[Hua11.com Original] (Note: This article simplifies financial investment concepts for easy understanding.)

What is the "Rolling" Internal Investment Strategy?

The growth of flower shops and floral studios relies on careful operation and effective investment methods. The "rolling" internal investment strategy discussed here is a stable approach that allows flower shops or studios to grow with manageable risks. In essence, it involves reinvesting a portion of the surplus back into the business without external financing or seeking additional investors.

Successful Investment:

- If this internal investment succeeds, the surplus will continue to grow.

- Over time, the available funds for internal investment will increase, leading to overall surplus growth.

- Compound interest effects amplify investment returns.

Failed Investment:

- Conversely, if the investment fails, the surplus will shrink.

- In such cases, it's crucial to reduce or halt internal investment or change directions to turn negative returns positive.

Example:

Suppose a small flower shop had a surplus of 20,000 yuan last month. Allocating 25% (5,000 yuan) for additional marketing expenses this month, we expect a return of more than 5,000 yuan (excluding returns beyond the current month).

If we invest 5,000 yuan in paid channels (like self-media and group-buying apps) and generate 8,000 yuan in income by month-end, these channels are effective. The investment return rate is (8,000 - 5,000) / 5,000 × 100% = 60%, which is favorable.

We should reinvest more surplus funds (following a fixed percentage) in these successful channels for higher total returns, steadily increasing the flower shop's revenue.

However, if the initial 5,000 yuan investment yields only 3,000 yuan in income by month-end, it's a failure (excluding returns beyond the current month). The investment return rate is (3,000 - 5,000) / 5,000 × 100% = -40%, indicating negative returns. In such cases, we must promptly analyze reasons and adjust investments accordingly. If it's a channel issue, we'll explore more suitable alternatives.

Method of Increasing Investment Amount (Leverage):

Once a flower shop or studio enters a virtuous cycle with stable expected income, adding investment leverage (increasing the investment amount by multiples) can yield greater returns. However, after leveraging, it's crucial to maintain stability. In principle, the total investment in the current month should not exceed the surplus from the previous month. Otherwise, in the worst-case scenario, all current-month investments could be lost, resulting in zero or negative overall returns.

Example:

Suppose the monthly surplus of a flower shop is 20,000 yuan. One month before Valentine's Day, we anticipate an explosive increase in order volume. We decide to boost the investment ratio from the original 25% to 100% (a 4x leverage). Thus, we invest the entire 20,000 yuan. If the flower shop maintains a 60% investment return rate, this month's income would be 20,000 × 60% = 12,000 yuan—far surpassing the original 5,000 × 60% = 3,000 yuan. The investment income has quadrupled.

Even in the worst-case scenario where all 20,000 yuan is lost, only the surplus from the previous month is affected (last month's efforts would be in vain). However, since only the surplus portion is used for investment and doesn't touch the principal, timely adjustments can prevent fatal impacts on overall operations—resulting in reduced earnings rather than losses.

Selection of Investment Targets:

Investment doesn't always mean marketing channels; it can also involve soft decoration upgrades, enhancing flower materials, expanding material categories, or upgrading personnel. When there's a surplus, consider these worthy internal investment targets.

How to Choose Different Investment Targets:

- Apply the method discussed in another Hua11.com article: A/B testing. (For details, refer to: [Hua11.com · Product Analysis Series 3] Creating in-demand floral solutions and pricing them effectively using A/B testing)

Example:

Suppose we successfully invested 5,000 yuan in a marketing channel with a 60% return rate (Scheme A). In the next month, alongside increasing investment in the original channel, we allocate another 5,000 yuan to upgrade flower materials—replacing common domestic flowers with rare imported ones. This upgrade enhances the store's overall image.

Observe guest reactions to these upgraded materials. If they're popular but only lead to a small profit increase (say, 30%), Scheme B isn't as good as Scheme A (with its 60% increase).

Choosing Between Schemes:

- Decisively stick with Scheme A and invest all originally allocated funds from Scheme B into Scheme A. This ensures faster rolling development.

- If Scheme C emerges, compare and test A and C using the same method. Repeat for Scheme D and beyond.

Through continuous testing in flower shop and floral studio operations, you'll discover the most suitable internal investment plan for your business.

Hua11.com has successfully applied this investment strategy since its first physical flower shop, yielding remarkable results.

Copyright Statement:

This article is an original creation by Hua11.com and is included in the “How to Run a Flower Shop and Floral Studio” Ebook. The content of this article may be periodically updated and is initially published on the Hua11.com official website blog. You can find the article at this link: https://hua11.com/blog/4673.html.

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