Too Many Wire Services ?

[Bigted]

We do, I mean for the head designer. The only wage I cut during summer is the hours of part-timers.

Way to go Goldie. I have taken a different approach. We are trying to minimize all expenses but the employees just didn't seem to care. Now, 75% of them are on reduced hours. They seem to have a better grasp of the situation now.

We are anticipating a tough summer. They need to get with the program immediately so we can avoid more drastic measures later on.

 

[goldfish]

It's a simple Excel Calculator that most florists still find confounding. If we put in every single caveat possible, maybe you and a couple other shops could work your way through it.

Cathy, I suggest the formula in Cell G14 to be changed

from: =+E14*$G$11
to: =+E14*($G$11-$G$18)

COGS%, E14, should apply to the total (G11) MINUS the delivery cost (G18), because that's what everyone does.

 

[bloomz]

Damm - I wish I understood Excel like that!

I know - I could learn, but there's SO much software to learn, and one has to pick their battles.

 

[wrdlady47]

Quick excel lesson:
vertical: letters
horizontal: numbers
* = multiply
/ = divide
- = minus
+ = plus
: = through
to total a column: =sum(a5:a20) for a row: =sum(a5:g5)
to subtract two cells: =sum(a20-a19) same for multiplying, dividing and adding

Hope this helps!

 

[RJD]

a business assigns labor as fixed or variable based on the job or as it supports the business.

R, I never said labor is fixed. I said some labor is fixed and some labor is variable.

your comment served no purpose for this discussion.

Joe,

Yes, you did. Let me quote:

LABOR IS A FIXED COST ON A DAILY BASIS!

See it in context at http://www.flowerchat.com/forums/showpost.php?p=148115&postcount=28

And then again,

Tell me how labor isn't a fixed expense. yes I realize you can send employees home, but that doesn't happen every day.

See it in context at http://www.flowerchat.com/forums/showpost.php?p=148129&postcount=30

There is a difference between managerial accounting and financial accounting. I think Joe is speaking in terms of managerial.

Then he's the one off track. You evaluate profitibality of orders on financial accounting.

Another reason to look at the labor cost per order is to allocate them smartly when you can. This is easier at the busy times. Our AIFD accredited manager earns more than our other designers, so we try to keep her from filling $30 orders when there are $100 orders to fill. On slower days, that's not always possible, but that's why it's more important to do so when we can.

If your shop is "on the bubble", you need to dissect numbers and manage smartly. Manage for profit.

 

[LJVF]

Then he's the one off track. You evaluate profitibality of orders on financial accounting.

The reason I mentioned financial/managerial accounting is because you brought the GAAP into the equation. In financial a business will follow the GAAP because they are required to. The reports are used for external users or for those on the outside. In managerial, the procedures aren't regulated. They are used more for forecasting and analyzing and are kept private. For tax and/or other purposes, some try to use every loophole in GAAP to keep profitability in financial reports to a minimum. Some do the opposite and try to make their financial reports as profitable as possible. The point is, is that these reports are meant for external viewers, where managerial reports are used for internal viewers.

 

[Bruce Hatcher]

Everyone has an opinion on this topic. Here is mine. You only need one WS. For me the primary value of a WS is that they make it easy for me to service my customer'S outgoing wire orders. Therefore I try to keep cost to a minimum; no card add; no 800 #; no ASB listings etc. The big trouble with incoming is that the GREAT MAJORITY come in at busy times. No problem with a few extra orders June to Oct. but if incoming at busy times is more than 10% of sales you surely have to add staff hours to fill the orders. Adding staff hours/overtime makes incoming unprofitable! Don'y spend money to get incoming, rather, spend it to get outgoing orders. They are profitable!!! I try to always have more outgoing than incoming. My easy rule of thumb to gauge success...IF AT THE END OF THE MONTH YOU GET A CHECK FROM THE WS, YOU HAVE TOO MANY INCOMING. IF AT THE END OF THE MONTH YOU HAVE TO WRITE A CHECH TO THE WS, YOU ARE DOING OKAY.

 

[bloomz]

AND - if you have to write nice fat checks - you're doing well.

Wellness measured by cheque fatness.

 

[goldfish]

The reason I mentioned financial/managerial accounting is because you brought the GAAP into the equation.

My accountant does financials; he calls it "creative accounting." I do managerials; I call it "real book." Neither of us pays much attention to the other's accounting.

 

[goldfish]

IF AT THE END OF THE MONTH YOU GET A CHECK FROM THE WS, YOU HAVE TOO MANY INCOMING. IF AT THE END OF THE MONTH YOU HAVE TO WRITE A CHECH TO THE WS, YOU ARE DOING OKAY.

No, not necessarily.

If you had 1 wire-out and zero wire-in a month, you woud be writing a check. And you are not doing well.

To be profittable by "writing a check to a WS" (i.e., wire-outs), the number of wire-outs must exceed a certain threshold.

If you had 0 wire-out and 100 wire-ins a month, you would be receiving a check. It is possible that you did earn money from WS in this case. Exact analysis is a little more complicated than wire-outs, however. The conclusion depends on the assumption you make (labor is fixed or not, etc), so it a leeeetle bit arbitrary.

