Floral Insiders: Featuring David Dahlson

November 12, 2009

Due to the response of my previous post Bear Bear Bear, many wonderful floral industry professionals have sent me emails to voice their concern for the future of the wedding floral business. Though I cannot possibly post all the wonderful, inspiring, disturbing but thoughtful provoking notes, I did receive one very poignant email. Because of his email, I extended David Dahlson the opportunity to contribute a post based on the wholesaler's point-of-view.


I thank David for his courage and conviction. He has over 20+ years experience in the floral wholesale industry, so to say that he has seen it all, is quite the understatement. This thought provoking post will not sit well with many of you. Whether disturbing or distressing, the point that has been made over and over again is that WE MUST CHANGE.


Bottom line: What worked yesterday will not work today. What will work today will not work tomorrow.


How did we get here? And where are we going then? Read on.

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For the purposes of this brief essay I will concentrate on the predicament of the modern floral professional who specializes in weddings, events and corporate accounts.


As an associate who works for a company that supplies many such designers, I am all too pertinently aware of the fallout from the financial meltdown and the squeeze or even elimination of flowers from the budgets of corporations. Our company is keenly aware of the downsizing of weddings and parties that has occurred and sensitive to the quite austere atmosphere that we Americans currently live in. Given the excesses of the past ten years or so, it seems entirely logical that there would have to be a period of reconciliation with the insanity of our runaway consumption. Alas, it is just history repeating itself - yet again (Genesis 41, again!) but still, the dissolution of much of the wealth from our economy comes with some pain.


I was moved to respond to the Nancy Liu Chin’s commentary(in her post, Behind the Scenes: Bear Bear Bear) because of her straightforward and accurate outline of the financial predicament that many florists find themselves in. Most of the problems that floral professionals encounter are the direct result of a very poor understanding of the real costs involved in conducting their business. During the times when money was altogether much looser and more available, the wealth effect managed to mask most of these shortcomings; but now that we live in times when every penny counts and is counted, all costs of production need to be accounted. Last but not least, the credit-worthiness of the client needs to be assured. There is absolutely no shame in this…it is business!


OK…so now we’re in business, still in business, as it were, let’s take a look around at the playing field.


State of the Union: A Wake up Call

First and foremost to be considered are the DIY Nuptial Designers working in concert with the supermarkets. We need to have a clear understanding of what is happening at the supermarkets, and they are in business to maximize yield per sq.ft.. It is unfortunate for a lot of us that many markets frequently use flowers as a loss leader, but this is happening less and less in this economy. Even the mass markets have cut back on flower purchases. The flowers they sell can be very good, in many cases excellent. Generally however markets do not have enough people allocated to properly take care of the flowers. Therefore, the quality suffers significantly the longer the flowers remain in the store.


One fact has become clear and immutable: Supermarkets are unequivocally the best location to sell flowers to consumers, because the consumer ranks their perishable nature on a par with milk, meat and produce. Supermarkets provide the absolute best opportunity for an impulse purchase of flowers because the buyer is going directly home. The selection available is commensurate with the diversity available in the produce department. It is quite likely that if you can get organic dandelion greens or fresh sorrel, the likelihood of being able to procure Canterbury Bells or Peonies significantly increases.


Generally speaking, most of the flower selections in supermarkets tend to be commodities as the inherent purchasing process for supermarkets means being able to replicate one box lot for hundreds of stores, with the correct bar code and price attached. The flowers also need to be fairly hardy products as they frequently need to endure plenty of abuse. So the selection is going to be fairly predictable; roses, poms, carnations, limonium, asters, sunflowers, gladiolus, some lilies, and the odd seasonal selection such as peonies and hydrangeas.


(Side note: Incidentally, we will be seeing a lot of peonies in November and December for the foreseeable future because they are being grown extensively in Chile, a country with well established agricultural trading ties, and USDA located at the airport in Santiago de Chile, a cozy relationship not enjoyed by any other country in the world! The key here is that peonies have been rather extensively planted in the South American fashion, and due to the nature of the peony plants, production will increase exponentially over the next decade.)


Clearly, given that we are in a recession many brides-and-grooms to be will elect to buy flowers from their local wholesaler, farmers market, supermarket or, for the lucky few, from a flower farm. I imagine they may do it themselves or a friend will put the flowers together fro them. Likewise I suspect they may have friends take the photos and bake a cake. Many brides may elect to forgo the elaborate wedding dress due to financial constraints. I think we must have compassion for everybody whose dreams may be curtailed in these often gloomy times, but we must applaud and support their decision to become betrothed, and I for one wish all brides and grooms nothing but the best of luck and that they enjoy a happy life together. (I agree!)


