Report Florist shop Present to ASST.PROF Natepanna Yavirach Present by Miss Sangfa Sukprasert
ID#114910510018-8 IBE4/49
Mr. Panuwat Kwanpet
ID#114910510024-6 IBE4/49
Mr. Pollachat Burpunta
ID#114910510025-3 IBE 4/49
Miss Arphaporn Nimsa
ID#114910510030-3 IBE 4/49
Miss Anusara Sasungnoen
ID#114910510051-9 IBE 4/49
Miss Rawiphun Vanaphuti
ID#115110514016-4 IMK 4/51
This report is a part of Small Business subject Term 2 Year 2010 Rajamangala University of Technology Thunyaburi
Preface
This report is about florist shop that including business plans, marketing plans, our products, and price rates. We hope this report will be useful for everybody who interested in small business bu siness and want to have their own business. And if this report has something wrong, we must say apologize at this time.
Florist shop group
Preface
This report is about florist shop that including business plans, marketing plans, our products, and price rates. We hope this report will be useful for everybody who interested in small business bu siness and want to have their own business. And if this report has something wrong, we must say apologize at this time.
Florist shop group
Contents Executive summary Business idea and goals
1
Marketing
2
Operation
3
Finance
5
Background Mission statement
6
Company history
7
Business goals
8
Marketing Market research
9
Market analysis
11
Risk analysis
11
Marketing plan
14
Operation Management detail
16
Insurance and security issues
17
Equipment required
18
Critical risk/contingency
28
Financial projection Liquidity plan
31
Investment plan
32
Appendix – research reference sources
33
Business idea and goals Colorful florist shop have planned to control cost of goods sold and expense in low level, start building in October 2007 and will have done and start working in February 2008, and we also: 1. Invest about 3 million baths by loan from bank with 7% interests 2. First year sell about 1 million baht 3. Get profit in first year 4. Growing rate about 20% per year 5. Break even in 3 years 6. NPV about 5 million baths 7. IRR about 35%
1
Marketing Flowers are a big part of people’s lives. Their beauty and color allows us to convey our messages perfectly get-well soon for our sick friends and family, congratulatory messages to a newly promoted colleague, condolences to a grieving family, and to express our love to another person. Every occasion is celebrated with flowers The key element needed in the florist business is the knowledge and skills in floral design. You must have basic knowledge of flowers and plants. Customers will ask questions and want advice, so an extensive knowledge of soils, plant nutrition, and light and temperature control will be handy. You should also know the proper methods of handling cut flowers. Of course, you must possess creative and artistic flair to come up with innovative flower arrangements. Our customer targets are everybody that has much purchasing power. We found one rival in this area is Florist shop in market in Central ladprao, Florist shop have opened for many years and well known by customer.
2
Operation Flower has always been an eye catcher for anyone who appreciates beauty in nature. It symbolizes love, affection and peace. There will be lots of interpretation we can connect with the flowers but the most prevalent meaning is the extension of affection to someone who sees or receives it. Flowers can be very widely in demand on several occasions namely; Valentine’s Day, Mother's Day, Father's Day, Birthday, Wedding Day, Graduation Day, Memorial Day, Independence Day, Anniversary, meetings or conferences, Christmas, New Year, Thanksgiving, and many other holidays. I don't know of any places in the world that do not need flowers. Due to the high demand of flowers, flower shop has been one of the most important shops to own especially in places where people celebrate these special occasions regularly. Flower Shop can be in the commercial area, inside a hotel or in the comfort of your home. It can be built anywhere as long as the demand and supply of flower is available. It is important that flowers are always available in the shop and buyers will be able to see and choose the type of flowers they need and the arrangements they require for the occasion. They should be kept refrigerated on certain level of coolness ranging from 38 to 42 degrees Fahrenheit. This will keep the life of the flowers longer. Flowers should be kept in a bucket with water ensuring that the end of the stalk is cut regularly at least an inch to let the water go through. There should be different type of leaves available to match the required flower arrangement needed. Baby's breath or similar will add to the volume and color to the arrangement as well. Usually flower shop has either roses or carnations available all year round. A flower catalogue for different type of flowers is usually available with flower supplier. Information as to the name and which months each type of flowers is available are clearly indicated at the book. From it you will be able to make your order accordingly and delivery will vary depending on where the ordered flowers are coming from or the origin of the supplier. If the order is coming from outside the country then the operator has to contact the supplier for the consignment paper to be able to pick them up from the airport loading area or the like.
