information to determine whether to cost In WS completely, partially, or not at all.

I agree with this to a point.
Delivering to the funeral homes is pretty time effective. If I have several orders to one funeral home, I don't charge my usual delivery of $8.
Hospitals and residental areas are different. Maybe your delivery person is already going to the hospital so you wouldn't have to take that cost into mind; but hopitals are huge buildings and sometimes the wings can take at least 10-15 minutes to walk from north to south. Residental area and small towns are also spansive. So is free delivery of multiple arrangements to the same location really cost effective?

Lastly, I question the cost effectiveness of the original numbers for small as well as large shops. If a WS is only bringing in $35k in NET sales, why would you use it?

P.S. Anyone who wants to dump their wireservices, but still wants to offer that service to their customers can clear their outgoing business through me. I will be happy to take the added business.

I'm not giving up any of my services to my customers. I still provide customized outgoing sales. They love that I don't use a WS once they have become educated on their dastardly deeds and don't have a problem with my service charge either.

 

[Joe Mioux]

I wouldn't go so far to claim that our analyses are flawed. Skewed? perhaps due to our subjectivity and uique perspectives.



You are correct. The study quoted $35k net sales. I would asume that a WS brings in about 25% of annual net sales, so in this scenario the shop brings in about $100k--give or take. If a WS did not at least supplement my business by this much, I would look at cancelling the WS.



Really? When is labor cost not a factor? Even in this scenario, it is a factor-- it is a varible factor. Labor cost do go down as volume goes up, but it is still a factor.



Yes it may be insignificant at this point from a labor sceduling veiw. I would have to question though, maybe the 2 orders for the day are insignificant themselves considering what you have to pay the WS. Let's say those 2 orders are average $60 orders. From the numbers given to us, the end user is making a 20% profit and no delivery fee is included. So is it worth the 25 bucks a day to keep an employee on the clock for an extra 30-45 minutes?



I agree with this to a point.
Delivering to the funeral homes is pretty time effective. If I have several orders to one funeral home, I don't charge my usual delivery of $8.
Hospitals and residental areas are different. Maybe your delivery person is already going to the hospital so you wouldn't have to take that cost into mind; but hopitals are huge buildings and sometimes the wings can take at least 10-15 minutes to walk from north to south. Residental area and small towns are also spansive. So is free delivery of multiple arrangements to the same location really cost effective?

Lastly, I question the cost effectiveness of the original numbers for small as well as large shops. If a WS is only bringing in $35k in NET sales, why would you use it?



I'm not giving up any of my services to my customers. I still provide customized outgoing sales. They love that I don't use a WS once they have become educated on their dastardly deeds and don't have a problem with my service charge either.

$35K was the incoming business not net total sales. Since I haven't read the article and since there was no mention of Gross Sales, I see no way anyone could cost out labor in this example without more details.

If it takes you 30-45 minutes to make a $60 bouquet - or 2 - something is wrong. 10 minutes max per order.

Scheduling labor; I don't know how you can schedule labor in 30 minute increments. it just isn't practical. Yes, you can make scheduling changes at the beginning and end of the day.

However, I don't think you are going to have very happy employees having them punch in and out during the course of the work day waiting for an order to show up.

is that what you do? have your staff punch in and punch out during the course of the day.

Hospital deliveries? you miss my point. If you have extra time involved in any deliveries, then by all means account for it. I was just pointing out that certain deliveries can be lumped into other daily deliveries where no additional costs are incurred.

hope this clarifies my points.

joe

 

[BOSS]

Joe, correct me if I'm wrong...

I do agree with your thought of $35K incoming being less of an issue the larger the volume of the store is, it's affect on a store making $1MM will be much different than one making $250K...

That said, I tend to analyze each area of my business individually. If a product is not generating the required profit margin it is eliminated. You should not subsidize one part of your business with another IMO, but that said if I don't fill I should not send.

The wire service math is and has been flawed from the beginning, labor should be figured in real dollars as should delivery. Multiple orders to a hospital or funeral home subsidize the long distance deliveries that do not generate profit. Hence when I get an oncoming order, I subtract the real dollar delivery charge and not the amount they claim is for delivery. My local customers pay $7.95 (local) hence wire in's get dinged $10.33 ($7.95+33%).