The Floral CEO

 Hello flower friends. This is Jen, and you are listening to the Floral CEO podcast. On this week's episode, we're gonna talk about one of my favorite topics to talk about. And that is money. I, last month and in continuing into this month, have been diving into profit first with the floral CEO Mastermind girls, and I ordered the book and sent the book to everybody because this book is something that.

I think even if you don't wanna do it, just even learning the perspective of this book, I think is a game changer. So this book was written by Mike Mitz. It is a. Basically like a system for you to make sure that you are taking profit, you are paying yourself in your business. So I, I wanna explain the fundamentals of how Profit First works.

This is something that I do in my business and it is. Something that many successful businesses have implemented. Not to say it doesn't make it tricky because we are, fluctuating price points. We have, um, goods, cost of goods, things like that, but. Many successful businesses that sell products, that do all the things, use this foundation.

If you are interested in reading this, I am putting my link to my Amazon store to directly to the book, so you can check it out because it is. A fascinating read, and if you are not really a reader I have also listened to the Audible and it's also a, it's a great audiobook as well. So the foundational principle of profit first is that you basically make buckets.

You make buckets of. Allocations of revenue. So your first bucket that you have is your income bucket. This bucket is where all the revenue incoming into your business goes. Then. Once all of that revenue comes into that bucket, you have separate buckets to divvy out your expenses and other business.

Um, basically expenses that are built into operating. So, I'm gonna give you the simplified version because I am not into complicated. I. Don't think complicated sounds fun. I don't think complicated is fun. So I have simplified this to work for me. So the first bucket is your tax bucket. And there's two ways to do tax buckets because I collect sales tax.

I have chosen to make one of my buckets. The sales tax bucket. So I take out of all of my gross profit that goes in my income bucket, I take no. So you have all of your income in your income bucket and you take your tax percentage out of it. So you are basically ripping out your sales tax and sh shutting it into a account until you need to pay sales tax.

So that sales tax here is anywhere from 9.15 to 9.85. So if you want to allocate extra. You could very easily say, just like 10% of my gross sales goes into this bucket. In the book they also discuss like, your sale, your tax bucket, could be the sale or the, um, personal income taxes that you pay as a business owner.

I just take that out of the owner's comp bucket because that's how you would. Take it. If you were being paid by an employer for $5,000, it's going to just be taken out of that bucket anyways. So that you would gross $10,000 and your net pay would be 5,500 after you've paid all your expenses like social security, Medicare, federal and state taxes. So that's how I do the tax bucket. The next bucket is owner's comp. So with this, you are figuring out a percentage of your gross sales that you want to allocate for your owner's compensation. So let's just say. You have a hundred thousand dollars business and you want to pay yourself 40%, so that would mean 40%, which would inevitably be $40,000, would go to owner's compensation.

Then in owner's compensation, that is just like the core, paying yourself a reasonable salary, depending on the type of business set up you are. If you are a sole proprietorship, um, if you are a corporation, if you are an S-corp that could inevitably end up different. I know I am an S corp, so I pay myself a reasonable salary and then I can pay myself any leftover profits through a Schedule K at the end of the year.

So that would be like a bonus inevitably. So the next bucket is. The profit bucket, which can inevitably be your bonus buck bucket. But this profit bucket is a way to guarantee that there's actual profit after all of your expenses. A lot of people will say I made a hundred thousand dollars. I paid myself $40,000 or $50,000.

I had $40,000 of expenses, and then I had $10,000 of sales tax. And then there is nothing left over in case of a rainy day. Rainy days happen. You guys, like you need to have profit in your business to be able to scale your business, to be able to inevitably, um. Invest, give yourself a bonus for all the fucking hard work that you're doing to, do so many things.

Like I have used the profit in my business to help fund all of the coaching and I've had to use the profit in the business to go and buy my van. I mean, I bought my van out. The company itself did, and that's because I had so much profit. Inevitably in the end, it ended up to not be profit because I ended up spending it.

But it is that buffer. You also could make a rainy day account. A rainy day account could be like like last year, I think I had. A really good chunk of expenses 'cause now I have 65,000 miles on my van and I really don't wanna get a new van unless I can get a green one. And I don't know why I'm being so silly about it, but I want a green outta screen van and they don't make one.

So I will make this one work until hopefully they do or hopefully something happens and I just need to get a new van. It is funny because this is the van that I've owned the longest in 20 years because I was in the car business and I always just had new vehicles. So, but I have had expenses like tires.

I've had, uh, some auxiliary battery going. Those are expenses that if you feel like you have an older vehicle or you are in a place like that, things need to be repaired or whatever. You potentially might need a rainy day bucket, a savings bucket that you're taking a percentage and stuffing away for incidents that could potentially happen.

