Now, I’m not a financial advisor, tax guru or super fancy accountant so don’t go thinking I’ve got all the answers. I don’t. Definitely, talk to your financial peoples to get clarity on the specifics of profitability as it relates to your business. But I have been in the business for enough time to address the topic of how much profit a florist makes.
I know a lotta florists wanna know more about the ins and outs of profitability. This is why I thought it would be worth putting together a few notes and providing a super simple framework to help you understand profitability in your flower business.
I want to shed a little light on that super simple and powerful question: “How much profit does a florist make?”
What Is Profit?
First off, one of the most confusing things about learning money talk is that different people use different terms to refer to the same things.
It’s so confusing. So, before we jump into talking about profit margins and fancy ratios, let’s clear up a couple of language things and definitions.
What is profit? In its simplest form, it’s the difference between the amount earned and the amount spent in buying, operating, or producing something.
For us, it’s essentially your total sales minus your costs and expenses. The money that’s left is your profit.
You’ll also hear people refer to “net profit” (your profit minus your tax obligations) or “gross profit” (your profit not accounting for taxes owed).
Now, I’m all for simplicity. So I’ll just refer to profit as profit. And you can figure out your tax obligations with your accountant, OK?
Also, when I say “all your costs and expenses”, I mean everything. Rent, water, and electricity. Insurance, repairs and maintenance. Flowers, foliage and hard goods. Staff, taxes and mandatory contributions (if you have them in your state).
All of it.
And yeah, that list of expenses should also include your salary.
You read that right: there should still be money left in the bank after it’s all said and done.
This is where a lot of floral designers get led astray, assuming profit = personal income. Your salary, as a business owner, and your business’ profit are two different things entirely.
Remember, your business is an entirely separate entity to you. Even if you are a sole trader/self-employed, your income is not your business’ income (even if you only do one tax return in the year).
Keeping them separate in your mind (and across bank accounts) is super helpful.
Here’s One Key Business Lesson For You…
It’s important to understand that you need to have money to invest in your business to grow, reach new people, and elevate your brand.
Which is exactly where your profit comes into play. Your profit is what you’ll reinvest in your business to continue to expand your revenue and reach even more customers. Your business’ profit is the fuel for your business’ growth.
With no profit, there is no growth.
How Much Profit Does A Florist Make?
The general rule of thumb I like to follow when we’re mapping out our costs and expenses is as follows:
- Cost of Goods Sold: 20%
- Operations: 20%
- Labour: 20%
- Taxes: 20%
- Profit: 20%
Now, it’s by no means a hard and fast rule because the nuisances of your business will be different to mine. But when I’m looking at our business over 3 months (quarterly) or 12 months (annually), I find it a really helpful framework to follow.
It’s simply a good guide. It allows me to keep things simple and make smart investment decisions.
It also gives us a general framework to follow to know to signal to us when we’re over-investing in staff, figuring out how much to allocate to rent or reviewing how much you’re spending on wholesale flowers.
Learning to manage our costs is an integral part of running a business. And every dollar we over-invest in advertising, product, rent or staffing is eating away at our profitability. And that means we’re limiting our growth potential.
Not Meeting Your Profitability Targets As a Florist?
You’re not alone. It took me years to figure this out and I want to save you from the same headaches I created for myself.
Where to start? First things first. Review your pricing.
I put this off for far too long. It’s one of the most important activities we can do in our business. Don’t wait till the next quarter or next financial year. Do it today.
Once you get your pricing sorted, the next task is to stay in touch with your costs.
I know learning the ins and outs of money can feel scary. But I’ve found it to be one of the most empowering experiences of my life.
When I let go of the judgement and started to just look at the data, I realised I was spending way too much on wholesale flowers and far too much on staffing.
I paired it way back. I started to experiment. And so I limited my options and we rethought our staffing structure.
Then we started implementing changes slowly, started sorting through one piece of the puzzle at a time. And in a matter of weeks, I saw our bank balance begin to steadily increase.
It didn’t take long to see that a change in our behaviour created a massive impact on profitability. And having access to more profit meant we could invest more back into the business and grow even further.
It’s like a virtuous cycle. It’s so fun!
Shift Your Mindset – To Make Profit As a Florist
I work with floral designers around the world and know first hand, how easy it is to not make money as a floral designer.
There is a lot to learn when it comes to flowers + business and so little support for floral designers and flower farmers to learn the ins and outs of making money.
But it’s why I’m here. To help you move through the overwhelm and get focused on what matters most.
If you’re struggling to make money in your flower business, be sure to dig into this week’s podcast episode: #164 – I’m not in it for the money (and other such nonsense). Listen to the full episode at the bottom of the page.
Need Help Making Profit As A Florist?
I teach floral designers how to take charge of their business inside my Flower Boss Bootcamp. We dig into all things marketing and money and learn the ins and outs of running an empowering flower business.
The moral of the story: Flowers are fun. But so is making money.
My Flower Boss Bootcamp is the only program available to floral designers focused entirely on the business of flowers.
Yes, we talk about profitability. We talk about feeling confident with your pricing, learning to manage your costs, growing your business.
Inside my Flower Boss Bootcamp, I give you my exact marketing approach, we dig into getting crystal clear on your vision of success and surround you with like-minded business owners who are navigating similar challenges to you.
This program will change the trajectory of your flower business. I promise.