Congratulations for researching how to open a flower shop! We aim to provide the resources you need to plan and open a successful flower shop by showing the successes and failures of mine and other shops.
If you love the smells of fresh flowers and making flower arrangements, opening a floral business may be for you. Keep in mind, however that it’s not all roses and this is a tough business. OpenaFlowerShop.com covers some things to take into consideration before jumping in.
How to Get Started
As far as a starting business goes, a flower shop is one of the easier ones to start due to not needing a specialized license (you will still likely need a sales tax permit, occupancy permits and possibly local business licensing), professional certifications/schooling and relatively low cost of starting. Keep in mind though, while getting started is not as difficult as in some industries, it’s also easy for new competitors to start as well.
My biggest tip is before going into business, be sure to write a business plan for your flower shop. While many people will write a business plan only to get a loan for a flower shop, the plan should be your roadmap so you know what you want your business to become. Once you write it, share with many business minded people to minimize any costly mistakes.
What are the Costs to Get Started?
Compared to other retail businesses, there are few costs to start a flower shop as there is a minimal amount of furnishings for a retail location and there isn’t much in the way of starting supplies for a flower shop to buy either. The biggest initial cost to start a flower shop are the coolers to keep your stock fresh longer, but fortunately they don’t typically need replaced often.
Operationally, inventory will run between 40%-50% of sales, making inventory management a critical skill as flowers make up almost half of a flower shop’s expenses. Why is this critical? Flowers are perishable and as such have a limited shelf life. Nobody wants to buy wilted flowers and no shop owner wants to sell them either. Also keep in mind that you need to be good at estimating demand for the peak holidays like Mother’s Day and Valentine’s Day but not order too much and have inventory go to waste.
The next highest expense is labor, which is about 20%-25% of sales. Don’t underestimate the importance of employees to the success of your business because ones that emphasize good customer service will keep customers coming back. Be sure to pay and treat good people well so you don’t lose them.
When starting a flower shop or any business in general, you will typically want to focus on the direct competitors as they are typically the biggest threat, however for traditional florists the biggest threat is from indirect competitors – online sales and supermarkets/grocery stores.
If you are looking to open a flower shop in a market with a competitor already in place, even if you are the best at floral design, do not underestimate reputation in the community as the existing shops competitive advantage and this alone may be too much for a new shop to overcome. If you plan to offer the lowest prices as your competitive advantage, remember that an existing shop has the ability to easily lower their prices and still stay profitable and may eventually run you out of business. Also existing competitors may have better access to quality flowers as they have a track history with suppliers.
As indirect competition has greatly increased from supermarkets, grocery stores and online, the result has been a reduction in profits and volume of sales for traditional florists due to low prices and one-stop shopping. According to the US Bureau of Economic Analysis, sales from traditional flower shops have declined from about 33% to under 25% in the last decade.
Market share from online florists continue to grow due as more shopping shifts online. While traditional florists can benefit as the typical model has the local florist fulfilling the order, the traditional florist’s margins are greatly reduced since the wire services take a big cut of the profits. The newest trend that traditional shops need to be aware of is that online florists such as Amazon Curated Flowers Collection and others eliminate the local florist altogether and instead purchase flowers in bulk directly from the farmers (further reducing their costs of inventory) and fulfilling orders in their own facilities, thereby bypassing local shops. The impact of this model is yet to be seen, but with large corporations such as Amazon getting into the market, traditional shops need to be aware.
I believe that for traditional flower shops to thrive in the future, they need to focus more on individualized custom products and featuring unique & hard to obtain flowers. Supermarkets and online stores will focus on volume and can only offer a limited selection. Also excellent customer service will set you apart from them as well. Being different with unique products will be necessary for flower shops in the future and with the ease of online shopping for flowers, one bad customer experience will likely have them to never return to your shop.
Are there enough customers to support your business? Before you invest time, do some market research for your flower shop before sinking money and energy into opening. In other words, take time to think about who your customers will be, how much of what they will buy and when. Flower shops have two primary markets – consumers wanting to purchase flowers for aesthetics/gifts and for weddings & funerals.
Consumers in 2015 spent $5.8 billion for fresh flowers in the United States. While that’s a large number, that is down over the last decade and projected to be .9% less this year. In addition, over the last 10 years, grocery stores and supermarkets have been taking a significant amount of market share from independent flower shops – and that trend isn’t expected to stop anytime soon.
Flowers for weddings and funerals should be safe from the grocery stores and supermarkets and continue to be a major source of revenue for traditional florists since customers tend to be less concerned about the price as they are about quality and setup. According to the U.S. Census Bureau, wedding and funeral flower sales were 32% of the market last year.
According to the Society of American Florists, a traditional shop’s primary customer is aged 45 to 64 as they are the group that tends to give gifts of flowers more than any other group. As this market ages and is replaced by consumers in the next age brackets, a few longer term issues arise since consumers aged 25-44 tend to purchase based on convenience and don’t often have flowers at the top of mind for gift giving. For traditional flower shops to thrive, connecting with this generation is very important.
To connect with younger generations to advertise a flower shop there are a few excellent and low cost resources, which will require an investment in an online presence. The two primary resources (which cost nothing except time to use) at this time are Facebook and Pinterest. Facebook is great for generating local awareness through posting of unique arrangements. Also Pinterest, which is a photo sharing website, is heavily used by women and great for sharing photo worthy arrangements.
With customer attitudes increasingly demanding convenience due to their busy schedules, consumers are expected to shop more at grocery stores and supermarkets for basic flower needs. With the increasing importance on time savings, the importance of location should increasingly be necessary for a traditional florist to thrive. Many flower sales are due to impulse purchases and a good location will increase the opportunities to capitalize from these purchases.
Online sales of flowers are also expected to continue to increase with customers doing more of their shopping over the internet. With the larger wire services spending a significant portion of their budget on marketing, these services have the purchasing power to buy a significant amount of advertising in local markets. All is not lost however as the Society of American Florists did research that found over 42% of consumers went online to find a florist’s local contact information and 32% used the internet to find a local florist’s website. While online competition is significant, flower shop owners that develop a good online presence and incorporate paid advertising and search engine optimization will still be able to compete in local markets.
Flowers are largely a discretionary expense as they aren’t a necessity and that consumers tend to be more willing to spend money on flowers when they feel flush with cash. Assuming the economy stays healthy and employment strong, sales should continue to grow slightly. Should the U.S. face another recession, consumers may cut back on flower purchases.
These are just a few of the issues to consider before you open a flower shop. Take a look through the site at the other articles to learn more.