Looking to Buy a Florist in Australia?

MMJ Business Sales & Acquisitions
Looking to Buy a Florist in Australia?

Getting started in the floral industry can be hard work if you try and set up your flower shop from scratch. Similarly, if you are looking to expand your floristry business, buying a flower shop in the suburb/town you are considering carries many advantages over starting a new shop.

Buying a flower shop avoids many of the challenges of starting a new business: finding an empty shop in the right spot, fit out costs, hiring talented staff, purchasing equipment, and building your reputation as a florist which can take yearsThere are many unknowns when you start a new business in an unproven location. 

If you buy an existing florist shop it is comparably easy to ascertain that the shop you are buying is worth your investment. Another important consideration is that by purchasing a business you are effectively eliminating one of your likely competitor florist businesses. 

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Here are some important tips to consider when buying a florist shop: 

Understanding the Value of a Floristry Business 

No matter how beautiful the premises looks, a flower shop is still a business, so you need to examine the profitability of the business to help you determine its fair market price. When considering profitability, you should ensure you take into account all the financial benefits an owner operator is receiving from owning the business. Also look at how many hours the owner is working in the business. A florist shop partially under management with the same net profit as one that is fully managed by the owner may be worth more as you could potentially reduce labour costs.  

You also need to consider the business assets that you will be acquiring as part of the sale of the business. Ideally these assets will be in the form of an asset list and/or be on a balance sheet. Assets in a flower shop usually consist of equipment such as preparation benches, display shelving, refrigeration units and vases. Additionally, delivery vehicles may be included in the sale. Looking to Buy A Florist In Australia
The goodwill of the business also needs to be considered. This is an intangible asset which represents aspects such as the company’s good reputation, the loyalty of its customers, the brand identity and recognition, the talents of the workforce and any proprietary technology or operating systems. Ascertaining the value of the goodwill can be difficult and it may require the assistance of an experienced professionally qualified b business broker. 

Frequently florist businesses will be advertised for sale with a price “Plus S.A.V” .When you take over your new florist there will be flowers and packaging materials in the shop. Often this is referred to as Stock At Value (S.A.V.) – this generally means stock valued at the price the seller paid for it, not the price they are selling the flowers for.  Whilst this will change on a daily basis you should still ask the seller or business broker for the estimated stock value as you will need to have the funds to pay for the stock in addition to the business. 

In a business sale the buyer only takes on the liabilities of the business if they are buying the shares of the company. In most small business sales the buyer is only buying the business and the assets of the business, not the company shares. Generally, the seller will need to ensure they pay all creditors e.g. suppliers at the time of the sale. 

Better presented florists for sale will usually use a business broker who should provide all the financial information in the form of a professionally prepared Business Prospectus. A Prospectus (sometimes referred to as an Information Memorandum) should contain the important information such as financial trading data, asset list, lease information and staffing details etc. A prospectus will ensure you, as the buyer has all the relevant information required to decide to purchase the business. 

Other Helpful Business Sale Documents  

Any retail business is highly dependent on its location. Most florist businesses for sale are renting their premises so it is critical that you examine the commercial lease. Ideally there will still be a number of years to run on the existing lease to give you the security of remaining in that location. Most existing leases can be transferred to a new tenant so long as the proposed new tenant (i.e. the buyer) has similar or better skills and financial resources as the existing tenant 

Additional documentation specific to florists include any licences or agreements with 3rd party online networks eg. Interflora or Petals. There may also be supply contracts with commercial customers that need to be viewed. 

Florist Shop Equipment 

The equipment needed to run a flower shop includes work benches and display counters whose condition is reasonably easy to ascertain. Other equipment including refrigeration, cool-rooms and vehicles may require inspection by an expert. Additionally any I.T. equipment including Point Of  Sale (POS), printers and telephone systems will need to be checked to ensure they are functioning well. 

Floral Supplier Relationships 

Florist’s can either pick up flowers direct from growers, from a large local wholesale market or use a wholesaler who delivers to the store. The relationship between the florist and their suppliers is critical to ensuring the best quality flowers are sourced at a reasonable price. There may be an opportunity for a new owner to change suppliers to get better prices but make sure you choose a new wholesale flower supplier with a good reputation. 
Floral Supplier Relationships

Flower Shop Employees 

The existing employees of the florist could be an important asset for you as you learn the ropes. Management will change if the florist is owner operated, but the employees may stay with the businessOften the employees will have good relationships with existing customers which can be very helpful. They may also know the systems such as ordering and working with the online florist portals. A new owner generally is not obliged to continue the employment of existing employees, however it is important that any staff who are not retained have all their entitlements paid by the seller. 

Reasons for Selling a Florist 

 As florists are often creative and passionate people, it is important to remember that selling their flower shop is probably a difficult decision. Some if the reasons for selling a florist include: 

  • Life stage of the owner – either reaching retirement or other personal circumstances 

  • Owner moving away the area  

  • Owner losing motivation, as they acknowledge a new owner can fulfill the potential of the business

  • Owner taking a new career direction 

It is important to find out their motivations for selling and then work out how you as a new owner will be able to overcome any current challenges the business is facing. If you do this successfully you should be able to create additional future profits for the business. This may come from cutting costs or finding new opportunities to increase sales by exploring new revenue streams. 

A florist business is highly rewarding for the right person. Obviously, a love of flowers is important, but you also need to enjoy dealing with people. Often your customers will be at a significant point in their life e.g. a wedding or the loss of a relative. Being able to show empathy and then assistance through the floral arrangements you provide is an important skill for a florist owner. 

Good luck with your Flower Shop journey – why not start by checking what florists are for sale right now.

If you don’t see a florist for sale that fits your requirements let us know by signing up for our business alerts – as soon as a suitable business is listed we will be in contact. Looking to Buy a Florist in Australia?