Jenny (00:29)
One question I hear all the time is what should my flower farm's profit margin be? And people want a number. Should it be 20%, 30%, 35%, 50%? And you'll hear benchmarks thrown around in farming and small business all the time. And while I do think that benchmarks are an important reference, I also think there's something that's much more important to understand. And that is that there isn't a rule.
That says because you own a flower farm, you're gonna make X amount of profit. Your profit margin isn't assigned to you, right? This isn't just something that happens based on your industry or your market or your area. And it certainly isn't something where you can say, well, flower farms just aren't very profitable. Because it's not true. Profit is something that you have to intentionally manage. And
People have given me flack for this before because I was running a multiple six figure flower farm at a fifty percent profit margin. And it is because I am so
Obsessive over my profit margin. Let's just say that, you know, two flower farms could both do $100,000 a year in revenue and leave their owners with wildly different amounts of money at the end of the year.
And a huge part of that comes down to the decisions that those owners make. So instead of spending this episode trying to give you some like magical profit margin percentage to shoot for, I want to talk to you about something that I think is a little bit more useful once you understand that. It's what can you actually do if your profit isn't where you want it to be? Because I think people have a lot more control over that number than you might think.
So here's my own example. When my farm was just starting out and I was earning around $100,000 a year, my profit margin was like 65 to 70% because I was doing all of the work myself. And so I was earning like $65,000 to $70,000 a year. And now I took a lot of that and I've reinvested it back into the farm. I didn't pay myself all of that. But that's what the profit margin was.
But then when you scale your business more, when you make $200,000 a year, $300,000, multiple six figures a year, there's just no way that you can do all the work yourself and scale the business. And so our profit margin went down as the business scaled. So it went down to about 45 to 50% because I hired people and I had to spend more to run the business and I had to make, you know, more investments back into the business. But 45%.
Of $200,000 is $90,000. So that is a bigger number of profit than when I was making $100,000 a year at a 65 or 70% profit margin. So in general, as your business gets bigger and you scale more, the profit margin usually goes down. But when the revenue is up, your profit number is usually bigger. Not
You know, not always, but this is usually how business works because as your business scales, you need more people, you need more things to be able to run the business. So the profit margin goes down, but the numbers are bigger, right?
Now I know and have worked with lots of different flower farmers whose gross revenue is $100,000 a year, $150,000 a year, and they're breaking even. And this is all, I think, one personal choice, depending on how you want to scale your business, and two, management. So some people are okay with just breaking even as they're scaling the business. For me, I was never okay with that. But for some people, that works for them.
And then the other piece is like just managing it because the reality is profit doesn't just happen. Profit is unnatural. You have to fight tooth and nail to have profit in any business. And the equation is really simple. It's just revenue minus expenses equals profit. And obviously, there's more nuance to your financial statements, but at its core, that's what we're dealing with here. And both sides of that equation contain things that you can influence. And so if you
In your business, are in a place where there's not enough left over, something has to change. Maybe your revenue needs to increase, maybe your prices need to increase, maybe you're selling the wrong mix of products, maybe you have a lot of waste somewhere and your labor needs to become more efficient, or your planting plan needs to be more efficient. Maybe you need to decrease expenses in certain places, or maybe you're just spending too much time generating too little return. The answer.
Is not automatically, I just need to sell more flowers, like I just need to increase revenue. Like I said that, but that's not automatically the answer. And I see a lot of flower farmers get themselves into trouble thinking that when they're not making enough or not paying themselves enough, they just decide they need more customers or more markets or need to book more weddings, more CSA members, more flowers, more tunnels, more revenue. But more revenue doesn't automatically equal more profit.
If it's not managed properly, sometimes it just creates more work. Now, your job as a flower farm business owner is to protect your profit. Every single dollar of revenue that comes into your business has somewhere to go. It should be assigned a home in the beginning of the season or the season before when you do your budget, right? Every single dollar in your business has to go towards seeds, bulbs, labor.
packaging, market fees, infrastructure, software, supplies, your own compensation and profit. And as the owner, one of your jobs is deciding how those dollars get allocated. You can't simply hope that there's something left at the end. And that's what most people do, right? They just go into the season, they try to make as much money as I can, then they sit down and do their taxes and discover, I didn't make any money this year or, surprise, yay, I did make a little money, you know, whatever it is.