3
Costing an arrangement will be the most important part of flower shop operation: 1. Get the price per piece of; each type of flowers used, each leaves, each baby's breath stalk, no. of sponges used, pot or saucer, labor ( time consumed in the preparation ), and other expenses incurred in making the arrangement. 2. Add them all together with a mark-up percentage or tax required. 3. Wrap the arrangement with a plastic wrapper gathering them from the top of the arrangement and tie it with ribbon. or any way you think will look presentable. It is also important for the operator to be aware of the upcoming occasion or seasons in order to order the sufficient quantity of flowers for the week. Order of flowers is usually done on a weekly basis due to the life span of the cut flowers. Creativity, aesthetic sense, and touch of professionalism add to the success of the flower shop operation.
4
Finance For a florist looking for a small business loan there are new options available. Traditionally small businesses have only had the option of going through a bank for this type of loan. This has been a very difficult process for a small business due to the fact that their revenue fluctuates and they are considered to be high risk for loan defaults. This has caused many small businesses to be unable to get a loan when they need it. Getting a cash advance is now an option that many of these small businesses are turning to in place of the banks that are so likely to turn them down. A cash advance works by giving cash based on the future credit card sales of the company. A business can qualify by having more than $2,500.00 in credit card sales a month. The loan is then paid back based on the sales for the month. A sound financial plan is the key factor for the success of a business startup. Investor’s and banks will base their funding decision on the information given in this plan. Besides a plan of the financial needs this plan must insure that the business is always liquid and ultimately profitable. Since the sales and earnings projections in the business plan are based on expectations, the financial plan has to be revised and refined on a constant basis so that discrepancies can be uncovered and solved instantly. The inputs for this financial plan are based on 10 businesses of different size and market segments in the retail industry which serve as a group of comparable firms as well as own estimates based on the planned business environment. Revenue estimates are conservative and expense projections include a cushion for unforeseen contingencies. The initial capital requirement is estimated to be $50,000 to $55,000. The sales margin is expected to be 12-15% whereby each business segment contributes differently to sales and earnings.
5
Mission statement 1. Wholesale florist service supplies retailers with fresh-cut flowers and
potted plants. Sell and deliver directly to flower and flower shops or sell through wholesale produce and flower markets. 2. Retail florist service providing arrangements for weddings, funerals,
gifts, and other occasions and deliveries. You can also choose to create a florist by your requirement. 3. Floral supplier sell the various non-growing components that floral
designers use in making arrangements: ribbons, vases, baskets, floral foam, wreath, frames, stands and other supplies.
6
Company history In the start-up phase the business is operated as a one-man-business. This set up carries a certain risk potential because of the high equity stake the manager bears and the personal and statutory liability assumed. However, this set-up preserves a high degree of flexibility in managerial decision taking. The number of personnel to be employed depends on the structural complexity of the operations and the desired size. It is expected that the target employee earns a monthly salary of $4,500 to $6,000 based on 42hours per week. The sales and service area requires 1 to 2 employees on average working in 2 shifts. Due to illness and vacation times in the long run an average of 4 permanent employees will be required after the startup phase. With increasing sales and better utilization of employee work time revenue margins will and thus costs per employee will decrease on average. With revenues ranging around $500,000 capacity utilization is expected to be around85%. During the start-up phase a single person will attend to all necessary management tasks, coordinate employees and provide strategic direction to the developing business. Accounting, administrative and machine maintenance will be outsourced to external partner since those tasks can typically be provided at better rates externally. Sourcing and marketing will require one employee. Finding the optimal location for a business is one of the success factors in the short and long run. The following analysis is based on 10 businesses in the retail industry.
7
Business goals - 2 million baht circulation in 2008 - Net profit estimate 40% in 2008 - Price rate: Exceed 100 – 1500 baht While it's a fact of life that most people may want to open a business, it's always also a fact that if they don't have a goal in mind, the chances of failure are high. And since coming up with these goals -- at least as they relate to a business -- is so important, it matters how they're developed and when they're developed. By this, it's meant that maybe the act of sitting down and coming up with sensible business goals should be a part of the planning process. After all, any smart businessperson will want to initiate it as soon as it's decided to go forward with opening a business. Maybe there was a fortunate monetary windfall, and a person wants to start up a flower shop, for instance. Well, unless there are clearly-defined goals for the business, how will the owner know which way to proceed? Probably the most important goal to have when it comes to business is to decide exactly why the business is going to exist. The development of business goals can be helped along by the utilization of some really excellent planning software available on the market these days. There are a myriad of business plan writing programs, goal-setting programs, project management programs. The list is endless. And since software is plentiful, make sure the right one is used, and that's meaningfully related to the kind of business being contemplated. After that, it's just a matter of picking one of the goals - having the most successful pizza shop in town, for example - and then working with the planning programs to make up the goals which the business can then be oriented towards performing.