Insofar as the flowers are concerned; can people buy satisfactory flowers at a supermarket? Absolutely!


For that matter; can people buy serviceable butter, flour, sugar, eggs and cream from a supermarket and bake a more than adequate cake? No doubt!


I imagine there are people who take cool and hip photos with disposable cameras and create neat little sushi appetizers and amuse-bouches, and all with products garnered from a supermarket.

Heaven knows, one-stop celebrations catered by supermarkets, from basters to bouquets, is already purchased in its entirety by many Americans at Thanksgiving!


Verdict: Good quality DIY Wedding Flowers can be enjoyed if the couple is flexible and willing to keep things simple.


However, I have a nagging suspicion that there are quite a few people these days who, when contemplating marriage, may not want to invest significantly in the occasion because they are not invested 100% in the emotional and spiritual components of a lifelong commitment to another person.


But for those people who believe that the “Wedding Day” is a sacred and profound and who have the economic wherewithal and desire to invest in this occasion, certain facts hold true: When two people join together and make a commitment to live together for the rest of their lives for better or for worse, then it is customary to celebrate this matrimony in the presence of both extended families and the couples closest friends. Many parents are extremely proud of their children and want to underwrite the vent or support it in a substantial fashion. To this end it is generally necessary to secure the services of a variety of specialists who can make that day unique, memorable, inspirational and maybe even divine.


Again, I must underline that prudence be employed when creating the budget and thereafter discipline in sticking to it is paramount to success of the wedding, not to mention the happiness of the couple!


Adding Value and Quality

Today, more so than ever, almost all citizens of the USA want to ensure they get the most value for their money, and that this holds true for all income levels. In these economic conditions people are searching for quality, and this applies equally no less for a set of tires than it does for floral arrangements. Therefore, it is plain commonsense that we provide the best possible quality products to our clients, and that we go as far as we can in providing the best experience for our customers as possible.


I would like to venture that there are some consumers have felt rather short-changed when looking at the products submitted for their wedding. Generally speaking, on the wedding day, most couples are experiencing an impregnable euphoria, so it is mother-in-laws, fathers, ushers, bridesmaids, friends and so forth who may be apt to criticize, especially if they have an inkling of the sums involved. And I am sure amongst these critics are perhaps a few who have felt that “they could do that”! This of course engenders even more DIY weddings. Thus, another level of economic pressure, the corrosive competition from florists who are not equipped to deliver value commensurate with the sums of money involved in nuptial flowers, provides yet another hurdle for the legitimate floral professional to surmount.

Consequently, the challenge is to be able to articulate and demonstrate the value-added products and services that one can offer to a couple considering your business as the purveyor of all things floral for their wedding. If you are able to do that in a professional and sincere way, maintaining an acute consciousness of the couple’s desires and allowing their ideas to resonate in your craft, then one will be able to continue to do business successfully. But people will expect “more for less” and it is the true, experienced artisan who will be able to prosper, displaying light, beauty and levity with less flowers, creating the illusion of mass and volume, substance and generosity with fewer ingredients. Certainly, the days of the crammers and jammers are a thing of the past (Jeff Leatham is an exception, it would seem! We mean no disrespect, Jeff! We wish you and your TLC show - Flowers Uncut! much success!) and economy, good taste and grace must surely prevail.


Unique Value Proposition

In concert with this, and what struck me about Nancy’s emphasis on the need to be profitable, is that we all need to account for our costs, and pay ourselves a living wage. It is imperative to be ever vigilant that you are attributing the costs of doing business properly. Incidentally, one aspect of retail flower cost estimates I have never understood is the method of marking up flowers three times or four times, adding the cost of hard goods, the cost of labor and any drayage, plus taxes.


As I understand it the profit is captured in the mark-up on the flowers, but this method seems to leave the true profit in the realm of the occult. Whereas most conventional businesses add up all the costs of production, plus allocate a pre-determined percentage to cover all fixed costs, and then mark up this total to arrive at a price that includes the profit, which is therefore a known quantity. Knowing all your costs, fixed and variable, as well as your estimate of the profit will allow you to properly prepare a quote, and if your customer indicates this is higher than they care to pay, you are in a position to advocate downsizing, changing ingredients and so on. If, after you have tried to accommodate the client, they still find your price beyond their reach then you are on a sound footing to decline the assignment or accept, but with lower (but known) margins. I have witnessed many talented persons fail because they do not allocate nearly enough money to cover fixed costs, or a reasonable salary plus profit for themselves.


