Web site instead of wire services?

[Tracy D'Amico]

If you are this florist and based on the numbers, which proposal do you think is the best direction for you to go? Is there any considerations other than just numbers this florist should take into account?? Trust me. There are some traps in here. It is your business and your money. Mistakes are costly. Numbers can mislead. Your comments please.

I read these accounting posts with hopeful anticipation that it will sink in. I admit I am one of those florists whose eyes glaze over when conversation turns to numbers, but I really fight it and am trying to learn, to turn on that portion of my brain.

So, the only thing that stands out to me is the overall ongoing expense of the WS compared to website - the WS fees are always $250 forever and ever. The website, like a cooler, or delivery van, will be paid for eventually, then will only have the expense of $35 monthly, plus labor for updating. If I knew how, I would take those numbers and spread them over a year or two to see a better cost.

And of course there are other considerations - the WS orders are generated from the WS, not the florist. The website IS the florist and only the florist, not the other two shops in town.
The website will help build the shop name, not the WS name
The potential for growth is better for the website if the shop owner can market it. The potential for growth in the WS is very limited.
The website is indicative of the owners designs, not the WS designs.

Okay, teachers. Let me have it!
tracy

 

[Joe Mioux]

And of course there are other considerations - the WS orders are generated from the WS, not the florist. The website IS the florist and only the florist, not the other two shops in town.

Okay, teachers. Let me have it!
tracy

Wire service orders are generated from other florists as well as customers using WS's own website.

Florist-owned website sales are generated from the customer.

Joe

 

[theRKF]

Tracy,

If you really want to have a stellar website that is not WS image, but reflects the shop and the owner, expect to pay for it.

The reality is that the hosting costs are quite low - can be less than $10 a month, and $2/yr for the domain name. That gets you the space - the canvas, if you will. The design and related costs can be in the thousands, for a custom site, or much less for a template site. Then there is the photography costs for your images, the cost of your time or fee paid to someone to update the images, content and theme (not to mention promotions, etc) of your site.

It is an ongoing cost. It will cost you dollars and time - the balance is up to you, whether you invest more $$ or more time to get to where you are happy with the site. In the end, you get out of it what you put in. Floral Management has a great article on treating your website like a second store location.

Ryan

 

[Griff]

Sorry, Dianne, not trying to be hostile.

In following this thread, I'm only trying to get people who post to explain their reasoning behind the recommendation. For example, if Twiggy joins FSI, how does she get her investment back. You could have responded that if the monthly cost is only $59.95 and you have a sending fee of $6, you would only need 10 outgoing orders a month to pay for it and the commission earned on those 10 orders could help offset the discount on any incoming orders through FSI. And because $60 a month is cheaper than $250 a month, it would be financially advantageous.

I'm not trying to "stick it" to anyone here. Prestonway expressed very well when he challenged the idea that florists have to start making decisions based on sound economic groundwork and not just a "gut" feeling. Sorry if I offended.

 

[Griff]

Note to Joe

Yes, I'm sure that there are costs I have not included, but feel that if we keep piling on the numbers we will put EVERYONE to sleep.

Ryan's points are all well taken. You can spend alot more for a real good website, but this florist has very limited resouces and if the price is too high, the florist isn't going to be able to take advantage of the offer. Remember, this is just a case study and the thread is about having a new florist choose between a WS or a website.

And Tracy, you seem to be catching on very well. A couple factors to consider. The $250 fee really doesn't go on forever. It will increase yearly as the WS have all continued to raise dues and fees. But once you pay off the cost of the website, you only have to worry about the hosting fee and maintenance costs. One small interesting aspect is newer florists having a small number of outgoing. The example talks about and AVERAGE of 20 orders out per month when the major WS will only pay rebates if you send 20 or MORE. In other words, some months might not qualify for rebates.

This is just to see how florists think. Would you pick the WS program that will provide you a couple a bucks more per month - as Prestonway says, every dollar counts!" Or do you take the website idea and why. It produces less income, if the numbers are to be believed. Again, not trying to "stick" anyone but rather put a sense of reality in the numbers.

By the way, you can't cheat and say you chose both. You haven't got enough money to do both.

 

[theRKF]

It's not cheating if you have the website established before you launch the business. Include it in your start-up costs.