8
Market research There are many methods and ways to conduct market research. The methodology of business research can be categorized in the following five ways which are namely: surveys, focus groups, personal interviews, observation, and field trials techniques chosen to conduct these depend upon the type of data needed and how much money is sanctioned to conduct the business research. Surveys involve straightforward and concise questionnaires. These questionnaires can be analyzed to study the sample group representing the target market. The larger your sample, the more representative is the survey of the existing market sentiment. In person surveys are interviews conducted one-on-one which are generally conducted in higher traffic areas like shopping malls, colleges, schools etc locations. They represent the people’s opinion about the product samples, advertising or packaging. In person survey guarantee on the spot feedback and can sometimes generate a response rate of greater than 90 percent, but they are expensive as they require hiring of people. The cost of in-person interviews can sometimes run as high as $100 or more per person interviewed. Telephone surveys tend to be the expensive alternative to in-person surveys, but are costlier than the e-mail surveys. It has increasingly become difficult to conduct telephone survey due to increased resistance to telemarketing. Yield response rates of fifty to sixty percent are generally achieved in telephone surveys. Mail surveys represent a comparatively inexpensive and easier way to reach a broader audience. Although they are cheaper than the in-person and the phone surveys, their response rates can be as low as three percent to fifteen percent. But due to cost effectives despite lower return rates, mail surveys tend to remain popular as a means of marker research.
9
Online surveys generate response rates that are unpredictable and participant data that is unreliable. The results are so because the participants are random and not a true representative of the target population. In focus groups, moderators target the audience with a series of scripted questions to involve them in a discussion. It is conducted at neutral location with video conferencing facility. It lasts for an hour or two. Personal interviews include open-ended and unstructured questions that last for an hour or more and are usually recorded. Observation. Individual response to surveys and the focus groups is not true representative of people's actual behavior. When an attempt is made to observe consumers, researchers start by videotaping the consumer in stores, at home or at work it gives a very accurate portrayal of consumer usage habits plus their shopping patterns. In field trials, new products are placed in a select number of stores to test consumer response in real-life selling environments. This can help businesses to adjust prices, improve packaging or make modifications to their products.
10
Marketing analysis Macroeconomic - Government policy and Economic
The economic is changed in better way that effect consumer to spend more and government have new policy to support natural products and agriculture products. - Society and culture
In Thailand, Florist products and services becoming necessary things in every ceremony and events.
Risk analysis The risk analysis considers critical factors that may lead to a failure of the business concept. Such factors can involve failures during the implementation phase as well as during operations. Such potential factors are ordered according to the probability at which they can arise. Shown is the key factor that led to the failure only. Data are drawn from questionnaires of 10 retail businesses with comparable product offerings and revenue- and cost structures that went bankrupt during the last 3 years as well as analyses of different research institutes. 1. Insufficient demand: This is the most frequent reason that leads to business failure. This includes permanently low demand as well as a temporary collapse in demand. Often demand estimates were too optimistic at the outset. Such failures might also come from external shocks instead of operating deficiencies. 19% of businesses within sufficient demand go bankrupt. 50% of these businesses report that once demand slacked they did not react accordingly because they believed that this phenomenon was only temporary. Since the expected frequency of customers during the start-up phase are still low a critical success factor is to focus promotional effort so as to generate customer loyalty early on which will help minimize the effects of demand fluctuations. 11
This is also important for the future development of the business. 2. Behavior of Competition: Due to low entry barriers additional businesses can enter the market at low cost. Approximately 16% of insolvent businesses were driven out of the market by that competition. A better service concept, innovative ideas and concentration on core businesses are an easy means for an entrant to gain a competitive edge. 3. Personnel and capacity utilization: Often personnel capacity cannot be adjusted flexibly easily when demand slows down. Currently retail businesses have a capacity utilization rate of personnel of about 70%, i.e. 70% of employee working hours can be directly credited to sales. At small businesses this value is often lower which means that30% of working hours arise without generating any further revenue. 13% of such businesses go bankrupt for this reason. 4. Liquidity constraints: Another frequent reason for bankruptcy is in sufficient liquidity. In that case it is possible that all liquid funds are used to cover losses or that liquidity needs were planned too tight. To be able to flexibly react to changing liquidity needs it is important that sufficient funds be planned even during the start-up phase thus5-10% of the investment sum should be held as liquidity reserve permanently. 13% of insolvent businesses reported liquidity as the reason for bankruptcy. 5. Over-indebtedness: Many businesses are run on a small equity base. The majority of investments are funded by debt. If the business becomes unprofitable, debt obligations cannot be covered. Little more over 10% of insolvent firms reported over-indebtedness as the reason for going bankrupt. It is therefore important that a share of earnings is retained for debt service. 6. Macroeconomic Conditions: In a cyclical downturn revenue expectations my not come in according to expectation. Although this factor does not affect the business in itself it does have an impact on profitability, liquidity and leverage. Cost remains constant during such period but revenues typically decrease which affects overall profitability.