The floral professionals who have a sound financial footing, who are assured and confident of their unique value proposition can move forward in securing profitable engagements.


Beyond Flowers: Fashion and Beauty

Now I shall focus on the third component of our industry to be considered which provides a powerful advantage over the competition: Fashion. Unbeknownst to many people in the floral industry is the concept that we are in a “fashion industry”. But we are. Colors, textures, shapes and sizes influence our business just like clothing, furniture, kitchen components and so forth. To further put distance between ourselves and the competition it behooves us to be conscious of what is happening in allied industries. Certainly, much of fashion seem frivolous, but trust me it is all about the bottom line. Therefore is extremely important to be open to what is happening in the world around us, and especially to the younger generations, no matter how alien there ideas may seem at first. As one’s sensibilities become keen, anticipating floral trends, or even being in a position to create them can really set one apart and above the competition.


The company that I work for prides itself on sourcing the newest rose varieties, unique flowers from around the world, off-crop products from the Southern hemisphere as well as forgotten heirloom varieties from our won back yard. It is part of our business model that we strive to differentiate ourselves from the competition, although we have competitors around the country who also do an excellent service. And yes, the cost of some of these items is high, but this is unavoidable. To stay on the cutting edge incurs expenses not apparent to many people, such as the research, the education, the travel and the expertise to track down new products, not to mention the cost of freight, handling and so on. But with unique items featuring unusual shapes and textures, of a limited supply, our customers can establish their unique and trademark designs, confident that they are in fact differentiating themselves from the crowd.

Incidentally, it follows that if peonies are filling up buckets at the supermarket, they will be featured less and less in wedding magazines, as editors and designers seek to find new looks, new flowers and new textures. Flowers that are much harder to handle, transport and keep hydrated, such as Sweet peas for instance, or sprays of phaleonopsis, will become more ‘fashionable’(or Iceland Poppies, I can never find them).


There is no way to change what is happening in supermarkets, with internet fulfillment, or the world-at-large. What each of us can control is our actions, our decisions, our desire to learn and our enthusiasm to share our lives with other people. And we can do it with flowers.


What I would like to share with you all is that at the end of the day, flowers may remind us of our spirituality. Of course they are “temporary décor”, temporal is how I would express it, but in the big scheme of things so are we. Flowers speak to this mystery, and have echoed these feelings in human beings since the dawn of time. Let’s celebrate this idea!


I would like to thank Nancy for the opportunity to express my ideas, and I hope they may spark some thoughts within you. I leave you with a couple of quotes from two great spiritual minds:


"Let him who hath two loaves sell one, and buy the flower of narcissus: for bread is but food for the body, whereas narcissus is food for the soul." by Mohammed


“Consider the lilies of the field, how they grow; they spin not nor do they toil; yet, I tell you, even Solomon in all his glory was not arrayed like one of these.” by Jesus


David Dahlson has worked with Mayesh Wholesale Florist for over 25 years, and is currently involved with marketing and the development of the On-Line Shopping Portal of Mayesh Wholesale.

The ideas expressed in this article are solely those of David Dahlson.

Mayesh Wholesale Florist, Inc. does not necessarily agree with, or endorse, this article or any part thereof.

Floral Insiders: From Nancy's Brown Bag

November 11, 2009

A week ago I bumped into a floral friend. As always we were talking shop. We were both at the end of our busy season so to say that we looked a little "beaten down" was an understatement. Both of us had dark circles under our eyes, hair a little out of place, and shoulders sagging from feeling weary about the season ahead. Both lacked sleep. Tired. Yulp.

After spending some time chatting, she mentioned that after 20+ years in the wedding floral business, she was struggling with paying the bills. And that she didn't have much to show for it. After seeing so many ups and downs, she said that this year was the worse.

If someone with her experience is still having trouble making ends meet after investing 20 years in this business, then what can we learn from this?


During these times, it's hard to feel bullish(confident and upbeat). Given that my background is finance, I often seem to have a "bear" mentality when it comes to business and consumer confidence though on a personal level, I think I'm more glass-half-full then the glass-half-empty type.