The WS could then be an on-going expense related to operating the business. If the website is financially a make-or-break expense you shouldn't be opening a business in the first place.

Ryan

 

[Joe Mioux]

Griff:

Remember in your example, a WS derived order will not be replaced by Website generated order. The reverse is true as well.

In your example, it appears that the WS will make more money, however, I suspect you are trying to prove that wrong.

Just remember, that if a florist is sending an order to another WS member, that the order is already gone and will not be filled by through the website.

So you can't compare or substitute a WS generated order with a locally owned flower shop generated website.

These are two seperate orders, why?

Because the customer has already committed to going to a sending WS florist and having their order fulfilled traditionally rather than going through a website or direct to the fullfilling florist. If you are not a WS member you will never receive that order. The order will be filled by your competitor.

joe

 

[Griff]

It's not cheating if you have the website established before you launch the business. Include it in your start-up costs.

The WS could then be an on-going expense related to operating the business. If the website is financially a make-or-break expense you shouldn't be opening a business in the first place.

Ryan

No, I guess it's not cheating if you have a website created before you open. Hopefully this propective new business person knows exactly what they want to convey about their business. However, you have x number of dollars to start your business. If you use some of the start-up money for the website, that's fine, but you now have less to spend once the business is open. Florist after florist on these boards has talked about marketing your company. I can attest to the fact that a new florist never has enough money to do everything. Not trying to restrict anyones evaluation, but if money was NO problem and there was a long line of customers waiting for this new florist to open every morning, making business decisions about money would be easy. Don't you agree?

 

[CHR]

Would you pick the WS program that will provide you a couple a bucks more per month - as Prestonway says, every dollar counts!" Or do you take the website idea and why. It produces less income, if the numbers are to be believed. Again, not trying to "stick" anyone but rather put a sense of reality in the numbers.

Griff your example suggests an average of 8 online orders per month. I know you needed to pick a number to illustrate your point but your example is very, very far off from my own business' reality (and the ratio of incomings to website orders). In 2004 we averaged 2 orders via our website for every incoming. By 2005 it was 3 to 1 and so far this year the ratio is still climbing.

This is in part because incomings are shrinking as well as direct sales growing. Neither number has remained static.

Additionally, websites can't be solely measured just for the amount of orders flowing through the shopping cart. Ours also includes portfolios of custom work and has been the source of many leads for weddings, events and special orders. Leads we would only have had due to the site's content.

I doubt there are industry stats of average direct online orders per store. Still, the answer will be zero for shops that lack a web presence.

Added: I'd also like to recommend that if a new business owner lacks the funds to build a quality website, they should think long and hard about opening a B&M store in the first place. It's tough these days for even established businesses to cut through marketing clutter. A new owner, with no customer base, needs every tool available to make a serious go of it.

 

[theRKF]

No, I guess it's not cheating if you have a website created before you open. Hopefully this propective new business person knows exactly what they want to convey about their business. However, you have x number of dollars to start your business. If you use some of the start-up money for the website, that's fine, but you now have less to spend once the business is open. Florist after florist on these boards has talked about marketing your company. I can attest to the fact that a new florist never has enough money to do everything. Not trying to restrict anyones evaluation, but if money was NO problem and there was a long line of customers waiting for this new florist to open every morning, making business decisions about money would be easy. Don't you agree?

Simplest answer, IMHO, to get back to the original question:

A website is an absolute essential must-have for any business today. To try an balance the WS vs WS (wire service vs website) issue is apples to oranges. I haven't wanted to sidetrack or derail this excellent discussion, but it comes down to this ... that any business must have a website. It's expected. If you don't customers wonder what's wrong with you.

Now, a wire service isn't essential, it's an optional operational cost that must be evaluated like any other: how many phone lines will be have? what size delivery vehicle? what kind of marketing will we do?

If finances are so tight that chosing to belong to a wire service eliminates the web site option - or vice versa - it's time to rethink the strategy.

Let's flip this around a bit: Twiggy, what's your projected business model? Are you going to cater to residential clientele? Be a neighbour florist, deal in babies, birthday and funerals? Are you a special event / wedding specialist? Are you targetting corporate accounts?

The neighbourhood florist won't need a wire service from day one, if you plan to open the doors, drop some flyers around nearby blocks and do funerals, etc.