12
10% of all insolvent businesses report that they went bankrupt due to macroeconomic conditions although the relevant indicators of the business looked healthy. 7. Location and market: The market of the business and the selection of the right potential customers is an important success factor and one of the fundamental decisions that have an impact on the future prosperity of the firm. Therefore a careful analysis is necessary. More than 10% of insolvent businesses reported that they went bankrupt because of the wrong market selection. Often start-ups did not consider that even when the choice of market may not be wrong at the outset it may later become so when economic conditions worsen. This may be due to structural changes or different interest of customers. 8. Wrong Business Decisions: Often wrong business decisions and difficult situations go unnoticed for some period which can lead to a failure of the business. A critical and independent reflection of a decision is critical factors to determine the value of a management decision and evaluate the business' profitability.
13
Marketing plan In the start-up phase it is a central task of the marketing concept to establish a name recognition and own trade mark. Later on the strategy will primarily be targeted to gain new customers and create customer loyalty of repeat customers. Several marketing and sales promotion strategies are available in the retail industry. Figure 6.1 shows different marketing elements and their use in marketing strategies as well as their estimated potential success factor. The figure can serve as a direction for the planning of a marketing and sales promotion strategy. The numbers are based on typical businesses in the trading and retail industry. As can be seen printed advertisements targets a large potential customer group but at a relatively high cost. Printed advertisements in regional newspapers and magazines is regarded as very beneficial in the start-up phase to attract a large group of potential customers and draw attention to the range of articles offered. 49% of businesses in the retail industry use printed advertisements and about 60% of this group regard this as the most beneficial form of marketing. Sales promotion strategies have temporary effects only. They are used at business openings primarily and offer special discounts. 49% of businesses use sales promotion strategies frequently and 81% of the users responded that this instrument is successful. Marketing alliances with other businesses to generate cost savings and increase efficiency are used rarely. Such strategies include mutual use of marketing and web promotion events and joint promotion arrangements. Only 45% of businesses have used these elements and 55% of these regard this instrument as beneficial. Web and e-mail marketing is used frequently in the industry although this would be a relatively inexpensive additional effort. Direct mailings are a very efficient strategy that sends mailing to selected customers or businessmen groups. Since spreading costs of such mailing are very low this marketing element provides a useful tool for special offer promotions. The use of marketing and sales promotions proceeds as follows: to a broad base attract new customers the strategy will include a combination of printed advertisements and special offers with opening discounts. Furthermore a group of customers will be selected for direct mailings. 14
This strategy is expected to continue for 3-4 months after which the effort will turn towards creating a customer loyalty for regular customers. This strategy is supplemented by regular marketing strategy and direct mailings to regular customers. A marketing alliance and online advertisements will also come to use.
15
Management details The managing director of the flower shop will be: Colorful florist shop
Address
: Central plaza ladprao, block 17 floors 3, phahonyothin road, jatuchak Bangkok 10900
Tel:(66)-2793-6000 fax:(66)-2514-1314 Email:
[email protected] Date of birth : 14 February 2008 Qualification : bachelor of home economics Experience
: wedding fair at impact arena muangthong thani 2006-2008
16
Insurance and security issues Insurance and security issues: The following insurance will be: - Professional indemnity - Workers compensation That insurance necessary for this business and equipment such as What if my coolers break down the day before a big holiday such as Valentine’s Day Or What if a fire destroys my accounting records? We can choose this insurance for help.
