HomeAboutFAQContact Us

Articles

“Increase your Sales and Improve Profitability By Teaching Yourself and your Employees how to Sell”

First and foremost, to capture your attention, if your current annual sales are $600,000 and you increase your average sale per customer by just $6.00 you can increase your annual sales approximately $80,000. One of my customers recently increased their sales by $350,000 in the first year by making selling and increasing the average sale a priority. Ninety nine percent of my customers increase their average sale once they realize how critical this strategy is to their bottom-line. Those few that do not increase this average and make a commitment to selling never truly understand the power of having a “sales culture” compared to an “order-taking culture”.

In a “sales culture” employees know how to sell, their performance is measured and they are skilled at taking control of the sale. In an “order taking” culture the sale’s employees pretty much just take orders and it is the customer that is directing and controlling the sale. Two totally different concepts with two totally different results as the average sale within the sales culture are typically $20.00 to $30.00 higher than the order takers average.

During the selling program that I teach there is a section where we talk about the qualities and characteristics that a good salesperson should have. Qualities that are always identified include; having good product knowledge, a positive attitude, patience, good listening skills, enthusiasm, people skills, etc. However, on only one occasion in twenty years has someone stated, “that in order to be a good salesperson you must first know how to sell”. This is not a surprise to those of us that work in this industry no matter what level. Very few know how to sell, often times it is not really a requirement of the sale’s position and very, very, very few take the time and effort to teach it.

Let’s first clear up one thing. No one is “born to sell”. Yes some people with upbeat, outgoing personalities might seem like on the surface that they have an advantage. But selling is simply a process, an approach that an individual or business may take to sell a customer. It includes, the questions that are asked, how value is created and most importantly the technique used to close the sale. People are not born with this skill or this process it is something that they must learn and practice.

The first step in improving your sale’s culture is to take a moment and self analyze your current approach to selling. Who takes control you or the customer? Do you ask questions and do the answers to the questions provide you with enough insight to identify the customer’s needs? Are you selling product or price? Are you then able to suggest products that satisfy those needs? As you suggest items are you creating value in those products to justify the price points? Does your approach raise the buying expectations of the customer? And finally can you close the sale?

Once you have analyzed your approach take some quality time and observe your employee team selling. Hopefully you won’t find the following: no questions about the customer’s situation are asked; however the dreaded “how much do you want to spend” is asked meaning that the employee is now selling price; no value is created in what we suggest as we promote the infamous “mixed bouquet in a basket or a vase” no matter what the occasion (Isn’t that what the Super Market sells?) and prices are on barrier/whole numbers while the sales employee starts with their lowest priced or worse choice first. If this or something similar to this is what you find in yourself and/or your employees, immediately change the culture.

Step two is to determine what the average sale is of each sale’s associate. The average sale is determined by dividing the dollars sold by the number of customers served. As an example let’s say that Joan sold $2,314.56 in total sales on a given day and serviced 50 customers. Joan’s average sale per customer would then be $46.29. Your ultimate goal will be to increase everyone’s average approximately 20% or in Joan’s case approximately $9.00 to $55.00. It is important to note that the employees are not competing with each other to increase their average sale but with themselves to increase their own average. Create a monthly report showing everyone’s average, have this report become part of your culture and remember the adage “that anytime you pay attention to anything it improves”.

Step three would be to teach and practice a sale’s approach that will increase the average sale. In review the approach that you use should enable you to take control, sell product not price, create value in the products that you offer while increasing the customer’s buying expectations and be able to close the sale.

In creating this sale’s approach identify ways that one can take control of the sale. Being prepared for the customer situations that occur in this industry over and over again would be a great place to start. To create value in what you offer practice using colors and adjectives while you describe the products to the customer. Also promote the benefits to the customer for purchasing that item. In order to close, you must have created products to sell and each item must have their own psychological price point. You would be amazed at how many floral employees and owners get to the end of the sale and have not really created anything to sell or offered a price point so the customer can determine value.

There is no time like the present to take ownership of this priority. Where else can you increase sales dramatically without spending one penny on advertising or adding one additional customer? Simply, your current and new customers are going to be spending a little more for the right product and they will enjoy the purchase and sale’s experience more if you truly sell and not just take orders.

“Improving Profitability – Start with the End in Mind”

I will start this article with the following statement that “Most Florists are closer to being more profitable than they think they are”. That said, one of the worst feelings that a business owner can have is experiencing a business that is in a “Decline Stage” and that florist has lost hope. By setting Financial Goals, developing an action plan and taking hold of the future a newfound energy is created.

The best way to predict the future is to invent it. Based on where you are now, using your financial report card (Income Statement) as your guide, take control of you business.

PLEASE DO NOT WAIT UNTIL IT IS TOO LATE. Although this statement will sound self-serving, it is true. Those florists that will contact me for guidance this year should have done so two to three years ago!