The wedding / special event florist doesn't need to wire out their type of work. Don't expect many incoming wedding orders, either

However, the florist targetting corporate accounts will need a reliable order transfer system to confidently service their customers on a national / global scale. The florist can also benefit from the WS marketing materials when approaching the corporate clients.

Ryan

 

[Griff]

Griff:

Remember in your example, a WS derived order will not be replaced by Website generated order. The reverse is true as well.

In your example, it appears that the WS will make more money, however, I suspect you are trying to prove that wrong.

Just remember, that if a florist is sending an order to another WS member, that the order is already gone and will not be filled by through the website.

So you can't compare or substitute a WS generated order with a locally owned flower shop generated website.

These are two seperate orders, why?

Because the customer has already committed to going to a sending WS florist and having their order fulfilled traditionally rather than going through a website or direct to the fullfilling florist. If you are not a WS member you will never receive that order. The order will be filled by your competitor.

joe

Joe, I'm not trying to prove anything. I'm not trying to substitute any WS generated order with a website order. The florist in this example has not been in any WS and after 2+ years is currently sending an average of $900 <20 orders> out per monthly directly to other florists. They get nothing in from other florists because they're not in any WS directories. They only get an order or 2 a month from consumers directly out of the area because they can be found in Yahoo yellow pages of something similiar. Both sales people have presented alternatives for helping the florist's business. The WS rep picked a possible number of incoming based on the actual numbers being shared by the other 2 established florist in town. Yes, I have my own evaluation, but want other florists to give theirs. After all, we are all looking at the same numbers. If I have used the formulas incorrectly, tell us how to correct. If I have left out viable income or expenses, show us where. I don't expect us all to agree on this scenario and I hope they are not going to be bashful about the response. The young florist in this example would have to have some idea what is going on in the industry even after only 2 years in the business. From what I can see, the people all reading this thread have alot more experience than 2 years, so they should actually have more insight.

So the question is, which direction would you persue and why??

 

[Griff]

Simplest answer, IMHO, to get back to the original question:

However, the florist targetting corporate accounts will need a reliable order transfer system to confidently service their customers on a national / global scale. The florist can also benefit from the WS marketing materials when approaching the corporate clients.

Ryan

I think it actually depends on the size of the town and the accounts. I have several corporate accounts and have managed to satisfy there needs locally, out of state and internationally with out a order transfer system and without a WS. If you are operating in a large town, I can see where it might help, however. Ryan, do you think a new florist should have an order transfer system the first day they open if they decide they want to target corporate accounts and have no way of knowing how successful they are going to be securing them?

 

[Tracy D'Amico]

Additionally, websites can't be solely measured just for the amount of orders flowing through the shopping cart. Ours also includes portfolios of custom work and has been the source of many leads for weddings, events and special orders. Leads we would only have had due to the site's content.

This is the main reason that as a start up, I would choose a website over wire service. IMO, the website will be more useful in the long run to establish my business as an independent brand, regardless of whether I'm going for local neighborhood shop, corporate shop, or event shop. That custom work can also be for everyday occasion - funeral, babies, etc.

Even though with your example, the more profitable course is the WS, in long terms, a better building starts with a better foundation. WS really does not offer enough to help build my foundation, whether it's for a neighborhood shop, corporate shop, or event shop.

That would be my choice, and will eventually be my choice :tread:

tracy

 

[Joe Mioux]

Griff:

From what you are telling us, both scenarios will make a profit. I cautiously say this because it appears you are anxious to prove some point here.

In your example you did not provide Gross Sales, COGS, OE or NP/L or a whole bunch of other stuff that may help with this business decision.

Your example is a florist that has been in business for 2 1/2 to 3 years, so they do have a track record, but you provided no information regarding their financial stability.

With that said, if all variable costs are covered and some or all fixed costs are covered or they both make a profit, then do both. .

However, according to your rules, we can not do both.

So flip a coin and choose one. Pick one. I can't from the information you provide.

I don't understand choosing one over the other, they both can do the same thing but more often they serve as two indvidual, seperate and independent sources of additional sales.

Simply put and to my point, if you can spend money and earn more money on a new product line, website, or WS, a good money manager would try to maximize profit.

Since in a prior post, you invited some real life experience, here are some.

In real world experience, my WS orders far surpass my internet orders.

