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?
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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if the inventory is shop worn, out of date or not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/.