In business and when it comes to consumer confidence, I confess that I'm conservative and bearish all the way. (ps - the definition if you don't know of a bear investor or analyst is one that is "accompanied by widespread fear and pessimism" as defined by Wikipedia. ). And because I am bearish this is what I have to say to those who are thinking of starting a career as a floral designer or a florist. (or more simply put - anyone just going into business for yourself)

Save Save Save

Yes. When it comes to your business, you better know how to save. Save for a rainy day. Save your profits on a yearly basis for future expanse or for the growing opportunities. Save now for next year unexpected expenses or downward sales. Save for the unknown.

Many businesses especially floral and event designers, forget how to stay on budget, stick with a shopping list, and buy only what is needed. I totally understand when you are in your element of design that it is always so so so easy to buy more more more. Or when there's a great sell from your suppliers we get carried away. I say, "stop and evaluate". Do you really need it?

What I am saying is that you have to be good at saving. Learn to buy wisely. Learn what deals are worth while. Learn to save for upcoming projects. Does not mean you go cheap. No No No.

In well managed companies(small or big), cash flow is crucial. Especially during tough times, those companies who have strong cash flow can weather the downs.

For Richer, For Poorer
This piece of advice is for those who haven't started their business and are still on the fence. No matter what I say, I know many of you will jump right in but I'm going to say it anyway. If you are one of those that don't care about making good money, working long hours, waking up early, and being slaved to your work, then you don't need to read this section. However, what if you do care?

For those of you who would like to have a home one day and might need money to pay for the mortgage(or your credit card bills or your college loans or even a shoe collection), who want to have a life outside of their work, and who might care if they have to give up weekends. then read on.

I am sure that many people will bash me for saying this so hold on tight....Unless you are at the top top top of your game in your community, most floral designers do not make that much money in comparison to averages. Period.(Did I just burst your bubble? sorry!) (****The top of the market or top volume businesses are excluded from this conversation)

The profit margin is horrific. Horrific.

That's why after so many years, my dear floral friend was crying on my shoulder. She's having a hard time meeting her financial needs and feels that she doesn't have much to show for 20 years of work in this field. I feel that way too.

Why do so many floral designers gripe that they don't make much. It has to do with low profit margin and consumer's expectation of what is an acceptable margin. Planners don't get it. Editors don't get it. Venues don't get it. Consumers don't get it. As a floral designer, we've heard people moan, "wow - flowers are so expensive!". Sure, but that's because they are perishable, usually imported, rare things. Most flowers are not common commodities like oranges, beef, water, pork bellies that can be traded on the NYSE.

Let me continue.

Did you hear that Apple's last quarter profit margin was over 35%. Wall Street applauded this.

What does that mean in layman's term? A 35% gross margin on a $100 item from Apple, would equal a pre-tax profit of $35.00. Wall Street and most investor of Apple did applaud the company for managing their bottom line and thus the stock jumped on trading news.

However, when it comes to wedding flowers, most average consumers would probably question if a floral designer made $35.00 per every $100 of flowers ordered. I'll give you an example. If a boutonniere priced out at $20.00, a floral designer should make $7.00 - right? However, most consumers probably would feel that it is too much. Not all consumers but many. Why do I know this...because I've actually had many bride ask me why a single stem flower that should be worn on the lapel should be over $5.00. (That's another discussion which I am not suppose to talk about.)

For argument sake, let's look at this backwards from the cost perspective.

Let's price something out HOPING to achieve a 35% profit margin. Let's be simple about this and assume that you materials and supplies are 30% of all your costs. Your other fixed and operating expenses including a big component labor(****yes I understand that this doesn't take into account non operating expenses) is 35%. The total of materials and operating costs is 65%.

Once you buy just the materials for one arrangement(let's say for simplicity) a bridal bouquet, let's try to figure out what to price this item. In this example, I've used this lovely orange, fall bouquet.


Recipe and Costs
1 bunch of orange tulips at $9.00 a bunch
1 5 stem bunch of orange orchids at $10.00 a bunch
1 bunch of orange mini calla at $20.00 a bunch
1 stem of green cymbidium orchids at $22.00 a stem
1 bunch of orange Asiatic lilies at $9.50 a bunch
1 bunch of 50 cm deep orange roses at at $18.00 a bunch
1 stem of orange cymbidium orchids at $22.00
1 bolt of ribbon at $7.00 a roll for 10 yards
1 box of pins at $2.25 a box
1 1inch floral tape at $2.00 a roll

Are you ready for the costs? Total approx costs - $122*(remember this is SF so in your city, it might be more, it might be less). What retail will get you to a 35% profit after cost of materials/supplies plus fixed and operating expenses? How many times should you mark up the cost of the materials(not including the overhead) to achieve the profit margin that you want?