First year of website I received a whopping 14, fixed costs of the internet site were a 182 pct of Gross Internet Sales, second year 32 orders where internet cost was 51 pct of those sales, third year 64 orders where costs were 31 pct of sales, etc. For the first five months of this year, I have surpassed 2005 internet orders. Those costs did not include COGS or anything else!

Needless to say I lost a bunch of money with my website the first couple years. The website is doubling sales every year, so the trend is positive and that is why I am sticking with it.

Also, WS orders are trending down, both in and out, while my internet orders are increasing.

Currently my WS costs as a percent of sales is about 8-10 percent less than the Internet generated sales as a percent of sales on a per order AND per dollar basis.


Joe

 

[goldfish]

So the question is, which direction would you persue and why??

(1) If the new florist in question is already running a profitable business, I think s/he should choose a web over WS. A store web site is essentially another store front, meaning it's an expansion of the existing business, providing a potential for growth. WS is not.

(2) If the new florist in question is losing money and has excess production capacity, I would suggest s/he join a WS. Setting up and maintaining a profitable web-site is not easy for a non-computer geek, and requires more time and money than people realize.

If this owner is not a computer geek, and spent just $500 to set up a web and is willing to pay only $35 to keep it, most likely s/he won't get any significant number of orders coming through the site. Perhaps only 1-2 orders a month at most. Since this florist already has a pool of customers who send out 20 orders a month, WS is the way to go.

 

[mlou]

...A store web site is essentially another store front, meaning it's an expansion of the existing business, providing a potential for growth. WS is not....

You are so right...
Many florists fail to understand that a floral website should be treated like a second shop...

But you can promote your floral website without being a computer geek.

.

 

[Griff]

Additional food for thought

As I indicated earlier. I'm not really looking to prove anything here, but rather just some observations.

There is, however, a big difference between how various size companies can view the same problem. As Parie indicated, it took him along time to see any daylight when he started his company from stratch. I too agree. I had to live off peanut money for many years and wasn't able to get a pay check for almost 9 years in business.The lady next door to me who owns a dance studio which seems to be doing very well and has been in business now for over 3 1/2 years also admits she hasn't been able to pay herself yet. All young businesses struggle to achieve enough revenue just to pay the bills and payment to the owner isn't always the primary concern. Hense is why I said the example florist had to chose one or the other. I was surprised that no one suggested join a WS and get both. Dianne was close, but would persue it. We could have had an interesting thread on that subject by itself.

One of aspects of the example was that unlike a florist that has had years of experience and has historical numbers to back up the use of these formulas, the problem with the "example florist" is that all numbers provided had to ESTIMATED. No matter how good the formula, the numbers inserted were all estimated based on sound information from a third source. The $250 monthly dues and fees was an estimate and yet anyone who has been with a WS would possibly object to that number. The imaginary WS salesman estimated that this florist could receive as many as 45 incoming per month. The actual number could be more or alot less. Although there are already 2 other florists in that town that are splitting the incoming now, there is no reason to believe it will be split equally 3 ways. For example, if this florist only got 8 orders in instead of 15, and the number of outgoing dropped to 5 for the month, you'd still end up with a NET GAIN $4.20. Hardly worth the effort, but a net gain. As these are just estimated numbers, you can create any outcome without the real facts. The major problem with evaluating WS business like this is you can get a positive marginal gain with almost any combination. Remember, the florist started out with $120 in sending fees. All we showed was how that florist could make more money.

One thing that has always bothered me about florists making comparisons and talking about marginal gain with WS orders is that none of these formulas make any reference to the labor factor to put incoming orders together. We deducted for cost of goods, but any net gain does not include the cost of labor on incoming orders. I have always believed that ANY order that I handle should carry the full margin burden. The full profit burden is on everyone of your regular customers, but not on wire ins. But this is just my hang-up and these guys are correct. ANY dollars left over after expenses is profit. You can also obtain marginal gain by opening a hot dog or lemonade stand just outside your shop and also create marginal profit gain.It doesn't have to be done with WS. It is important to note, as Joe points out, that it works much better if your flower shop is able to regularly cover all the fixed and most variable expense with the everyday business. Florist who try to use WS incoming orders to continually meet some fixed or variable expenses will find themselves in trouble, because it is a very inconsistant source of revenue. Give me good cash flow over marginal gain with WS any day.