17
Equipment required Retail Space
- If your target market includes customers who will come into your place of business, you will need a retail space that is accessible, attractive, safe and well laid out. A clean, well-merchandised space will be a salesperson that you do not have to pay benefits to! Research the zoning requirements of your community by contacting your local zoning officer. Think about the parking needs of your customers, it's important to make your store hassle-free. Difficult parking is a hassle. When you are choosing a retail space, remember the three rules of real estate... location. If your location will have foot or car traffic passing by, how will you get the attention of your customers? Display windows have traditionally been important in downtown retail florist locations. As florists, we are lucky-our product is beautiful! It lends itself to gorgeous window displays. Imagine if you had to come up with an eye-catching display for a stationary store every month! We also do a lot of our business based on seasons and holidays-more great material for tremendous window displays. Window displays are not the only means of getting attention, be creative, and look around at business outside of the florist world-how about the giant milk shake cup ice cream stands? How about the neon lights of a nightclub? How about the smells that works their way out of a bakery onto the sidewalk? When choosing a retail location, balance the cost of space with the dollars you expect to generate. If your business plan is based on a subscription service, placing flowers in local businesses and corporate offices, do you need to invest big money in an expensive downtown location?
18
Add in a healthy dose of common sense and design a retail space that fits your business plan. For example: If your target customer is a college student... your space should be in proximity to the school, so the students will be able to stop in as they walk to and from classes. It should be inviting and in a style that will appeal to them. Allow plenty of elbowroom in your store, college students rarely travel alone, they will have a friend or two in tow and may also be wearing a backpack and carrying their groceries! No matter what your target market, keep handicap accessibility in mind. Work Space
- You will need space to put your flowers together. Many traditional flower shops separate the work area from the retail area. I suppose this helps hide the clutter and the mess of a working flower shop. Please don't underestimate the power of flowers. If you invest the energy required to keep your workspace in a presentable condition, you will reap the benefits of one of the best store displays you can have. Your customer came in to get flowers! Let them see and smell them! Use the natural advantages that flowers provide to help you compete with those other items we listed in the competition section. Let them see the expertise you are employing in creating designs; let them see what work goes into the finished product!
Work Tables -at a comfortable height for designing arrangement
they should have storage for florist supplies so designers can work efficiently. You may also use these tables for wrapping arrangements and lining up deliveries or you may need separate tables and carts for this function, depending upon your business plan. Floor Mats- especially if your floor is concrete, provide some cushioning for your designer's feet. Mats will also help keep floors from getting too slippery. Vegetative materials such as fleshy stems or flower buds are as slippery as a banana peel on smooth concrete or tile. Water source- sink or soaking tub for flowers
19
Trash receptacles
Flower shops create a lot of garbage! If your community provides a way for you to dispose of compost-able materials, you can drastically reduce the cost of your garbage disposal by separating the plant material from the rest of the garbage. Large re-useable trash cans work. My favorite receptacle is a waxed box that fresh greens come in! They are reusable, durable, low and easy to drop cuttings into, drain well and FREE! Preservative delivery system- This can be as simple as a bucket of dried preservative, a scoop and a measured watering can, or as complicated as an automated dosing system. Space for telephone sales-with a writing surface and or computer and keyboard. A counter to be used for retail store sales. This allows you to bunch and wrap flowers in front of your customers... Let them see the flowers!! Specialized workstations For example: If you will be selling balloons and balloon sculptures, have your tank, curling ribbon, balloons, weights, hi-float and specialized tools all in one work area.
Coolers
- The basics are available just about anywhere... Office supply stores, big box retailers, etc. The printed materials for billing, etc can be purchased from a local printer. I'd recommend using the John Henry Company. This company sells all sorts of printed materials and several specific floral supplies aimed at the retail flower shop. Wholesalers carry their non-personalized products, but for products that are printed with your name, you deal with John Henry directly. An alternative to printed envelopes, order sheets, invoices, etc is to purchase a rubber stamp or stickers with your information. This will allow you to use the stock forms that are available off the shelf. It's a great way to get started if your business plan is based more on service and product than on visual impression.
