reducing labor costs

To offer consumers the lower prices they seek while maintaining your profitability, you’ll likely have to reduce business expenses. Here are my ideas for lowering your payroll.
  by Kenneth R. Royer, AAF

    Like many small-business people, florists who work side by side with their employees every day become almost like a family. In such a situation, it’s often difficult to take unpleasant action when it becomes necessary. Also, properly training people in this business is stressful and time consuming, and many florists avoid it whenever possible. As a result of these factors, I believe many florists have not made changes in their staffing or their methods of operation and are planning to maintain their current staffing and operating procedures until things improve.

it will never be 2007 again
    I believe that maintaining the status quo, hoping for improvement, is a mistake. Florists are losing market share, and that loss will continue to grow unless the value equation is changed in the minds of consumers. Even then, it is unrealistic to expect to return to the inflation-adjusted sales volumes of past years.

    However, I am not totally pessimistic. I believe there will be opportunities to grow and prosper for florists who respond properly to the current circumstances.

what needs to change
    There are various reasons for florists’ loss of market share. Some of it is the Internet and the more satisfactory ways it enables consumers to order arrangements and other gift options. Some of it has to do with market changes involving order gatherers and wire services—changes that were out of the florists’ control.

    A major cause of diminishing market share, however, is that consumers have become educated about flower prices and have concluded that florists are expensive. Now, consumers are searching for better value. Unfortunately, florists are already barely profitable—if at all—so reducing prices is out of the question unless, somehow, costs can be reduced.

adjust labor costs now
    Approximately one-third of florists’ expenses are labor costs. Because of the gravity of the situation, I encourage every florist to immediately reduce his or her labor costs by 10 percent to 15 percent, or more, if he or she has not done so very recently. The reduction should coincide with the level of sales declines being experienced. Here are a couple of suggestions for doing so.
  1. Selectively reduce hours rather than laying off or discharging employees. Keep your staff intact, if you can. Most employees can handle a reduction of a few hours a day or a half day a week. Some may even enjoy it. Ask them before you take action, and make sure the most valuable employees are given first priority.
  2. Think carefully about the time period for hours reductions. Some times of the day are very busy, usually from 10 a.m. to 2 p.m. During other times of the day, the pace is usually slower. If that is the case in your business, a reduction in staff during the slow periods would increase productivity. Schedule workers when they are needed rather than attempting to maintain a traditional 8-to-5 schedule
    I have always believed in Parkinson’s Law, which states: “Work expands so as to fill the time available for its completion.” In other words, if you reduce your staffing wisely, it will have the effect of raising your staff’s productivity.
       Parkinson’s Law also works in reverse and has probably already been at work in florist shops. As units sold have declined, the work force subconsciously has slowed its pace to make the work last for the entire work period.

change work procedures
    Profoundly revising the work procedures is the next step, and doing so can further reduce a florist’s need for costly labor. The most needed revision is in the way arrangements are made. Some floral arrangements need to be different and unique, but uniqueness is not really important to most customers, and it is very time consuming. Begin making multiples of prepared-in-advance sample floral arrangements. Here are some suggested steps.

  1. Each week, a floral designer should create several sample arrangements in the most popular price points. That designer then is free to concentrate on floral arrangements that need to be custom made.

  2. An arranger, who is less skilled and less costly than a designer, should then make the anticipated number of the sample arrangements that could be sold in the next few days. When made in a group, the copies of sample arrangements can be created with a 50 percent time savings and with less costly workers.

  3. Sell the featured (sample/recipe/standardized) arrangements. Offer them, suggest them, describe them. Be proactive. This is where the process often bogs down. Most floral salespeople are not accustomed to suggesting specific arrangements to customers, and some incentives, such as a commission or award for every featured arrangement sold, should be provided.

    I hope that every florist in operation today is using a computer with direct order entry. I am amazed by how much time computerization has saved in our business. Here are a few functions that relate to labor savings.

  1. Automated outgoing wire orders and incoming orders that print out on the user’s order forms

  2. Printing of all the cards and tags

  3. Delivery management: manifests, routing and confirmation

  4. Monthly financial statements

create a web site
    Every florist needs a Web site for many reasons, but here I want to address the amazing labor savings that can be derived from Web sites. An increasing number of orders is being placed on the Internet, and, essentially, customers are filling out their own order forms. The orders arrive and are printed out in the store, requiring no time of the sales staff.

    Unfortunately, most Web sites present consumers with hundreds of options, making every Internet order a wasteful, time-consuming custom order. This is not efficient. The principle of “less is more” applies here. In this case, it means that fewer choices and more concentration of orders result in increased efficiency. I will address this further in a future article on marketing.

    At this time, 20 percent of sales in Royer’s stores arrive over the Internet, and they are 30 percent of the sales that previously were placed on the phone. It is a major change in store efficiency.

structure deliveries
    A helter-skelter delivery system, without any structure or timetables, is inefficient. For the most part, deliveries can be directed into defined areas, with designated timetables.

    Drivers should be part-time and scheduled to arrive for work at the times their routes are planned to depart. Special deliveries can be done for additional charges, but be sure the fees you charge reflect your costs.

pay for productivity
    Many workers believe that they are paid an hourly rate to “be there.” It is important that you make them understand that, as employees of your business, they are there to contribute to the profitability of the business.

    Many florists have found simple ways to help their staff understand that principle. They talk to their employees about productivity, and they praise the most productive ones. Most importantly, they show their appreciation by giving productivity rewards for designers, salespeople and drivers.

the owner/manager role
    The flower business is hard work. In the current situation, absentee owners probably will not be successful. It is a hands-on business and requires a 100 percent commitment from the owner/manager to be involved in the everyday operation, unless the business generates more than $1 million in sales.

    Everyday operation means the owner/manager will often be at a design table or sales counter. There is no stronger motivation for employees to pick up the pace and improve productivity than an owner/manager who is setting the pace, leading the way and setting an example.

Kenneth R. Royer, AAF, is a lifetime florist who expanded the business started by his mother in 1937 into what is now, arguably, the largest traditional florist business in the United States—U.S. Retail Flowers, Inc.—which is operated today by his three sons.

Throughout his career, Mr. Royer has served the industry in numerous ways—holding positions with the Society of American Florists (SAF), the American Floral Marketing Council (AFMC) and the American Floral Endowment (AFE); conducting seminars; writing articles; and authoring a book, Retailing Flowers Profitably.

Mr. Royer also is the recipient of many awards, including SAF’s Golden Bouquet Award (now named the Paul Ecke Jr. Award) and lifetime achievement awards from FTD and Teleflora.

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