It should also be said that websites are no panacea either. As Ryan and others point out, the initial costs may be higher to get what you want. The major point of interest is that any site should require a high degree of personnal attention. I don't think that anyone can predict with any accuracy how many orders you are going to get whether you use a "industry template" or a very customized site. I also don't think that Joe could use Cathy's<CHR>same site with the same pictures in Joe's town, nor could an "industry template" website get the same results Cathy is experiencing in Anaheim. Mary lou mentioned that a website should be treated like a second shop. That is one of the postive aspects as well as one of the draw backs. Anyone can create the illusion of a flower shop on the internet and park their images right next to your shop website in your town and make the consumer believe they are really located there. Hense having similiar sites and same pictures makes you victim to a competitor that really isn't there. This means to be successful, you will have to create YOUR site with YOUR images and that will cost additonal funds and time. None of these costs were talked about in the original example.

Formulas are good and using realistic numbers always helps, but you as the florist have to do the RESEARCH and make the final decision about YOUR business. I try and make decisions based on numbers myself and the only one I ask advise is my wife who is not even in the business. Asking other florists what they think without you doing a little math work is just not very wise. We don't know much about YOUR business and you have no way to know much about ours.

In summary, I think most florists are just looking for quick answers and immediate results. Hense most will opt for the easiest solution. Exploring all the possibilites of website development, for example, and what it can do for the business down the road falls short in most florist's evaluation to accepting WS business which they feel gives them a quick fix. It is difficult for me to imagine why florists are willing to continue to invest in the WS business when people like Joe, Cathy and several others have confirmed with their own numbers that both incoming and outgoing wire business is on a down trend and internet business is increasing. This is just my opinion, but investing dollars today in the internet even with the draw backs, seems to outweigh continued investment in a declining wire business with ever increasing dues and fees.

I do greatly appreciate all the contributions and comments on this thread and hope we have not put too many people to sleep. We haven't been able to create any sex and violence and therefore very much appreciate your class attendance.

 

[Joe Mioux]

One of aspects of the example was that unlike a florist that has had years of experience and has historical numbers to back up the use of these formulas, the problem with the "example florist" is that all numbers provided had to ESTIMATED. No matter how good the formula, the numbers inserted were all estimated based on sound information from a third source. The $250 monthly dues and fees was an estimate and yet anyone who has been with a WS would possibly object to that number.

One thing that has always bothered me about florists making comparisons and talking about marginal gain with WS orders is that none of these formulas make any reference to the labor factor to put incoming orders together.

ANY dollars left over after expenses is profit. You can also obtain marginal gain by opening a hot dog or lemonade stand just outside your shop and also create marginal profit gain.

It doesn't have to be done with WS. It is important to note, as Joe points out, that it works much better if your flower shop is able to regularly cover all the fixed and most variable expense with the everyday business. Florist who try to use WS incoming orders to continually meet some fixed or variable expenses will find themselves in trouble, because it is a very inconsistant source of revenue. Give me good cash flow over marginal gain with WS any day.



I don't think that anyone can predict with any accuracy how many orders you are going to get whether you use a "industry template" or a very customized site. I also don't think that Joe could use Cathy's<CHR>same site with the same pictures in Joe's town, nor could an "industry template" website get the same results Cathy is experiencing in Anaheim.

Mary lou mentioned that a website should be treated like a second shop.

That is one of the postive aspects as well as one of the draw backs. Anyone can create the illusion of a flower shop on the internet and park their images right next to your shop website in your town and make the consumer believe they are really located there. Hense having similiar sites and same pictures makes you victim to a competitor that really isn't there. This means to be successful, you will have to create YOUR site with YOUR images and that will cost additonal funds and time. None of these costs were talked about in the original example.



In summary, I think most florists are just looking for quick answers and immediate results. Hense most will opt for the easiest solution. Exploring all the possibilites of website development, for example, and what it can do for the business down the road falls short in most florist's evaluation to accepting WS business which they feel gives them a quick fix. It is difficult for me to imagine why florists are willing to continue to invest in the WS business when people like Joe, Cathy and several others have confirmed with their own numbers that both incoming and outgoing wire business is on a down trend and internet business is increasing. This is just my opinion, but investing dollars today in the internet even with the draw backs, seems to outweigh continued investment in a declining wire business with ever increasing dues and fees.

