Let me start by congratulating the ASCFG 2016 National Conference Committee for planning, hosting, and executing a spectacular conference! The workshop topics were outstanding and the speakers were on point. As always, it was great to see all my peeps, meet my online friends in person, and introduce our son to the gang. I was particularly touched to see the Association honor Josie Crowson and Ellen Frost for their continued dedication and service to ASCFG and our industry. We so grateful to have you, Josie and Ellen!
The Numbers Game
Urban Buds is five years old! In some ways is hard to believe it has already been five years, but time flies when you’re doing a labor of love. The five-year mark is the perfect time to pause and assess how we are doing financially. Each year we have set and met a new gross sales goal that is higher than the year before. We keep an eye on the totals throughout the year via our QuickBooks accounting program and our quarterly sales tax, but around mid-September, we start a “count-up” to our goal number, and weekly we say, “We are x amount dollars closer to hitting the goal.” This is count-up motivates us to keep working hard.
This year we are completely blown away at the number of flowers we sold from our postage stamp farm. At year five we have our growing and distribution systems in place, and we have a good idea of the amount of product we can grow and sell. Now it is time to analyze our expenses in relation to the gross sales amount. This is where true profit lies; one way we determine total net sales is by subtracting our expenses from our gross sales.
When we took a hard a look at our categorized and itemized expenses via the QuickBooks account we saw areas where we could cut costs, and make them more efficient. Here is an example that may help to inform the financial analysis of your farm. Our crated indoor lily production was really expensive compared to how they sold. We were spending a lot of money on monthly bulb deliveries, potting material for the crates, the greenhouse space they occupied and the care they took, but the reality of our market is that lilies aren’t the most fashionable flower.
We give every crop three years to see if it is profitable. In an attempt to build a demand for our lilies, for the past three years we introduced new varieties and seasonally appropriate colors. However, our clientele—florists, farmers’ market customers, and brides—weren’t buying them in the quantities we needed. The florists can get imported domestic and international lilies cheaply, and some of our direct sales customers would specifically request no lilies in their arrangements.
We know that other ASCFG members have a strong market for lilies and it is true, a couple of our farmers’ market customers loved the lilies and the lilies did help to fill out our CSA and a portion of our market bouquets, but it wasn’t enough to make the grade. This year we are significantly cutting our lily production, which will be a big cost saver to the farm. Do you think there is a flower on your farm not making the grade? Take a closer at it.
For all you new growers, a quick cost saver is to order your floral preservatives, bouquet sleeves, fertilizers, soil amendments, and any products you use in large quantities in bulk through wholesale accounts that you set up with the distributors. The wholesale accounts are generally tax-free. For even deeper discounts you can organize several area farmers to order supplies together. We did this with our Vermont Compost Company order. A dozen or so eastern Missouri and western Illinois growers wanted to use Vermont Compost Company potting soil and compost, but to get the company to even send a truck this way we needed a minimum 20-pallet order, so we contacted our farmer colleagues to see who wanted to get in on it. Within a week we had our 20 pallets and a deeper discount on shipping and the product because we ordered in bulk with other farmers, once the farmers agreed to accept and store the orders. Working cooperatively saved us all money on this high quality product.
This year we are going to focus on lowering our expenses; the idea here is that as we grow (the number of flowers sold in a year) we will be simultaneously cutting down or “trimming out the fat” in our production costs, and growing our net profit. Net profit is the number we are excited about.
These are just a couple suggestions you can try to lower your overall expenses. A little bit of analysis and planning can go a long way.