You have to protect it.
And the way we do this is by pulling what I call certain profit levers. So if the amount you're keeping in your business isn't what you want it to be, you have choices. There are different levers you can pull to increase the profit of your business. This is very tactical, very like sensible step by step here. Okay. And the thing is that you don't need to pull all of them, but I want you to think about your business like a control panel.
And the amount of profit it produces. And on that control panel, there are a bunch of different levers that you can pull to affect the amount of profit it produces. You could pull the sales lever and bring in more revenue. You could pull the pricing lever and keep more from every stem or bouquet that you sell. You could pull the product mix lever and shift more of your resources towards your most profitable products and services. You could pull the cost lever and reduce what it takes to produce those sales.
Or you could pull the efficiency lever and produce the same result with fewer hours or resources. I recently just published an episode about average order value or AOV. It's episode 115. That's another option. Add that to your listen list when you're done with this episode. But all of these different profit levers are connected to the same thing. It's the amount of profit your business ultimately produces. And
The really important part here is you don't have to pull every single lever at once. In fact, that's usually not a good idea to do. Your job as the business owner is to figure out which one is going to move the needle the most, right? Now, there's another reason why I call them levers because a physical lever that you pull or you push allows you to move something much bigger with relatively little force. And that is leverage.
And that's what we're looking for here. Like, where can we make a strategic change that produces a disproportionately large result in the business? So maybe you could work another farmer's market every week and generate another $10 or $20,000 in revenue. That's one lever. Or maybe you figure out that you're underpricing your subscription and have a relatively small price adjustment that produces an additional ten to twenty thousand dollars more without
Growing or harvesting or selling a single additional flower. Both of these options can move a business up $10,000 to $20,000 in revenue, but one usually requires significantly less force, and that is leverage inside of a business. So let's go through some of my top profit levers that we work with farmers with all the time, and particularly
We work through these profit levers with students inside of our six-figure flower farming business program. But the first one is selling more. So the first profit lever, sell more. This is the most obvious one. and this is the one that people go to, I think, more than they should in in some cases. Obviously, this the biggest constraint sometimes is customer acquisition or sales, but
I don't want people to automatically assume that if they're not earning enough profit, that this is the answer. Because you can increase your revenue by finding more customers, selling more frequently, you can increase your subscription membership, you can book more weddings, you can increase your market sales, you can improve your marketing and your sales conversions. But selling more usually requires producing more, which can mean more flowers, more inputs, more labor, land, harvesting, processing, selling, delivery.
et cetera. And so instead of looking at how much additional revenue will we bring in, we want to look at how much additional profit will this additional revenue actually create. Because if you are earning a significant amount of money in your business right now, but the profit justn't isn't there, what happens is if you try to pull on this lever to sell more, all you're going to get is a bigger problem to deal with. You're just going to get a bigger business that's still pleading money. And so this is what
I work with farmers all the time who are a little bit more established, help them kind of work around this. But in some cases, like I said, if you're just starting out or if you are in a stage of business where
you're stable, this can absolutely be the answer. It's just to ramp up your marketing and sales to earn more. But profit lever number two is pricing. And this is honestly probably the biggest problem I see in the industry right now are pricing issues. What happens if you make more money from the flowers you're already producing? If you can increase your bouquet price or your subscription price.
You adjust your wedding and event pricing. You increase minimums for events or weddings that you book. If you create higher value offerings, or if you increase your AOV, your average transaction value, I kind of am lumping these all under pricing. It can have a massive difference in your business. And like I said, this is probably the number one reason that farmers are earning money, but they're not actually earning a profit, is because they are pricing too low.