I do greatly appreciate all the contributions and comments on this thread and hope we have not put too many people to sleep. We haven't been able to create any sex and violence and therefore very much appreciate your class attendance.

First paragraph: Estimated numbers...., Griff I still don't think you understand.

If you plug various numbers (scenarios) into a formula, you can determine how many sales, dollar value, additional costs will be needed to make a profit, break-even or lose money.

Graph 2: Taking and sending an incoming order, labor expense.... less than 5 minutes.

Graph 3: Lemonade stands.... ? Departmental issues do play a role, i.e. Candles, silks, plush, candy, spirits, etc.

Graph 4: Outgoing orders' commissions negate incoming orders' discounts. I am not making this up, but my TF in and out are mirror images. Dollar for dollar (off by $400), order for order (of by 38 out over 300 each way, first 5 months). May's incoming and outgoing numbers tied each other.

Graph 5: Good point, Cathy is in a densly populated area while I am in a rural area. For what it is worth, the county I reside in has a population of around 30,000 people and there are 8 flower shops serving these people. I own two of the shops and my family were the first florist in the county. With that said I still hover around being a TF Top 2000 florist.

Graph 6: Websites in the future will take on a stronger presence and continue to gain market share, but we are a far - far -far ways from the point that a website being a second store. Personal experience I will do roughly 125 internet sales this year compared to over 800 incoming wire orders. Wire orders mostly generated rated other real flower shops.

Graph 7: The bad guys will customize their websites probably better than the small real florist. That is being a bit cynical, but just turn to the yellow pages and look who has the largest ads in YOUR local phone books.

Graph 8: WS business still beats internet business hands down. The trend is established. I know from experience that a florist can make more money right now in WS business. That is not to say that one has to always be a WS member. I envision a day where traditional WS business will be less than direct internet business. We are not there yet. Go where the money is now and in the future change! While the WS is not a insignificant number in my overall sales, it is still a relatively small number compared to my local sales.

So with my very few and sparse comments made during this thread. My recommendation stands. Join a WS with bare bones services, send and receive and maybe Dove, (forget FTD) and work on developing an increasing presence through your website.

Joe

 

[Tracy D'Amico]

Graph 4: Outgoing orders' commissions negate incoming orders' discounts. I am not making this up, but my TF in and out are mirror images. Dollar for dollar (off by $400), order for order (of by 38 out over 300 each way, first 5 months). May's incoming and outgoing numbers tied each other.

Just one quick point, and maybe I am an exception ... we've been here two years this month, and have only seen this balance since April of this year. For the first 20 months or so, our incomings greatly exceeded our outgoings... so the balance of commision earned vs. discount given was grossly off. A new, or fairly new shop, especially one opening up in a town that already has existing flower shops that have been sending wire outs for their customers for a long time, will not have the customer base to earn those outgoing wire comissions. We literally sent 1-2 per month, except tradtional wire months like Dec, May. Our store was an exisiting shop of five years when we bought, and there were two other shops in town, one the same age, one 25 or so years old. Just another point of view.

On the flip side, many many of those unbalanced, incoming wire customers are now our outgoing wire customers, as well as local customers. We delivered quality product, with a smile, and try to follow up with constant visability in our community. The WS will give you that - exposure to people you might not easily get in front of. You have to take advantage of it.

But, in today's climate, with more and more people trying to find their own long distance shops ... I have so many customers that find us online, with my little TF template site. They all say the same thing, my mom lives here, my grandmom, and I'd really like to find a local florist to deal with so I can just call, or send online. They look at our site, and call to have personal contact with the shop that will be making their delivery. They want to trust the shop they're sending through. They don't want their local in town shop to farm their order out to just anyone (not realizing that the originating shop can make a preferred florist list based on their experiences). It's a DIY world out there, and many customers are choosing to find their own individual shops, all over the country, because they can.

So, this decision should also be based on who your customers are, and what they will utilize. Our recpients are a lot of seniors, many who don't get the web(some do and love it!). Those seniors received our TF or FTD delivery,called or came in person for us to send out their delivery, local or out of town. Our senders are a lot of middle aged and younger who live on the web. They choose something & click, or call. This may not be the same in rural IL, or MO, or MI. You have to think it through, not just what will make you money today, but what will keep you progressing through tomorrow.