The next after profit, after owner's comp, after sales tax, and after having an income bucket is owner's compensation. The O, or not owner's compensation. I'm sorry. Operating expense bucket. So your OPEX account is where all of your expenses come out. It puts it in one location so that you don't have a million locations of expenses coming out so that expenses are hidden or.

You're not really tracking them. They're in this one place. So you really make sure that you are on top of your expenses. I just went through an exercise with the mastermind girls that we went in and everybody figured out what their monthly expenses are to turn the lights on to their business. So if you have a studio space, how much does that cost?

How much does it cost? For them to be in the mastermind, for them to pay for a phone, if they have a phone for them to pay for their website, for them to pay. Any additional, like a couple of them were in some different Chamber of Commerce activities. Like what does it cost for them to say, I am open for business.

That is your basically, like, I call it your monthly nut. That's what I need. BEF before anything. This is what I need in sales to cover those expenses. So most of everybody, we could figure out almost to a percentage of their gross sales versus that monthly nut that they had. Several of them, they were coming out to about 20% of their gross sales went to those net operating expenses.

But your OPEX account. Essentially has everything that is a cost in your business coming out because those are your operating expenses to your business. So that would be your flower cost. That would be if you are paying freelancers, that would be if you are. Paying for electricity or you're paying for the tabs for the vehicle that is in the business name, whatever it is, that operating expense account is covering it.

So now we core have a income bucket. We have a profit bucket, we have a sales tax bucket. We have a. Profit bucket and we have a opex or operating expense bucket. So we have five core buckets. And yes, I went down to Wells Fargo. 'cause Wells Fargo, who is who I bank with forever. And I opened all of these checking accounts.

I also previously had a savings account and so I have six accounts. For my business, my floral business, the savings account is where all of my I mean essentially all of my deposits go. I do not operate my business on deposits, and I know that might sound of privilege that I am at a spot that I don't need to, but I have never seen anything good come of people using their deposits, and especially when we went through the pandemic, when we went through.

I mean years of craziness, of rescheduling people, canceling people, downgrading, all these things. Like I never have operated from that place because I knew it wasn't my money yet. And I know some people are at a place they just have to keep the lights on on their business. And that's one of the exercises we went through is we went through and audited everybody's expenses so that if.

Something looked bougie and I mean, honestly, with one, one of the girls, like, I like you don't need QuickBooks yet. Another one of the girls, I was like, you're paying way too much for your Zola account. Like I, I honestly am getting it for half the price. So like, I think you need to look into that. One of the girls, you know, we were, we were like, God, your, I mean, some things just seemed expensive, but like relative to the other areas in the country it's, like it's cheap for them. So every area is different and everybody's operating expenses are of course, customized to their business. But all of these accounts, all of these buckets.

Basically run in percentages. So the first bucket, and if your eyes are glazing over and your head, you know, your eyes have rolled back in your head and you're like, this sounds bad. Shit crazy. That is exactly what I thought the first time I heard it. I was like, who for one has time to be operating and managing six checking accounts, or check checking and savings?

I was like, I sure as shit don't. I was like, that sounds absolutely ridiculous. But after I started thinking about it I do love to invest in myself. I do love to buy new inventory. I do love to go and buy flowers when I go to the flower market, but I also love to make money in my business, so I wanted to put.

Some kind of guardrails on that ability to be able to control that. So part of this exercise of converting to profit first is going through and doing an expense audit and really understand what your monthly operating expenses are. Then figuring out your sales tax. Then it's making sure every. Income that comes in, all your income is going into that one place for you to monitor.

Then it's also in your operating expense account. It's making sure that's the only check card you guys have. The operating expense is the only thing expenses are coming out of. All if you're going to target and buying something, or if you're going to your wholesaler and paying for something, that's the check card or the check that is used, that account.

So straightening that out because you might have automatic payments set up with the different credit card or whatever it. Sometimes is the easiest to make a drastic pull the bandaid off shift and go and set up a new operating expense account. Cancel the check card for the preexisting account that you had those expenses taken up.

Maybe you wanna leave that account as an income account because you already maybe have your deposits being funneled there. Then you want to go in and figure out, okay. What am I realistically spending right now from a percentage standpoint? And if you have QuickBooks or you have the ability to have a profit and loss statement, you can kind of figure that out.

You can figure out, okay, 10% was going to sales tax. I paid myself, let's just say 30%, 35% of what my gross sales were last year. Then. I didn't take any profit in the business. You could be saying, and it might sound scary to even consider that. So then you might go in and say, okay for that, I'm going to say 2%, 3%, like whatever.

If you haven't been making profit in your business, even one, two or 3%. Is a gain because you didn't have it before then you're gonna go in and figure out what are my net operating expenses every month. So if I am going in and I am targeting, let's just say for $250,000 or 200 or 100, whatever the number is, and your monthly expenses are $1,500 a month, you would go and take that 1500 times 12, and then you would take that and figure out what percentage of your gross sales is.