And so simple hypothetical here. If you increase revenue by 10% through volume, you're also going to need to produce significantly more flowers, have more labor, all that stuff. But if you just increase your pricing by 10%, you'll be able to create additional revenue and profit without the additional production costs. So obviously the profit is more here. Now there are limits to pricing. Pricing shouldn't just be done like
you know, willy-nilly on a lit on a whim, you're charging like $100 for a 10-cent bunch of zinnias. Like people some people do that. Go for it. But I don't think it's something that can be done without knowing your numbers. But the biggest takeaway I want you to have from this episode is that pricing can have a huge outsized effect on profitability. And this again is one of our biggest focuses inside of six-figure flower farming. We take you through looking at
your specific costs because it can get complicated, you know, between your overhead and your insurance and your mortgage and your all these other things that it takes to run the business, they have to be factored into your pricing. And that's not necessarily a simple thing to do, but we can walk you through it step by step by step. And so pricing, knowing your costs, huge, huge lever on the profitability of your business.
And one last thing I will say about pricing is that the biggest block flower farmers have in this category is their own mental blocks when it comes to raising a price. When they look at I don't know, a bunch of zinnias, and let's say someone's charging $12 for that bunch of zinnias, they're like, there's no way somebody's gonna pay $15 for this, or I feel guilty charging $15 for this, or I don't know if this is really worth $15.
And so all these mental questions come up for us instead of just focusing on knowing what our costs are, knowing what the margin is we have to get from that, looking at the market and assessing how we can position our business to get the prices that we need in order to operate profitably and sustainably. So obviously there's more to this, but pricing, big, big profit lever. Okay, profit lever number three is your product or your crop mix.
Now, this is one that I think flower farmers aren't thinking about enough. Because not every dollar of revenue is equally profitable. You could have crop A, let's say dahlias, that brings in $5,000 in revenue, and crop B, let's say Snapdragons, that bring in $5,000 of revenue. But if crop A requires more bed space, more labor, more inputs, more harvesting time, if you have more loss because of pests and disease, if there's more processing.
The revenue is identical, but the return is not. And this is the same thing with your sales outlets. You know, $10,000 through one outlet may require dramatically more time and expense than $10,000 through another. So sometimes the opportunity isn't how do I sell more? It's how do I sell more of what's actually making me money and less of what isn't? And this is where leverage really starts to matter here. So taking a look at
your product and crop mix looking at what's actually producing profit in the business and what's not and making data driven decisions based on that data that we have. Now the next profit lever is expenses. This is a really simple one but not an easy one. Simple but not easy. And it is if you just cut your costs, you know, you will obviously make more profit. So can you decrease
what it costs to generate your current revenue. An important caveat here, cutting costs for the sake of cutting costs isn't automatically smart. You don't want to save $500 on something that costs you $5,000 in productivity or revenue.
Instead, you want to look for places where you're wasting time, if there's overproduction in your fields, if you have unnecessary subscriptions or services, if you're paying way too much money for your supplies and materials. Like if you're just buying stuff off Amazon and not buying like bulk from a greenhouse or a farming company, like that alone will save you.
So much money every single year. We did this with one of our students. We're like, you're just buying way too much on Amazon. Just go buy your supplies and materials from this other place near you. And they saved like $10,000 a year. It was crazy. But other things are just poor purchasing decisions, putting a lot of inputs like time and money and materials towards low performing crops, like certain crops where you're not actually making a big return on them, or just expenses where you don't get a big enough return on them.
And so the question isn't really how can I spend as little money as possible? I guess that's part of it, but you rather want to look at it like, is this dollar producing an adequate return? And so we have frameworks and exercises we take our students through inside of six figure flower farming to better help you understand which expenses are going to produce revenue for you and which ones are not. And so expenses, huge part of profitability. Now I
Before I move on to the next profit lever, I just want to say that when you are just starting out or when you are scaling your business, like growing the business, you are going to have expenses that I call it as stupid tax. And I don't say that because you're stupid because you're not. I I just say it because I have made a lot of very stupid mistakes in my business that have cost me a lot of money.