 

[Joe Mioux]

Joe,

Yes, you did. Let me quote:



See it in context at http://www.flowerchat.com/forums/showpost.php?p=148115&postcount=28

And then again,



See it in context at http://www.flowerchat.com/forums/showpost.php?p=148129&postcount=30



Then he's the one off track. You evaluate profitibality of orders on financial accounting.

Another reason to look at the labor cost per order is to allocate them smartly when you can. This is easier at the busy times. Our AIFD accredited manager earns more than our other designers, so we try to keep her from filling $30 orders when there are $100 orders to fill. On slower days, that's not always possible, but that's why it's more important to do so when we can.

If your shop is "on the bubble", you need to dissect numbers and manage smartly. Manage for profit.

Labor is fixed on a daily basis.

Labor doesn't necessarily have to be fixed on a monthly, seasonal or yearly basis.

Holiday and event labor could be considered variable as you can directly cost it out to a particular job.

Everyday labor normally needs considered fixed because you are not hiring someone to walk in and maybe MAYBE -- fill one or two incoming WS orders that day.




Financial Accounting is income sheets and balance statements.

Managerial/Cost Accounting is used to make additional business decisions.

joe

 

[Joe Mioux]

R, can you predict when you will receive an incoming wire order?

If you can everyday, then you might be able to hire a designer to arrange that order(s) and then send that designer home for the day.

then you can consider your design labor as variable.

is that reality? nope.

Now what about your support labor? Can you cost out your sales staff, office staff, flower processing staff, advertising staff costs, etc costs on a per wire service incoming order? Nope again.

(i was attempting to fine tune my thesis midway through this discussion but chose to retract that part, because it is too complicated)

Now with that said.....

Can you cost labor out for a wedding and schedule design labor to that job? Yep.


Joe

 

[Joe Mioux]

R, can you predict when you will receive an incoming wire order?

If you can everyday, then you might be able to hire a designer to arrange that order(s) and then send that designer home for the day.

then you can consider your design labor as variable.

is that reality? nope.

Now what about your support labor? Can you cost out your sales staff, office staff, flower processing staff, advertising staff costs, etc costs on a per wire service incoming order? Nope again.

(i was attempting to fine tune my thesis midway through this discussion but chose to retract that part, because it is too complicated)

Now with that said.....

Can you cost labor out for a wedding and schedule design labor to that job? Yep.


Joe

why? do you know the answer.

 

[Joe Mioux]

The idea was/is to get an overall grip on the expenses (commissions, receiving fees, WS directory fees, ad fees, unequal sending fees, etc..) instead of just being happy receiving a check from a WS each month and wondering why the bills outpace the bank balance.

I am beyond discussing receiving WS checks with this topic.

The flaw is as I looked at the calculator was that there is nothing there to distinquish design labor to shop labor as it relates to Gross Sales.

A shop mgr, can plug in 40 pct for Gross Labor while another shop mgr could just plug in 10 pct for Design Labor.

This is my main problem with the calculator.

my secondary concern is that I don't know any flower shop that hires a designer and support staff JUST to fill WS incoming orders. It's not reality for most shops I know.

Don't get me wrong, if a florist can figure out a way to be net profitable and fill WS with staff designated for 100 pct WS order fullfillment, that is fine. I don't care. Actually, a shop like that might gain my admiration as being a REALLY REALLY GOOD FLORAL MANAGED SHOP.

Cathy, my main concern with the calculator is that there is no definition for "payroll labor". If there is and I missed it. I am sorry and forget everything I said. (well, maybe not all )

all the best
joe

 

[goldfish]

Way to go Goldie. I have taken a different approach. We are trying to minimize all expenses but the employees just didn't seem to care. Now, 75% of them are on reduced hours. They seem to have a better grasp of the situation now.

From this year, I made FT's salary partly bonus-based. She gets a fixed percentage of earning. So her salary goes up/down depending on the revenue/season, although not completely proportional.

 

[RJD]

IF AT THE END OF THE MONTH YOU HAVE TO WRITE A CHECH TO THE WS, YOU ARE DOING OKAY.

Not if that check is all membership and technology fees!

 

[RJD]

Labor doesn't necessarily have to be fixed on a monthly, seasonal or yearly basis.

If you re-read what I said, I (pretty clearly) said to add the costs up daily, and total them at the end of the month. It's easier to pick through a small pile of orders each day rather than a large pile at the end of the month.

Can you cost out your sales staff, office staff, flower processing staff, advertising staff costs, etc costs on a per wire service incoming order?

None of those play a role in the acquisition or production of an incoming wire order, so I don't need to. The sale is handled by the sending florist (one reason why they retain 20% of the order's value, in theory more incentive to sell better). The processing should be accounted for in the retail markup of the flowers--it's one reason why the retail price is greater than wholesale cost.

my secondary concern is that I don't know any flower shop that hires a designer and support staff JUST to fill WS incoming orders. It's not reality for most shops I know.

This is exactly why you need to track what % of your labor is being spent on wire orders, as well as the % of each order's value that went to labor.