There’s no way to sugarcoat it - 2024 has been a rollercoaster, financially and mentally. And still is, right here in the final hours of the calendar year. The longer I am in business, the deeper I learn the lessons of just how hard (crazy?) it is to run one. How likely it is that the entire lifespan of your business will likely look anything but steady upward growth, especially in a seasonal business. You have good months, bad months. Good years, bad years, and hopefully good years again. It’s been a hard year. One that has me reflecting on the journey so far.
This year started out on a major natural high. 2023 was the first year I had a sizable profit to show for a 24/7 job - the first one I could truly claim and celebrate, because a professional financial planner had worked with me for more than a year, and could help vouch that I indeed profited.
In any for-profit business, profit is important. Pricing correctly, in a way that accounts for all your expenses - is just as important. Of course I don’t mean outsized profits like those that fund the personal excesses of corporate shareholders or billionaire founders at the expense of workers and the environment, but the kind of profit that creates an emergency fund, the ability to make capital improvements, or keeps a small business afloat when cash flow is tight.
In case this is a bit foreign for you, profit is the money you have leftover after all expenses. Profit can be used in the form of a bonus payout to the owner or staff, but is most typically used to reinvest in the business, in resources you need to grow: the security deposit to put down on your first studio, or a studio with a window, or because you’re bursting at the seams, to take the risk of hiring someone full time besides yourself, to purchase a floral cooler instead of relying on a window AC unit so that your designs can really look their best, be photographed at their best, and help build your reputation. If you can’t already tell, profit was something I needed to become comfortable with myself.
My first cooler - $800. The most expensive thing I’d purchased to date, aside from rent.
From 2013-2019, running a business was basically my side gig. I did the bare minimum to run a legitimate business - I incorporated with NY State and purchased liability insurance. For those first seven years, I did about 20 events a year, and held down another job as an urban farm manager and educator. After a full 4-day week teaching or running admin for the farm, I would wake up at 4 am on Thursdays or Fridays to shop for flowers, then head home (for the first few years and then eventually to my tiny studio) and crank out designs for 8-12 hrs. I’d deliver the following day and even break down the event myself, anywhere from 10pm - 1am. In all those years, I didn’t invest resources into having a financial professional look at my accounting (which was decent, but flawed, I would come to learn).
It’s easy when you’re just getting started to get carried away with the thrill of people paying you. A $3,000 contract - hell, a $1,500 contract - for an event feels like winning the goddamn lottery. You are stunned that people trust you with such massive sums of money and their wedding flowers, and you’re even more stunned when they are thrilled beyond belief with how you delivered in the end.
But it’s also easy - well let’s say easier - to make a profit in the early years because your overhead expenses are much lower. If you’re a new floral designer, you’re doing most of the work yourself (sales, shopping, designing, delivering), and you design out of your apartment. You’re only hiring another person or two when you need them, and they’re probably young too and they aren’t looking for true employment - a 1099 will do just fine. You most likely aren't tracking all the hours you spend working on the business. You don’t pay separate rent or utilities for your business, or payroll processing fees or workers comp because you don’t use a payroll service yet and you have a high risk tolerance. You don’t have an outsized electric bill because you just turn on your window AC when you need to keep the flowers cool. You haven’t hired an accountant or bookkeeper; you probably aren’t paying for Quickbooks; and you’re schlepping flowers in a cab or U-haul or a girlfriend’s car. In other words, your prices reflect what you think are your expenses, not what they truly are. And certainly not what they will be in 2 years, 5 or 10. And in some ways, that’s how it should be. Your experience level is such that you can’t be charging what a florist with 10 years’ experience can charge. You are still getting to know flowers’ habits in various predicaments, seasons, etc. You have a lot to learn.
And so you build your skills and you learn, year upon year. You learn what new expenses you have, and perhaps what future costs you should have assumed you’d take on and baked into your prices. Because now you realize you need to raise your prices, if you’re going to afford the labor, services, tools, and training you need to grow. If you really want to make some kind of living from your business, you’re going to need to charge enough to pay yourself and others.
I decided to 'retire' from farming in 2019 (after 15 consecutive seasons), and make a go of Molly Oliver Flowers full-time the following year. 2020 would be the first year I wouldn’t have the cushion of my part time non-profit salary. Great timing! The next year and a half was as unpredictable for me as I’m sure it was for you. I wound up launching our 100% local flower subscriptions in the void of events, in effect launching a second business.
In the spring of ‘21, as events began to ramp back up and with a business much more complicated - and one I wanted to try to make a living from - I knew I needed to get a real grip on my numbers. I wanted someone to check my work.
I had long ago created meticulous Excel spreadsheets that tracked expenses for every individual event and all overhead expenses, but I had no mechanisms for making projections. I knew I of all people should not be trying to reinvent the wheel.
The first thing my financial advisor helped me do was to get organized in Quickbooks. We created “classes” for income streams and expenses. The second was to move me from what’s called cash-based to accrual-based bookkeeping (two worlds I didn’t know existed). Rather than count any and all income in a given year as revenue, we would only count revenue for events / services rendered in that given year. In other words, deposits for next year’s events didn’t count as income / revenue for the year.
When you learn to make this basic shift, a lot changes. You see how profitable your business (or businesses - in my case, Events and Subscriptions) truly is.
In 2022, after a full year working together and straightening out my books, I showed a large loss. Lots of expenses I hadn’t been accounting for perfectly… it was sobering, but relieving to finally be looking at the business with clear eyes. From there, I could make decisions about changes to get to a more profitable place.
Continue to Part 2 of 2 here.