20
Rubber stamp or labels with your shop name, phone number, address and URL pens, sharpies Order tablets/scratch paper Billing supplies-envelopes, invoices, stamps
General Household
You will need all three or a working combination of coolers that supports these three cooler functions. Display Cooler
The display cooler has glass doors and walls so that the customers can see your flowers and flower arrangements that are for sale. Ideally, customers feel welcome to open the doors and take the flowers they want. There is display coolers that do not have doors at all, but have air flow engineered so that they are open. The water is kept cool and an envelope of cool air keeps the flowers cool. This removes one of the old barriers between consumers and flowers. You will see these coolers most often in Super Markets. I believe the simple fact that customers are less intimidated by the coolers at the supermarket is one big reason that Mass Market sales of flowers is the only growing segment of retail cut flower sales in the U.S. Take a cue from those that are successful and make flowers accessible for your customers. Work Cooler The work cooler holds buckets of flowers that you are using to make arrangements for the day. These flowers may still be in their grower sleeves and may be mixed in the buckets. They must be rotated properly so that the first flowers in are the first flowers out. Storage Cooler
The storage cooler may be run only at holiday and event times... this cooler should have an adjustable shelving system. You can use this cooler to store completed arrangements or the extra flowers that holiday times require. 21
Storage
- Consider your storage needs: Buying hard goods in volume can save you considerable money up front. Remember, inventory is money. If you won't use that volume of product in a reasonable amount of time, do you really want to hold your money in floral hard goods? Compare the savings with the cost of the money you will have tied up in your stock. If you are working on a line of credit, the money you are using is costing you money in interest paid to the bank. When you buy in volume, are you saving more than the money is costing you? Remember that there is a delivery charge associated with just about everything you buy. Balance the desire to keep inventory levels at a reasonable level with the cost of delivery on a daily or weekly basis. When you write your business plan, you should take the time needed to calculate the value of the inventory you plan to carry... and stick with it! That being said, there are just some things that will have to be stored! You need enough products to be able to run your business, fill customer's orders and keep your piece of mind. Remember that funeral orders are not predictable, so you will probably need to keep a funeral hard goods on hand. Weddings on the other hand are most often planned in advance. You do not need to keep a full complement of wedding supplies on hand. Basic glass and baskets should be kept at a comfortable level. To get started, be conservative... buy minimum amounts and buy more, as you need it. You will quickly learn what items turn more often and what items you do not need to replace.
Containers, baskets, glass Floral Foam and Styrofoam Funeral forms and supplies Holiday merchandise (normally we store it away when the season has passed-hopefully, you have planned well and gotten lucky-you sold the last Easter Basket on the last day before the holiday!) Rental Items If you plan to rent items such as wedding arches or specialized containers, you will need a place to store them when they are not rented. Hard goods supplies such as paint, ribbon, glue, wrapping supplies, preservatives General Supplies such as paper goods, cleaning supplies, etc.
22
Computer
- If you will be joining a wire service, research what computer equipment you will need. If your business plan includes Internet sales or email sales of any kind, budget for the equipment you will need. Some suppliers use email as a way of communicating their availabilities. If email correspondence comes naturally to you and you will reliably communicate over the Internet, include your email address on all publications and advertisements you do for your business. Most banks offer internet banking, a computer with reliable internet access will be crucial if you choose to take advantage of this time saving solution. Don't forget internet service. It is very important that you do not use your phone line for internet access. Your customers need to be able to call you with no waiting and no hassle. Most customers, especially first time customers, will hang up and call the next name in the phone book when they get a busy signal or an answering machine. Fax & Phone
- This will come as a surprise for entrepreneurs from other industries where fax machines have become nearly extinct with the advent of the internet..A fax machine is essential at this time in the florist world. Suppliers use the Fax machine to send flower, plant and supply availabilities. They also use them to advertise specials. Wholesalers, for the most part, do not have catalogs. Their inventory and prices change at such a rapid rate, and wholesale margins are low, so producing a catalog is not a financially viable option. You will need to rely on the daily and weekly faxes from your wholesalers to let you know what is available and what prices are running. Last but not least, now, about phones. Consider an extra phone line or two... depending upon your business plan. Set up a backup system in case your customer cannot reach you on the first try... an answering machine or voice mail system of some sort. Make sure the message is clear, brief and the system is easy to use. Be certain to return calls promptly and professionally. Have at least 2 messages, one for when you are open but cannot take the call personally and one for when you are closed.
