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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:
1. 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.
2. 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.
3. 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 However, if the inventory is shop worn, out of
date or not in keeping with your business plan, the value of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.
4. 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.
5. 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".
6. 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.
7. 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.
8. 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/.
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