The Floral Hustle

  📍 Hello, flower friends. This is Jen and you are listening to the floral hustle podcast on this week's mini sode. We are going to talk about understanding your operating expenses. When I start working with someone one on one, this is one of the first things that I like to understand because it is so critical to the success of your business or how your business feels.

When you have large operating expenses for your business, let's just say that you have went and got a studio space and that studio space is a good chunk of money on a monthly basis, you're going to feel pressure. You're going to feel like you need to perform. You need to perform because you have these expenses that you need to cover.

How we figure this out. You go in, you make a simple spreadsheet, and I know this doesn't sound very sexy, but, um, it's a very simple process to go through. You're going to get a spreadsheet. You're going to go into your monthly banking statement, or online banking, and you're going to look at all of your different expenses.

If you have rent, insurance, cell phones, Internet, monthly subscriptions to different services. Um, if you are, uh, you know, paying for any additional things like Canva, or you're paying for using FTD or some type of service, you need to get a great picture of what is going on so that you know what, I call it your nut to crack.

What is your nut to crack every month to break even? Understanding that can help you forecast, and I have an episode on forecasting, but it can help you forecast what you need to do on a monthly basis from a sales perspective. But, understanding these also is a great exercise to see and look at what you are spending.

So, let's just say that you have a membership. Uh, I actually was just going through this thing. I have a membership to this thing called the Boss Co op. I got some templates from them and I've periodically went in there and grabbed a few templates for Canva and I pay 47 a month for this. That membership that I thought I would keep for two months while I got some, you know, different templates and then.

Um, took action and move forward. I now have had that for 14 months. So when I went in to look at what are my operating expenses, I looked, I probably could cancel this. And so having a little check in, like, am I using this? Is this a useful resource? Is this something required for me to do business? Is this something that I need, um, at this point?

Maybe this served me before, but not right now. Having those questions, you know, just even discussed in your head is so impactful because if you are spending a lot of money, you need to make a lot of money. If you are not making a lot of money, you could be potentially going in debt. Because you are not covering your operating expenses.

And if you work really hard, and you're not making any money, or the ability to pay yourself, obviously that is going to impact you. Because you will start to feel resentful, you will start to feel like I'm not doing a good job, you're gonna start to feel that, like, This whole business owning a business feels heavy.

So having a check in with what your operating expenses are is a critical exercise to go through. I would say once a quarter, but do a really big overhaul once a year. And with that check in, you also can, you know, forecast, okay, I need to pay myself. 2, 000 a month. I need to pay myself 3, 000 a month, 4, 000 a month.

Whatever it is, that check in, you can go, okay. So if I have 6, 000 in weddings that month, and my operating expenses for my business, because I have a studio space, is going to be 1, 500, and then I have insurance. I have, um, you know, internet, I have Canva, I have, I'm, have the checkmark on Instagram, whatever it is, then you take that total up and I'm, with that 6, 000 of flowers, I bought, you know, let's just say 1, 800 of flowers, cause you overbought, or you bought 1, 500, whatever it is, or you bought 3, 000, depending on how you're running your business.

Uh, then you can say, well, if I have, you know, X amount in operating expenses and I only netted 3, 000 or 4, 000, your ability to pay you is dictated by this profit margin that you're running. And if you are running into making bad buying decisions, then that can get really complicated and, um, really just kind of start.

Making you go backwards in your business. So advice about operating expenses. Make sure that you are keeping track of all your things. Make sure you're having them on your business credit card. If you are writing things or paying for things out of your personal accounts, you need to stop. And that includes labor.

If you have contractors, you need to make sure that that is coming out of your business account. You need to make sure you get, you have a W 9 from them so you can 1099 them at the end of the year. If you are paying people cash, you are doing your business a disservice and obviously you are not doing it on the straight and narrow per the IRS.

Two, making sure that you are checking in with those expenses, making sure that they are justified expenses. And then making sure that your sales currently are supporting these expenses. If you're doing 3, 000 a wedding a month, you can't afford a studio space. That just doesn't make sense at that point.

If you every weekend are doing 5, 000 of weddings, then that's something to talk about. That maybe, what is my net profit margin at the end of this? So if I look at this, can I afford getting a studio space? I, at the level that I operate my business at, still do not have a studio space because I don't want that stress.

I don't want that added financial burden of having an outside expense. And I personally, with the setup that I have now, I have a two and a half car wide, two and a half car deep, or two car deep, uh, garage that has water, that has a furnace, has an AC unit, and I pay myself out of the business personally for my studio space.

I think right now it's 7, 500 a month. or 7, 500 for the year. Um, but that 7, 500, I then have to pay taxes on it. So we then take all of some of the household expenses that are put towards the business instead of writing them off against the business, because they're in my personal name, like our utilities, I'm writing it off against that line item on my taxes.

So. let's just say water, electricity, heat, or gas, all of those things will go and take a portion and just write that off against that on our personal taxes. So hopefully you have a tax professional that can navigate you through that, but it's super helpful. And, uh, I really think Making sure you're not expanding before you can really afford it is a critical part of your long term success as a florist.

I know it's exciting to get the new studio space, and it's exciting to do all these big things, and it is, but you also need to make sure that you're making long term viable decisions that are going to support your business, going to support your growth, and you need to start. Any decision with does this make sense in the long term?

I have seen so many florists that have been florists for less than two years that I have personally seen one of their proposals because I was uh, getting shopped and they shared um, the proposal because they wanted me to match it because the florist was several times, this has happened with different florists, has grossly undercharging.

Like one of the expenses She was charging cost to get these items, which I don't work for cost. That's just not a viable plan. And then she was because she was getting a whole bunch of weddings because she was so inexpensive. She went and got a studio space. That girl is not going to make any money. You deserve to make money.

You deserve to pay yourself. So act accordingly. Hope you have an amazing flower filled week 📍 friend. And thanks for listening.