It's a decision, probably one that could be made either way and work out. You just have to put effort into making either one work.

This has been an interesting brain stretch. Thanks Twiggy, and all our teachers! Can we go out for recess now?
tracy

 

[Griff]

Just for future reference

First paragraph: Estimated numbers...., Griff I still don't think you understand.

If you plug various numbers (scenarios) into a formula, you can determine how many sales, dollar value, additional costs will be needed to make a profit, break-even or lose money.

Joe, I understand break even points and I understand the formulas. I didn't get A's in accounting, but I still can add and subtract. The WS business is nothing but a maze of numbers, but I do understand that if you have enough volumn in outgoing or incoming, a florist can make some money. However, without sufficient VOLUMN, you WILL lose money. Example: The florist in the problem was averaging 20 orders out a month. That doesn't mean he sent 20 orders out every month. Because monthly wire out is not a consistent number, if that florist sends 30 orders out on the 3 busiest months and only sends 17 each of the remaining 9 months, this florist actually loses money by joining a WS <based only on wire outs>. His sending fee would have netted him $1,440 at end of year and if he joined the WS he would have netted only $870 which included the sending fee. The actual break even for this florist on wire outs is 21 per month. That's not an average number. He must send 21 orders each month to gain more than the $120 he's making now. Pretty good trick, don't you think.

Graph 2: Taking and sending an incoming order, labor expense.... less than 5 minutes.

I'm not talking about the time of sending an order. I'm referring to the idea that the incoming calculations we were showing never show any delivery or labor. It should be for example: $45 incoming, - $5 delivery, - $10 COG, - $10 labor, -$12.60 comm = $7.40 marginal gain. Now you should have been able to make additional margin on the labor, but the question is, did you make anything on the $5 delivery. Again, if the florist has sufficient volumn in incoming, then true margin is obtainable. However, florists that receive less than 15-20 in a month aren't going to have much if any net gain because of the rising gas cost which is a variable expense.

Graph 3: Lemonade stands.... ? Departmental issues do play a role, i.e. Candles, silks, plush, candy, spirits, etc.

The reason it is so easy for florists to convince themselves and other florists that WS is profitable is because their are TWO income sources - outgoing and incoming. All these others categories only have one side of income, when you sell the item. Even website business only has one side of income. Only order gatherers are able to be creative, and get two sides, but only with the help of the WS. I'm sure that is what 12 Buck was trying to get at before they slapped his hand and made him go sit in the corner. The sales of any item within your business can produce a marginal gain. Buying $150 worth of plush is a one time expense and everyone you sell has marginal gain to the overall profit picture.

Graph 4: Outgoing orders' commissions negate incoming orders' discounts. I am not making this up, but my TF in and out are mirror images. Dollar for dollar (off by $400), order for order (of by 38 out over 300 each way, first 5 months). May's incoming and outgoing numbers tied each other.

Another accounting pratice which I don't agree with. Florists seem to want to intermix these two categories. If the florist has low outgoing, the monthly dues and fees will be charged against the incoming. Some are willing to take everything that was gained from outgoing and applying it against incoming and the dues and fees are then classified as advertising expense. Each should have to stand on their own. Outgoing, incoming, full value business and website. All separate items and all with separate profit structures.

So with my very few and sparse comments made during this thread. My recommendation stands. Join a WS with bare bones services, send and receive and maybe Dove, (forget FTD) and work on developing an increasing presence through your website.

The reason that Joe and I will probably always disagree on this subject is that in Joe's case the numbers and volumn of WS business that his company has managed to build through the years favors the use a WS. For most small town florist or florists that have been in the business for 5 years or less, I wouldn't recommend it. Many of these florists that are recommending it are 2nd and 3rd generation and had had alot of time to develop their business. There are florists that will tell you that if you don't charge a sending fee, you will get more outgoing. Well, it's possible, but you are also going to lose alot of money in the mean time.


Joe and I agree about one thing. There ARE alot of bad guys out there these days and the list is growing rapidly. I was with WS for 14 years and then dropped them 6 years ago. I did the math and most of the time found I was doing alot of running around to fill orders with very little return on the money and time. One over the counter full value $45 order will give you a better return then 3 incoming discounted wire orders. Build you business as if your survival depends on the local people - because it does!