23 When I was working in wholesale sales, I could tell you which shops badly needed an extra phone line. Wholesale salespeople call their clients at least once a day, if not more. When I would get a busy signal over and over and it would take more than an hour to get in touch with a client, I knew that their customers must be having similar difficulties. Smaller shops have a hard time justifying the expense of a second phone line, but I can tell you that those are also the shops that don't grow or succeed. You can purchase phone equipment from local big box retailers or from office supply stores with varied success depending upon your requirements. It is worth the investment to purchase the correct phone equipment the first time. I have used Hello Direct as a vendor of phone equipment. Their knowledge of phone systems and their ability to keep track of your phone system for you is invaluable.
Florist's Supplies
-Purchase from your local wholesale florist as a first resource. Your salesperson can direct you to the right products and can help you combine price and quality factors to make the right purchasing choices. You do not need to purchase a year's supply of any of these. For one, how would you know how many that is? Start small. Your wholesaler is there to help you re-stock. Let them carry the cost of the inventory. You're no good to them as a customer if you're out of business because you sank all of your working cash into inventory. Wholesalers understand and embrace their role as a warehouse for florists. All they ask is for a little notice and planning on the part of the florist. You can handle that, right? Must have...
Containers Floral Foam Preservatives Wire Tape-Green waterproof or clear Curettes- one size Cards
24
Delivery Tags, Care Tags, and Guarantee Tags: You may purchase these items separately, or you can create your own using a desktop publishing program. If you create your own, you can include your business name, logo and contact information. If you purchase care tags separately, you can provide more specific care for each type of plant, arrangement or gift you send out. Wrapping (if you are in a cold climate, this is a must have... otherwise, it's a "should")
Should have...
Ribbon-small selection Envelopes Curettes-other 2 sizes (they come in 9,12 and 18") Wire-other gauges Tape-rest of the types Small selection of Floral Paint
Would be nice...
Glue Glue pan More Paint More Ribbon
Tools and Equipment
- Again, this is a list of purchases to be made with your local wholesale florist for the most part. There are some tools that can be purchased at a hardware store, and others that are specifically florist designed. Start at the wholesaler, and if you see yourself picking up items that you know you can get elsewhere at a better price or convenience, go right ahead and do so. Your experience will tell you if it's worth investing $20 in a good pair of steel scissors or if you will be just as happy with throw-away quality ones from a dollar store. Some florists find that they loose their tools before they can wear out, so if you're in
that category, then skip the high quality, high price models. 25 Must have:
Knife Scissors Bunch Cutters Stapler Trash Can/boxes
Should have:
Card/envelope rack Floor Mats
Would be nice:
Preservative dosing system Under Water Cutting system
Office Supplies
- The basics are available just about anywhere... Office supply stores, big box retailers, etc. The printed materials for billing, etc can be purchased from a local printer. I'd recommend using the John Henry Company. This company sells all sorts of printed materials and several specific floral supplies aimed at the retail flower shop. Wholesalers carry their non-personalized products, but for products that are printed with your name, you deal with John Henry directly. An alternative to printed envelopes, order sheets, invoices, etc is to purchase a rubber stamp or stickers with your information. This will allow you to use the stock forms that are available off the shelf. It's a great way to get started if your business plan is based more on service and product than on visual impression.
26
Rubber stamp or labels with your shop name, phone number, address and URL pens, sharpies Order tablets/scratch paper Billing supplies-envelopes, invoices, stamps
General Household
-Purchase these items wherever it feels good. Sometimes the simplest thing can make your life easier during a long day at your new business. Take some time to think about those items and bring them in now, while you can.
Cleaning Supplies Cleaning Tools: Broom, Dust Pan, Mop, Vacuum Cleaner Paper products Coffee machine, cups, snacks for long hours?
Fresh Cut Flowers
- Purchase from a local wholesaler in small quantities at first. It's better to pay extra delivery charges at first than to throw away wasted flowers. Learn about flowers and what ones will be included in your style of everyday work. Learn which ones hold the best and the care for each type of flower.