For most florists in today’s Marketplace the following holds true:

With all of these negative factors we have a choice to give up and sit on the sidelines and watch, or take control and proactively create our businesses future.

Quality time and focus must now be spent to create the future. Priorities must now drive the business. Standards, processes, budgets, etc. must be created that will impact the culture and if you want to survive you must take a leadership role and make it happen!

Our first step will be to analyze “where we are now”. The following is a sample Income Statement overview:

                          Current Year End

          Inventory Sales              $2,250,000   100%

          Cost of Goods Sold           $  888,975   39.51

          Other Income                 $  391,950   17.42

          Payroll Expense              $  976,725   43.41

          Other Operating Expense      $  805,725   35.81

          Net Profit(Loss)             ($  29,475)  (-1.31)

We know that sales have fallen for three years running and based on our Income Statement the following holds true. Cost of Goods Sold and Payroll Expenses are too high in relationship to industry benchmarks. Other Income Sales (Service Revenues) are strong and we will have to battle to maintain our current level of Other Operating dollars spent. Based on all of these factors the business has lost money for the second year in a row.

Now, based on this analysis, current market conditions, cash needs, etc. the following financial goals (Step 2) have been set to improve the profitability of the business.

                       Financial Goals Next Year

          Increase Inventory Sales $100,000 to       $2,350,000   

          Lower Cost of Goods Sold to 34%            $ 799,000  

          Maintain Other Income Ratio of 17.5%       $ 411,250   

          Lower Payroll Expense to 38.9%             $ 893,000    

          Maintain Other Operating Dollars to 34.3%  $ 805,725    

          Net Profit will increase 12.51% to 11.2%   $ 263,525  

Simply, you now must create strategies to achieve these goals (Step 3) and if you do, the business will have a bottom-line of $263,525. Let’s review; Increase Inventory Sales $100,000; Lower Cost of Goods Sold 5.51%; Lower Payroll Expense 4.51%; Don’t spend more dollars on Overhead Expenses than you did last year; and maintain your Service Revenue (Other Income) relationship to Inventory Sales. If you and your employee team are able to achieve these targets you will then completely turn the profit picture around for your business. Now that you know what the end looks like there is no time like the present to get going.

Employee Productivity in the Floral Industry “A Message to the Owner”

Whether it is design, delivery or sales, employee productivity starts and ends with expectations. What are your performance expectations for your employee team? What are the priorities of each position? What above all else should not be violated?

Let’s first make the statement that everything is important, but there are some things that are more important than others and the owner must be perfectly clear on what those priorities are. Let me caution you at this point that you can’t have too many priorities. Tom Peters the well-known customer service guru once said, “If you have too many priorities you have none and if you don’t know it your employees do”. Everything can’t be equal. Some parts of their job must stand above the rest.

Also, this is not something that can be left for the employee to determine. It is the owner that must set the standard, role model that standard and coach the employee to succeed on the performance expectations. If you are a larger Florist and have managers that help you lead it is mandatory that you are all on the same page.

With sales, is the expectation to increase ones average sale? With design is it care & handling which ultimately plays a key role in controlling dumpage? With delivery is it marketing to that customer so that they purchase again in the future? What exactly are your expectations of performance?

Experts say that for approximately 75% of one’s job the leader and the employee see it the same way. It’s the other 25% where the opportunity lies to improve productivity. Let’s say that I were to sit down with each of your employees, one on one, and ask the question what are the three most important parts of your job what would the answers be? Also, would all the sales team, or delivery team or design team say the same thing? And, most importantly, in every case would it be what you the owner feels are the priorities of that position? I highly doubt it!

Let me give you an example. One of the major cardinal sins in the floral business is for a designer to overstuff an arrangement. Nothing hurts cash flow and profitability more than this activity. Yet when I ask that designer what are the three or six or nine most important parts of their job do they ever say “to not overstuff and we must follow the pricing strategy”? I believe you know the answer to that question.

The many roles of a good leader include creating a shared vision, making objectives clear and crystallizing goals. Each day, with every customer, design, delivery, etc. we either move closer to our vision for our business or further away. There is no time like the present to spend some quality time on productivity and establishing priorities.

First, you the owner sit down with yourself and identify the top five priorities of each position i.e. Sales, design, delivery, bookkeeping, care and handling, etc. Second ask each employee to do the same without any coaching from you. Compare lists and schedule one on one performance standard meetings with each employee. This will be very similar to a coaching session as how you see the priorities of the position and how they see it will be different.

Be prepared to: (1.) Communicate to each employee what are the priorities of their position and what the performance expectations will be. Do not hurry through this component and make sure you reach an understanding and get agreement. The priorities are not negotiable!

