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Buy a Flower Shop: Serious
Considerations |
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by: Karen
Marinelli |
You've always liked
flowers and you think the idea of turning emotions into floral
expressions sounds like tremendous fun. You are between careers and
have been investigating business opportunities in your community.
Yesterday, while perusing the real estate magazine in your county,
you notice that the family owned, downtown flower shop is for sale.
The ad says it's a turnkey operation. This is your lucky day. Or is
it?
Let's look before we leap, OK? Here are some factors to
consider:
What is the current state of health of this
business?
You should be able to see the financial records
and consult professional help if needed.
What is the
reputation of this business in the community?
If there are
negative feelings about the business in the community, you need to
consider a name change and making a big show of the change in
management. Factor in the cost of a face-lift on the façade of the
physical facility.
What assets are included in the selling
price?
If you are buying the building, equipment, coolers
and inventory, you need to carefully assess the age, condition and
viability of these items. For example, there may be $10,000 worth of
inventory in the store, and the seller may be able to document the
value by showing invoices. However, if the inventory is shop worn,
out of date or not in keeping with your business plan, the value of
that inventory to you may be quite a bit lower than that $10,000.
Are you also buying the Accounts Receivables as an asset? If
so, you should do some serious research into the exact state of
these accounts. Many traditional florists have struggled with house
accounts. They have extended credit as a matter of tradition, rather
than good business sense and have found themselves in extreme cash
flow trouble.
What liabilities are you buying?
You'll need to be very clear about any debt or bills you
will be taking over. Be sure that you hire professional help to
outline any such debt in your sales agreement. Because of
seasonality of the flower business and the existence of house
accounts, many retail florists have difficulty with cash flow; you
should avoid any situation where you will be paying bills run up by
the previous owner.
Also, you should take time to consult
with the Wholesalers that you will be buying from. Discuss your
payment terms and lay the groundwork for a healthy business
relationship with a reputable Wholesaler or two.
What about
the business name?
If the name of the business is valuable
in your market, you probably won't want to change the name of the
business. In any case, consider a clause in the bill of sale
limiting the use of the name by the previous owner in the future.
This can be very sticky in the case of an owner's own name, for
example "Smith Florist".
Will you need to hire all new
staff?
Sometimes a previous owner chooses to stay on and
work for the new owner. This can pose tremendous difficulties for
all involved, so tread lightly on this territory. It's an extreme
analogy, but think about the difficulties in open adoptions between
birth and adoptive parents. Everyone has their own style and it can
be difficult to accept change or let go of something you have worked
very hard to build.
That being said, many valued staff
members at successful florists have weathered the change in
ownership of their place of employment. Do make every effort to
retain good people. Just be sure to be clear about your expectations
so that the separation can be as painless as possible should that
become necessary.
What is the correct timing?
Take
the holidays into account when you plan your purchase of a flower
shop. Valentine's day is the single largest day, but Christmas is
more of a marathon. Mother's Day, weddings, proms, graduations and
anniversaries team up to make the spring months a nice busy time.
Depending upon your market, the summer can be a difficult time to
make ends meet.
Ideally, you'd take over a shop with enough
time to get your feet wet before a holiday, but not with so much
down time that your funds dry up before you can get going.
What other opportunities exist, and at what cost?
Here's the acid test. Take the time to sort out the options.
Let's work on the assumption that you WILL own a flower shop in the
next year. Take a big sheet of paper and draw a line down the
center. At the top of the left column, write "Buy and Existing
Flower Shop". In the Right column, write "Open a New Flower Shop".
Now draw a line through the middle of the paper, so you have a top
and bottom. The top is for pros and the bottom is for cons. Fill in
the grid with as many items as you can figure. Ask your trusted
business friends and floral professionals for help. You'll be
considering such items as the finances and the marketing plan of
your business. When you have completed this exercise, you should
have two things. One is a good tool to help you make a decision. The
second is the beginnings of a business plan.
Whatever your
decision, a business plan is essential. It is your roadmap for
success and will be necessary for a business loan. It is worth the
extra time at the onset of this journey to compare the options and
make the best decision you can.
About the
author:
Karen Marinelli is a Floral Industry Professional with
nineteen years of experience in the academic, retail and wholesale
sectors of the industry. She believes the common goal should be to
sell more flowers to more people, more often. For information on How
to Open a Flower Shop, visit http://openaflowershop.com/
To order flowers online, visit http://send-flowers-online.ws/
This article may be reprinted without permission under the
following conditions:
Article must be printed in its entirety.
Author information and links must be printed exactly as above.
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