If you are asking me, I would say that you might want to price it at around $366.00 which is 3x the cost of MATERIALS(only) in order to achieve that profit margin, however, ask yourself this - what is the market expectation for this bridal bouquet? There is a different between what you want to charge and what a customer is willing to pay, right?

And thus our dilemna...

It is because some(not all) wedding markets cannot bear to afford a $366 bouquet before delivery and tax that so many floral designers have to either 1) lower their expected profit margin or 2) reduce expenses(in all areas - utilities, labor, materials, etc.....) if they want to price it out lower than $366. When floral designers including myself when I first started probably didn't know how to charge. Perhaps we just took the cost of their materials and mark it up 2x or 2.5 times marking.

If so, you might guess that after all those fixed and operating expenses like labor, rent, utilities, sales tax, trucking, liability insurance(and on and on), that a 15 to 20% overall profit margin might be what was achieved. (As for my own business, we average 25% on our EBIT which isn't good and isn't bad. There's always room for improvement and I'm working on that.)

What does this mean for a floral designer or new florist?
Well, if your End of Year gross profit margin is say 20%, you've done an estimated 40 weddings at $3000 per wedding with total sales equaling - $120,000. Your end of year gross before taxes might be----------

$24,000

As a well known photographer said to me, it's not that simple. Darn, right! It's not that simple there's so many accounting deductions and rules - frankly, I can't even get into it in this article nor do I want to.

Moving on....

Let's say you live in the Bay Area, this figure does fall below the average salary? According to Indeed.com, as of October 20, 2009, the average salary in the Bay Area is $85,000. It's no wonder since the average one bedroom rent is around $1839/month according to rentaldata.com. So if you make $24,000 per year, you could barely make rent.

Do you see where I am going? When an average bride spends $1000 per wedding flowers, if your profit margin is 20%, you make $200. If you spend 30 hours on that project including setup, phone calls, emails, etc, you make

$6.66 dollars an hour.

I once calculated how many hours I spend and it turns out that I work an average of 6 days a week, 46 weeks a year, totaling over 2700 per year. We do over 40 weddings per year plus I meet with 80+ client. The average wedding client gets 60 hours of my time(doesn't include my staff). So if a typically client spends around $4500 before tax and delivery and if my margin is 25%, then you could say that I make....
$22.50 an hour.

I'm sure you know what I'm getting at. This business is not for the faint of heart. 2700 hours a year. 60 hours per client. That's what it takes if you want to do above average, full customized weddings in which you service the client and write customized proposals.

If your community does not have the floral business that some areas like San Francisco has, you need to do more weddings at a lower average ticket, reduce your expenses, and you have to be able to get a higher margin if you want to stay in it for the long run.

Of course, money doesn't have to matter. But I'm not talking about making millions. I am talking about making a standard of living so that you can have a good quality of life. Before you jump in, ask yourself

Can your community support the type of business you want to run?

What do you have to do to make you stand out so that you can be innovate like an Apple so that your client will accept a 35% margin after all expenses?

Where do you have to cut expenses in order to reach an acceptable margin? What do you have to charge?

Your Worth Know your worth. If you've spent many years in this business, you know it's tough. If you are lucky like I am, you work with great vendors. You have a wonderful selection of fresh products. You have a great talent pool of resources and designers to choose from. You have wonderful clients who understand. Not many of us floral designers are remotely this lucky and fortunate.

Yet after it's all said and done, I kept thinking about my floral friend and I wonder, was it all worth it? 20 years and still being unable to pay the bills. Was it worth it?

And for me the answer is very simple. No matter what, there is much more to life. And as much as I love to do what I do, I know what's important to me. And I know that it isn't about the money. It's not even about the respect and admiration of your peers.

It is good knowing that I just love creating beautiful weddings and working for myself. Yet, I know what my limits are. And I know that it takes sacrifice to be a success but no matter what no sacrifice is worth it if I don't have the things that are dear to me... my health, my hobbies(outside of flowers), my friendships, my family life, my time with Chin Chin(my baby dog),my alone time, and my hopes.


Bottom line: Know what you are worth. Stand for what you need to make. Weather the storms by being a good saver. Spend wisely. Cash is king.