(2.) Once you have reached agreement make sure that the employee has the skills, knowledge, tools, employee cooperation and internal processes to do the job. Don’t set the standard and cut them loose if they are not able to achieve the desired result. Do the skill training; provide the tools, etc. first, before forcing accountability. Once they return to their job with expectations clear, monitor their performance. Please note at this point only one of two things will happen; they will meet your expectations or they will not. (4.) If they meet or exceed praise their performance. If they do not achieve the desired results repeat the process and do a second coaching session.

This will not be an easy task as your dealing with employee behavior, habit and the “this is the way I have always done it” syndrome. You the owner must be committed to follow it through and make it happen. In today’s florist marketplace Sales employees must learn how to sell, offer add-ons and increase their average sale. Designers must not overstuff, limit dumpage and help to control Cost of Goods Sold. Delivery employees must play a key role in the businesses marketing strategy by soliciting new customers as well as encouraging existing customers to buy more often. The old paradigms as they relate to this business have vanished.

In closing, it all starts with you and it starts with establishing expectations of performance for each position. If you think one thing and your employee thinks another you will never create a clear path to achieve your vision. A quality effort on this endeavor will improve productivity and most importantly profit.

Buying a Floral Business!

During the past few years more and more of my floral customers have asked me to either value their own business or value the business of another florist that they are considering buying. It has become a way-of-life in the floral industry. And although there are two parties to this sales transaction, the buyer and the seller, this article is directed exclusively at the buyer, the one that is staying in the floral business as a florist.

To the florist buyer I have ten thoughts that I would like to share with you especially if you are currently considering purchasing an existing floral business or will be in the future.

Number one. I am an advocate of growing your business by purchasing another floral business. That now said it must be a business that has value and is worth buying. With the market being extremely competitive and many florists seeing their sales decline even though they continue to pay good money on advertising. Buying another florist’s business is a way to grow your business and have sale’s increase, not decrease.

Number two. Never be rushed into making a decision. Everyone is in a hurry especially the seller. Often times when I am asked to Value a business I take my time and make sure I have all the information that is needed. If it is worth purchasing it is worth waiting for. The existing owner has owned the business for years they can wait a little longer for your educated, thorough, thought out decision. Take time and accurately evaluate the benefits of purchasing this business and how it will impact your bottom-line i.e. new markets that you will be impacting, being able to leverage payroll especially owner’s pay, improving productivity of the overall staff, is cost of goods an opportunity, etc.

Number three. Make sure the data you’re using for the Valuation is accurate. This is a major stumbling block and is often times a red flag for the buyer. Most often the data is incorrect because of how the wire service portion of the business impacts the financials. Ninety-five percent of florist’s financials across the country are wrong and their CPA who also does not understand Wire Service Accounting thinks that they are right. In order to value the business correctly their “books” must be adjusted accordingly.

Number four. Don’t believe what you’re told! Value the business based on what the business is on paper, not the potential that someone says it has. The comments that sales are higher and profit is better that what the financials actually say is 100% of the time an outright lie and should never be considered as part of the value. During my twenty years of being in this industry the business being purchased has never been “better” in fact most of the time it is worse!

Number five. If the business has done poorly and the existing employees are staying this might not be a benefit. Is Cost of Goods Sold too high and the Designer’s are overstuffing, dumping, etc? Do the Sales people know how to sell or are they order takers? Do the Delivery associates help with the Marketing and do have good Customer Service skills? If part of your plan is too change behaviors in order to be “more profitable” don’t count on it.

Number six. Disregard the attraction to the “Magic Multiplier” Fallacy. Establishing the value of a business is not easy and demands pure objectivity and reliance on hard, accurate information and data. There is not a cut corners, simple multiplier that should be used i.e. five times earnings. There are no magic formulas.

Number seven. Be prepared to deal with the emotions of the seller. What the business is worth is what it is worth and how hard and how long the seller has worked on and owned the business doesn’t matter. Don’t get caught up in the “I am going to be the savior” and help them out. Many people work hard on the road to bankruptcy, it is not your fault and it is not your problem. Many, many selling florists will say to another florist in their town “If I sell it to anyone I would want it to be you”. That is nice to hear but don’t get caught in this trap.

Number eight. Don’t forget to factor into the Valuation the “Cost of Money.” Whether you borrow money for the purchase or use existing funds there is a cost to the buyer in using these dollars. And this cost should be factored into the future profit potential of the business and what the buyer initially pays for the business. This cost can reduce the “return on investment” dramatically and should lower the price that you pay for the business.

Number nine. Make sure you personally have the energy and your businesses culture is strong enough to take on another business. Simply, do you have the internal organization and processes within your business to take on more sales, employees, debt, etc? Remember the goal is to be better off after the purchase not worse.

Number ten. Always consult with a third party that does not have a vested interest in the sale of the business. Under no circumstances should a buyer purchase a floral business without this input. This third party must understand the floral business including industry benchmarks, knowledge of wire service accounting and be able to determine if the records are reasonable in accurate. This goes back to Number two, never be rushed into making the purchase. Make the decision with your brain not with your heart.