[Hua11.com Original] The "Low-Cost Entrepreneurship Practice Series" has a clear focus. The entire series emphasizes low-cost floral entrepreneurship, starting from minimal investment. Basic concepts discussed here will connect to content in other chapters.

The purpose of this series is to provide florists and students who are new to the industry with a low-cost, low-risk startup plan. The goal is to prevent blind heavy investment that could lead to substantial losses and even business failure.

Once you have a low-cost trial-and-error startup plan, successful models can easily scale up with additional investment. (Refer to: [Hua11.com · Flower Shop Startup Series 4] How to test the feasibility of opening a flower shop or studio in the cheapest and fastest way?)

Keep in mind that "low cost" here refers to operational input, not compromised quality. Business models and promotional methods should align with your skills and maintain high quality. Any approach that sacrifices quality is beyond the scope of this book's discussion.

Now, let's dive into the first article of this series.

Hua11.com has actively participated in operating many mid-to-high-end physical flower shops. Consequently, this book extensively covers content related to physical flower shops. For instance:

We've provided a detailed article on location selection for physical flower shops here: [Hua11.com · Flower Shop Risk Defense Series 3] Analyzing flower shop locations: Have you considered these potential pitfalls?

Additionally, we've conducted an in-depth analysis of the differences between physical flower shops and floral studios: [Hua11.com · Flower Shop Startup Series 2] What is the difference between a floral studio and a flower shop?

Here, continuing with the theme of low cost, we will delve further into the analysis of physical stores. Why did we choose to open a physical flower shop in the first place? What defines the essence of a physical flower shop?

First, Functionality:

When opening a physical flower shop, you have a ground-level store. You can carry out various renovations, including both hard and soft decorations, layout adjustments, and creating distinct functional areas for holding offline activities.

Since the physical store serves as your facade, it naturally presents a positive image to the outside world. Essentially, the physical store acts as your business card, reflecting your strength and leaving a reliable impression. Consequently, the likelihood of receiving orders increases.

Second, Customer Acquisition Channel:

Given that commercial entities are typically located in high-traffic areas, having a storefront translates to having a customer acquisition channel. People come and go, and there's always a chance they'll enter your store to buy flowers—even if they don't make a purchase, your brand exposure increases.

However, it's essential to recognize that passing guests aren't necessarily your target customers; they might simply be passers-by. This relates to your store's positioning. Carefully observe the flow of people passing by and assess whether their purchasing power aligns with your intended market. This aspect is discussed in detail in the article on location selection. If the positioning isn't consistent, having a physical store won't effectively serve its customer acquisition function, posing a risk.

The above two points are relatively straightforward. However, many people overlook another critical aspect of physical flower shops:

Third, Physical Stores Represent a Liability (The Key Point of This Article)

This article was published during a time when the economy began recovering after the epidemic.

Observe the shops around you. Are many of them struggling to survive or closing down?

Our country handled the epidemic well, and its duration was approximately two months. Yet, even within this short period of economic standstill, numerous physical stores announced closures. What does this indicate?

In reality, it highlights the tight cash flow of physical stores. Although they may operate profitably under normal circumstances, once cash inflow stops, rent and labor costs (usually the major expenses) quickly erode previous profits. With no incoming cash but continuous outflow, the situation becomes doubly challenging.

What is a liability?

In common terms, it's something that takes money out of your pocket.

Indeed, the physical store represents your liability.

Next, let's do some calculations:

The first flower shop we operated many years ago was only 12 square meters and couldn't even accommodate a freezer (Refer to: [Hua11.com · Flower Shop Startup Series 8] Does a flower shop need a flower preservation cabinet? Or would an air conditioner suffice?). Our various fixed expenses totaled 10,000 yuan (including a monthly rent of 5,000 and an external employee cost of 3,000), excluding the loss cost of flower materials. Our monthly turnover ranged from 30,000 to 50,000 yuan. Based on our average operation, the monthly net profit was approximately 15,000 to 30,000 yuan.

For our store, rent accounted for about 1/6 to 1/10 of the turnover. This liability ratio was relatively healthy, and our operation was comfortable. We aimed for an above-average operation level in our physical flower shop.

However, if your rent accounts for 50% or more, you'll find that all your efforts benefit the landlord and employees. When cash inflow stops, your previously earned net profit fills the rent gap. Note that it's net profit, not turnover. Doubling turnover to cover it is extremely challenging.

Looking back at the post-epidemic period, economic recovery was slow. Doubling turnover was unrealistic; having half of the previous turnover would be considered good. Insolvency and bankruptcy were foreseeable outcomes (whether as a loss or to preserve previous profits).

Even without black swan events like the epidemic, physical stores face various challenges. Urban management, street conditions, neighboring stores' impact (such as catering smells or obscured signage), and community relations all increase store management costs. Hiring more staff indirectly contributes to rising expenses.

In contrast, running a floral studio simplifies matters—you focus on customers. Therefore, investing in a physical store requires experience and sufficient capital. It's not the usual direction for low-cost floral entrepreneurship.

For a low-cost floral business, consider opening a floral studio. As mentioned earlier, there are two primary publicity methods for studios: ground promotion and online promotion. Both deserve attention. (Refer to: [Hua11.com · Marketing First Step Series 8] Why prioritize ground promotion for flower shops and studios? Isn't online marketing easier?)

However, is online promotion necessarily cheaper than physical stores? Many cases show bankruptcy due to excessive spending! Yes, there are various online promotion methods. Let's explore this context further in the second article of this series: [Hua11.com · Low-Cost Entrepreneurship Practice Series 2] How does a flower shop deal with the increasingly high cost of online promotion?

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/4679.html.

Reproduction of this article is permitted, provided that it is reprinted in full and all copyright information is retained. Any form of plagiarism, whether partial or complete, is strictly prohibited. Legal action will be taken against violators.

The work titled “How to Run a Flower Shop and Floral Studio” is copyrighted by Hua11.com. Additionally, the “Practical Floral Training” model and the concept of “Light Decoration” are original creations by Hua11.com. The trademark “花艺意” is registered and protected by relevant national laws.