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Critical risks and contingency plan The critical risks will be: 1. Insufficient demand: This is the most frequent reason that leads to business failure. This includes permanently low demand as well as a temporary collapse in demand. Often demand estimates were too optimistic at the outset. Such failures might also come from external shocks instead of operating deficiencies. 19% of businesses within sufficient demand go bankrupt. 50% of these businesses report that once demand slacked they did not react accordingly because they believed that this phenomenon was only temporary. Since the expected frequency of customers during the start-up phase are still low a critical success factor is to focus promotional effort so as to generate customer loyalty early on which will help minimize the effects of demand fluctuations. This is also important for the future development of the business 2. Behavior of Competition: Due to low entry barriers additional businesses can enter the market at low cost. Approximately 16% of insolvent businesses were driven out of the market by that competition. A better service concept, innovative ideas and concentration on core businesses are an easy means for an entrant to gain a competitive edge 3. Personnel and capacity utilization: Often personnel capacity cannot be adjusted flexibly easily when demand slows down. Currently retail businesses have a capacity utilization rate of personnel of about 70%, i.e. 70% of employee working hours can be directly credited to sales. At small businesses this value is often lower which means that30% of working hours arise without generating any further revenue. 13% of such businesses go bankrupt for this reason 4. Liquidity constraints: Another frequent reason for bankruptcy is in sufficient liquidity. In that case it is possible that all liquid funds are used to cover losses or that liquidity needs were planned too tight. To be able to flexibly react to changing liquidity needs it is important that sufficient funds be planned even during the start-up phase thus5-10% of the investment sum should be held as liquidity reserve permanently. 13% of insolvent businesses reported liquidity as the reason for bankruptcy.
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5. Over-indebtedness: Many businesses are run on a small equity base. The majority of investments are funded by debt. If the business becomes unprofitable, debt obligations cannot be covered. Little more over 10% of insolvent firms reported over-indebtedness as the reason for going bankrupt. It is therefore important that a share of earnings is retained for debt service 6. Location and market: The market of the business and the selection of the right potential customers are an important success factor and one of the fundamental decisions that have an impact on the future prosperity of the firm. Therefore a careful analysis is necessary. More than 10% of insolvent businesses reported that they went bankrupt because of the wrong market selection. Often start-ups did not consider that even when the choice of market may not be wrong at the outset it may later become so when economic conditions worsen. This may be due to structural changes or different interest of customers. 7. Wrong Business Decisions: Often wrong business decisions and difficult situations go unnoticed for some period which can lead to a failure of the business. A critical and independent reflection of a decision is critical factors to determine the value of a management decision and evaluate the business' profitability. Studies have shown that many businesses fail in their start-up phase because of management’s inability to make sound business decisions while one a business is settled such mistakes are very rare. A critical management instrument is the ability to detect potential failures and problems. Certain key figures can help measure this ability and allow to objectively determining a decision's chance for success. Small businesses should use such indicator ratios to assess their business outlook.
29 Contingency plan will be: In the retail industry it is important that the customer experiences a comprehensive and competent service. This will secure customer loyalty and optimize profitability in a market that is very competitive.- The utilization of personnel capacity is critical for the long-term profitability because of changing margins and the constraints to flexibly reduce personnel. Therefore the additional selling of service elements like the development of customized products is a further segment of the business that is integrated in the sale of the whole business process.- A carefully selected assortment of interesting and profitable products as well as the selected choice of new technologies is a potential to gain a competitive edge against competitors .Furthermore a service that aims to give the customer an added value through new service can justify price mark-ups.- A critical factor in the retail industry is quality management. Better quality of products and services at lower cost increases customer satisfaction. Deficiencies in service quality can lower demand while good service quality can help create customer loyalty.- Cost management is a critical success factor for businesses in industries where margins are low. Computer aided planning for the store is an integral part of cost management.
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Liquidity plan The liquidity plan shows the amount of finances necessary to assure permanent liquidity of the business. The plan is based on 4 representative months of a typical business with 3to 5 employees, annual sales of $1,300,000 and net profits of about $300,000. Revenue estimates are drawn from a standard normal distribution
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Investment plan The investment plan comprises primary capital needs for the foundation and operation of a flower shop company with different products and services for sale. The plan also includes initial marketing and sales promotion expenses. The figures are based on a business with 3-5 employees and expected revenues of $950,000 in year 2-3.
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Appendix – research reference sources -
www.google.co.th www.docstoc.com www.wikipidia.com www.openflowershop.com www.floralmarketresearch.com http://ezinearticle.com www.petercooperflowershop.com www.smallbusinessloancentral.com Etc.