So let's just say it's $10,000. You have a hundred thousand dollars business. That is 10% of your sales are, realistically your net operating expenses. Then you go in and this is where you can find overspending. What is the percentage of what all of your flowers, all of your labor, all of those things costing.

Because if you are not using the formulas of three to four times, maybe even five times markup, and you are not going in and charging 25 to 35% and then you are not really properly charging for setup and delivery, all those expenses can creep up fast. Super fast, and you wanna make sure that those expenses are in line with what you should be charging.

Otherwise, you need to audit your recipes. You need to audit what you're spending and see if there's any hidden, sneaky things that you're not accounting for. So let's just say. That with your net operating expenses and your flower costs, you're running your business at 45%, 50%. Let's just say 50 for round numbers.

You have a $200,000 'cause you have rent and you have other expenses that, you know, you bought a new company vehicle, you did whatever. You went and got yourself a shiny new studio space, which I totally, I mean, I get it sometimes it's nice to have this really shiny, pretty Instagram worthy studio space.

I mean, I love the new space on the farm. Like it is beautiful, but I have to up my rent to a, to compensate accordingly because I have more space now. And there's obviously with the farm expenses, there's more expenses. So going and figuring out, let's just say you have a $200,000, or even if you wanna say a hundred thousand dollars, um, business, and you spent 50%, um, on.

All of your operating costs of your business, so your operating expenses. So then we have $50,000 left. Then let's say we're allocating 10% of that 'cause this is gross sales, not net sales. Gross sales are including. Sales tax, net sales is an inclu, like excluding taking out sales tax. When I'm figuring, of course it could mean a million different things to a million different people, but that's how I look at it.

My grosses with sales tax, my, my net sales is after taking in sales tax, 'cause that's what I'm actually realizing. I have to give the sales tax to the state. I don't get to keep it. So then. Let's just say that's 10%, so you have 40% left. Then we've accounted for sales tax. We've accounted for operating expenses, so we have some buckets left Income bucket, obviously everything's already flowed in the income bucket, so the two buckets that we have left are owner's, compensation and profit.

So if we had 40%. Left, we could say 35% to owner's comp, which would pay you inevitably $35,000. Then we can say, you know, the remaining 5%, which would be $5,000, could go to the profit bucket. And it sounds really sad when you have a hundred thousand dollars business and you got to pay yourself 35,000, but.

I have coached florists that have had well above a hundred thousand dollars business and have not paid themselves shit. So if you are having these big, audacious dreams of paying yourself a hundred thousand dollars, if you are operating outta the premise of a 50% operating expense to your business. You are going to have to have a pretty substantial business to get to probably 250 k to pay yourself a hundred.

And that is with not being bougie, with not overspending, with not having a serious overhead problem. So there also is, and he speaks to it in the book, um, a. Another account that is a profit account that is siphoned away at a bank that you do not have ready access to. Many people, myself included, if you see the money and an expense comes up or something looks shiny, something looks good, it's really easy to spend that money if it's in front of you, if you have easy access to it.

I have Schwab. Um, that manages my simple plan which is my actual, like savings, um, like 401k if you're familiar with that term for the business. You can invest. There's all types of plans, but since I've already had my investment accounts with Schwab, um, already. They have a simple plan that I can donate or I can not donate, I can give or donate.

Um, 13 point, or I think 13,500 was the last year. I think they might have upped it in 2025, but I can allocate 13,500 into this simple plan and in the simple plan. You know, it's basically just tucking money away and I can say, Hey, I wanna pay myself $10,000. I wanna pay myself $5,000, whatever it is, and I wanna allocate X to my simple plan.

Just making sure that I'm hopefully maxing that out. But again, if you were. Having to replace, let's just say a job income and you had a hundred thousand dollars business that paid yourself $35,000 and then all of a sudden you're siphoning $13,500 off of that. That might be hard. To swallow. So maybe instead you take this 35% and or 35,000, which would be 35%, and you say 5% or 3% goes to your simple plan, 10% goes to your simple plan, some percentage so that you can have a formula going into your plan.

And so. That you're always not feeling like you're not contributing the max so that you're failing systems in place help you run your business more efficiently. But if you never start with any systems or any formulas for going into your business, you're winging it. And I, a really great question and a very valid question is what if I don't have any profit in my business?

Because I'm basically taking money to fund the growth of the business, and that is a completely valid point. And my answer to that is if you are not making money in your business yet, and you know what your net operating costs are, so you know to turn the lights on to hit the website. Is on, you know, I've paid my Secretary of State the a hundred dollars.

