Flower Shops Are O’ So Rosy

May 2009 | Issue Four

The estimates and data contained herein are made using publicly available information and data and rules of thumb for different industries. BizEquity does not
represent or endorse the accuracy or reliability of any advice, opinion, statement or any other information displayed or distributed through this report or its website.
 

Flower Shops Are O’ So Rosy

Springtime. It's been a long, awful winter. Now that the bad weather is over, consumers are looking to
engage that wonderful rite of passage that begins in May and carries on throughout the summer. I'm talking
about the wonderful world of flowers. Such a pretty business model!

FLORISTS LOOK FORWARD TO THE MAY FLOWERS THAT APRIL SHOWERS BRING
After a winter-long hibernation, people just can’t seem to get enough of the outdoors come spring. So
much so that they often want to bring the outdoors inside and out, or give the outdoors to others. And by
‘outdoors’ I mean flowers, of course. What better way to celebrate the season than to be surrounded by
flowers while you’re having a bbq get together, or just staying in?
And it's not just women who are so taken with flowers. Indeed, men patronize the local florist shop as well.
No, not every guy is fascinated with roses and petunias. But just about every guy wants to make sure that
the landscaping on his property looks as good as the next-door neighbor's. In addition, the value of a piece
of real estate can be positively affected by the addition of flower beds and various bushes and tree species.
It can be seen, therefore, that the appeal of a business based on floristic concerns can cross both genders.
This is an important point to keep in mind when thinking about the marketing aspects of a flower store.

ECONOMIC DOWNTURNS DO HAVE A NEGATIVE EFFECT ON THE FLOWER

INDUSTRY
Of course, even though the cultivation of plants for aesthetic
enhancement is a worthwhile business undertaking, let's not kid
ourselves here -- the recession has not been kind to florists. At the
end of the day, it all comes down to the bottom line. Money is tight;
discretionary money is even tighter. Consumers have choices to
make. Not everything is essential.
As you can imagine, the valuation of florists is therefore not
necessarily on the upswing in every city. Since people have decided
to pullback their spending patterns in response to the recession, purchasing floral arrangements and
garden materials is not high on the list of absolute needs.

 
 
 
 
LET'S HAVE A LOOK AT THE BEAUTIFUL DATA
BizEquity has generated a data set that will give you an idea of the changes in valuation that have occurred
for this industry in some major cities around the country.

Current Old
City Frequency Valuation Valuation Change
Los Angeles 635 $109,417 $132,240 -17%
Miami 633 $166,765 $351,282 -53%
Houston 630 $89,579 $85,862 4%
New York 439 $81,669 $141,813 -42%
Chicago 381 $104,678 $98,024 7%
San Antonio 355 $100,574 $95,703 5%
Dallas 339 $129,699 $138,096 -6%
Brooklyn 332 $80,720 $78,010 3%
San Francisco 314 $105,173 $116,729 -10%
San Diego 303 $87,100 $79,257 10%
Portland 248 $156,968 $91,200 72%
Cleveland 231 $96,819 $95,721 1%
Las Vegas 228 $75,539 $98,510 -23%
Atlanta 193 $115,673 $132,043 -12%
Austin 184 $120,282 $66,738 80%
Philadelphia 177 $73,090 $44,230 65%
Seattle 172 $90,392 $110,715 -18%
San Jose 169 $74,767 $50,692 47%
Columbus 166 $116,328 $70,523 65%
Orlando 165 $88,432 $111,348 -21%

You'll note that the above table is ordered by frequency. Los Angeles has the most shops in our survey.
Hey, what else would you expect from the City of Angels, right? Unfortunately, the valuations there have
declined by 17%.
Don't fret, LA. You weren't the home of the biggest drop -That title goes to Miami. The party city is looking
at a more than 50% evaporation in valuation.
The biggest gainer in valuation can be found in Austin. Business owners in this Texas location will be
happy to note that their chosen line of work has seen valuations rise by a whopping 80%! The continued
influx of people moving to Austin, along with the growth of new businesses in the area could certainly
contribute to this hefty growth. Or maybe Austinites just like smelling the roses.
Fortunately, our data suggests that the florist industry doesn’t necessarily show an overwhelming pattern of
decline. Some areas have big gains, while others are on significant downturns. However, there does seem
to be a regional aspect to the numbers.

 
 
 
 
DO FLORISTS HAVE A GOOD GROWTH MODEL?
Cultivating a plant is no different than cultivating a business. Both need a lot of tender loving care. And they
need the right ingredients to grow.
Does the florist model have the best ingredients to sustain a
successful business model over time? We think so.
The giving of flowers is such an inculcated element in our society
that consumers find many reasons to patronize their local
establishments. Whether in good times or bad; for “I’m sorry” or
“Thank you” - plants have their place.

COMPETITION FOR THE LOCAL MOM-AND-POP

What big businesses compete with the local guys and gals? Well, during the warmer seasons, retailers like
Home Depot, Lowe's, and Wal-Mart kick their garden sections into high gear. Their circulars and sales
garner a lot of attention and can really hurt the local florist. Also, supermarkets have significant exposure to
the selling of plants at decent prices.
The rest of the year is obviously more kind to these mom-and-pop businesses. What the local owner wants
to do is attempt to differentiate his business by providing incredibly good service. Generally, you're more
apt to find knowledgeable florists who genuinely know their craft at a local store than in the cavernous hall
dedicated to all things green at the nearby Home Depot. This can be the trait of selective advantage that
can keep the valuations as high as they can possibly be.

ARE YOU DREAMING OF BECOMING A FLORIST? HERE'S WHAT YOU SHOULD KNOW.
As indicated by the data, the recession hasn't hit all the valuations of florists in all the areas. Keep in mind,
though, that the industry is nonetheless having its difficulties like everyone else. Looking at the stock of 1-
800-Flowers, we see that it hasn't done too well over the past few years.
When we come out of the recession, however, valuations should increase. So, if you're thinking of getting
into the florist's line of work, you may want to consider looking around now before prices rise. Be sure to
evaluate the books and real estate carefully. And location is, as always, almost everything.
Becoming a florist is not just about growing flowers, it's also about growing contacts and connections. Use
the Internet to market yourself, with careful attention to social-networking platforms. Indeed, fertilize your
MySpace and Facebook pages generously. And Twitter if you can, too. Also, if you've got the money,
consider some local TV advertising if the prices are right (be careful and do your research -- have other
business owners in the area generated a good return on investment when it comes to broadcast pitches?).
Be as creative as possible in your promotional materials. Try to look more exciting than the competition.

 
 
 
  
Florists can grow a lot of green stuff. In fact, the best, most exciting variety that a florist can propagate is
cash flow. Over time, valuations will hopefully prosper like a weed!

MORE ABOUT BIZEQUITY

Business valuation can definitely be a scary thing, involving complex equations, analysis and expensive
data sources. But at BizEquity, we try to make the process as easy as possible – and free. Keep in mind
that a professional business valuation can easily cost $10,000 or more. And, while there are various online
business valuation calculators, they are often too simplistic.

Drawing from our database of more than 17 million businesses and intelligent algorithms, BizEquity offers
tools that not only gives you an estimated valuation of your business, but also offers helpful insight into
industry trends, as well as recommendations and insight into your business’ operational
strengths/weaknesses. Please note that any valuation you obtain on BizEquity should only be used
internally and not be used to obtain credit or for any other commercial purposes.

CONTACT BIZEQUITY
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The estimates and data contained herein are made using publicly available information and data and rules of thumb for different industries. BizEquity does not
represent or endorse the accuracy or reliability of any advice, opinion, statement or any other information displayed or distributed through this report or its website.