I've done all of those things. Then let's just say you get a wedding and you know that month, or if you haven't made a couple, those three months, whatever the timeframe is, you need to take out. Your net operating costs for the last three months, for the last month, whatever it is, and then over and above that, then you start your percentages.

So if you're, let's just say you got an event for $5,000, but it's your first one that you've had for three months. Your net operating expenses on a monthly basis are $500. So now you've had $1,500 of expenses. So you would take that $5,000, you would minus your last three months of expenses so that those expenses are covered, and so you're reimbursing yourself that $1,500.

Then you can take and figure out your percentages, obviously. Your, percentages for operating expenses are going to be a little bit off from the numbers I talked about before because we're basically doing back pay to get caught up and, but once you get to that point that those expenses are covered, a percentage based formula can completely step in if that's where you are at in your business or.

This person in the Mastermind, I'm like, I think you need to cut a little bit of expenses for where you're at in your business and doing an expense audit is something that can be a really valuable exercise because I mean, you might have subscriptions to every single floral education program, but you haven't logged into two of 'em, or you only really like one, but you have four.

I, I mean like we need to trim the fat because you deserve to make money. I love that you want to learn. I love that you are hungry for knowledge, but I also know people only have so much capacity as someone who has soaked up more shit in my brain than most has taken more courses probably than anybody, you know.

I know your brain can get into overload and it triggers like a fatigue. Like, it's like, a knowledge like fatigue that you're just like, I don't wanna fucking take one more thing in like everybody back away. I am not taking any more, I'm dead serious. I was, I was. There has been points that I've been at I cannot soak up one more thing.

Sometimes you just need to make the call and be like, I love supporting this business, but it does not make financial sense and I do not have the time or capacity to really dig into it. I know that that is like, it's almost like when you cut expenses, you feel like you're failing, but you're actually being a better business owner.

You are going in and making CEO decisions. And CEOs make tough decisions. We don't. We have to. We want to run profitable businesses. We want to be able to pay ourself, and honestly, we deserve to pay ourself. We work really hard. I am guessing. You work really hard. It's your time to make money. It is your time for bigger, better things.

And if you can't pay yourself, it is a downhill slope of shame, of, of being embarrassed, of having potentially a, a partner that is resent. I just don't want that for you. I want you to be like, I am the fucking CEO of my business. I know how to run my business profitably. I know how to attract my ideal client, and if you need help, the floral CEO Mastermind is here to support you in a way that you have never been supported before.

You get like 24 7 Voxer access to me and a group of amazing women who are at different stages in business, anywhere from owning shops to studio florists to um, really heavy event-based florists. People who do dailies don't do dailies. I mean, it's like a wide range, and this is a place where you are free to ask anyone anything and.

It is such a helpful environment that, I mean, it is, it is booked people's whole year out. It has helped someone win a contract that's like a $40,000 contract, um, in one month. Of floral creations, it has helped someone figure out some very complicated weddings, complicated clients, how to respond, how to network, how to grow, how to support yourself mentally.

'Cause as a certified life coach, like the mental part is so important to me because I know what it feels like when you are feeling like shit. And you don't know what to do about it, and you feel like a failure and you know you don't have support because nobody sees what you, you see and feel in your heart is, is coming.

I knew I would be here right now. I knew that my business would get to a point of its success where it's at, and I knew that. I would be helping people and I knew I would be on this farm. Like when I commit to something, I go all in. And if things aren't happening, if you aren't where you wanna be, I want you to ask yourself, are you all in?

Because my success is inevitable and I want that same thing for you. I want whatever you commit to, whatever you are all in on. To just be inevitable that it's going to happen, that event, that client, that planner, that revenue target, whatever it is, I want that for you. You deserve big things and big things can happen.

Things can shift completely in one year. They can shift in months if you really put your mind to it. So. I hope this was helpful. I know it is. It is a very bigger picture system, but so many successful florists use this exact pro protocol. I know, I believe the hotel florist also teaches this. This is a way for you to make money and for you to strategically think about your business in an entirely new.

Light. So please head to the Amazon store link in the show notes if you want this book because it is such a fascinating book. And if you're not a book reader, definitely check out the audible. But I appreciate you listening. This has been a journey for me. It was an experience even going to set up all of these checking accounts 'cause it took hours.

Because, I don't know, like the guy I, the business banker that I somehow magically got, had never even heard of Profit First. I almost was like insulted dude, you're a business banker. You've never heard of Profit First. I just don't understand. Your level of stupidity is kind of annoying, but you never know.

You might find the perfect person who helps make this process easy and you will be on your way. To making profit first. So thank you so much for listening, flower Friends, and again, if you need extra support, go check out the Floral CEO mastermind@floralceo.com slash mastermind. Thanks so much, flower friends, and you have an amazing flower filled week.