But that is how we learn what is necessary and what isn't. So if you're looking at your expenses and you're like, man, I spent all this money on, I don't know, let's just say like a perennial or something and I didn't sell a single stem of it. Like that was stupid. Trust me, we have all been there. It's just what happens. This is how you learn. And don't be too hard on yourself in those situations. But it's a really good learning opportunity to see like, well, I won't do that again. Or are there other areas in my business where I'm doing something like that?
So I'll been there. We all make dumb decisions sometimes in our business. or we all make good decisions in our business that sometimes go south or sometimes don't go with the way that we thought they would. It's okay. That's part of running a business, but we want to keep the expenses in control, in check. Okay, last profit lever we're gonna talk about here today is efficiency. Now, this often gets overlooked because it doesn't really show up very neatly on your profit and loss statement. But
The thing we're looking for here is can you create the same result with fewer hours? And the way that we think about this on our farm is by labor efficiency. So there's some equations that you can do to figure out what your actual labor efficiency is on your farm. And we have some frameworks and benchmarks that we walk our students through to figure that out. But you want to just look at your harvest systems.
How you're processing the flowers, how you're making bouquets, you want to look at your delivery efficiency, record keeping, admin work, all that kind of stuff. And see where you can make processes or systems more efficient so you can do more and less hours. Like this, I know this sounds like a very abstract thing. there are a lot of things we can do to sort of sort of narrow this down, but it's very highly dependent.
On your business and your systems. But the whole concept here is if you're generating $100,000 a year while working 3,000 hours and eventually build the business generating the same $100,000 in 2,000 hours, you inherently improve the business. Even if your revenue didn't change, your time is a finite resource. So you have to treat it like one. And if you have employees, it is going to be
way less money in labor, so that's going to increase the profit margin. Now one big, big, big no about labor is that I don't want you to forget your own labor. A flower farm can appear really profitable on paper while the owner is contributing hundreds or thousands of hours of unpaid or underpaid labor to it.
if the only reason the numbers work is because you're not counting your labor, that's really important. Because your time has value. If you made $20,000 in quote unquote profit, but you worked an additional 1,500 unpaid hours to create it, I want you to know that. And this is one reason profitability and efficiency are very closely connected. Because sometimes improving your business doesn't mean making another
$20,000 or $30,000, sometimes it means making the same amount of money while working 300 fewer hours for you or for your team members. That's a huge improvement in the business.
And efficiency is a really important metric here because
I see other flower farms that have very similar sales outlets to me, but they're growing on less land. And they have like twice or three times as many employees as I do. And it's it's just like, well, what are you what are you guys doing with all your time? Like, you should have not a single weed on your farm.
And when I see that, that tells me that their systems and their labor efficiency is not efficient at all. And there's a lot of room for improvement with their systems inside of their business. And it would save them, I mean, it would make the difference between between them being profitable or not. It would make the difference between them paying themselves and not. And so labor efficiency.
Is really, really important whether it's you working in the business or you and a team. Now that's my core profit levers that we're gonna talk about today. There are obviously more, but these are the five biggest ones that I think can make the biggest difference in a business.
The most in important thing to understand if you really want to improve your business as much as possible right now is to figure out where the greatest leverage exists inside of your specific business. And this is what I help flower farmers with all the time. we'll just go through a few examples of different flower farmers. Farmer A has great margins, good prices, has an efficient operation, but simply doesn't have enough customers. Well, they would want to focus on marketing and sales.
Let's say farmer B has plenty of demand and sells out constantly, but there's still no profit. That means that their prices are too low. So they need to focus on pricing. Let's say farmer C has strong revenue, but most of the land and the labor goes towards low margin crops. this means that they might want to look at their product mix, like what they're growing and selling and how they're selling it.
and just really focus on what is most profitable. Let's say farmer D has really good products, customers, and decent pricing, but everything takes twice as long as it should, that's an efficiency in issue. And let's say the last farmer makes plenty of sales but spends almost everything that comes in, that's an expenses issue or a financial management issue. All of these five farmers should not have the same business plan or the same solutions because
They all have different problems inside of their business. And this is why blindly copying what another successful far farmer is doing can be kind of dangerous because their constraint of their business may not be your constraint of the business.
But all of these things, all these profit levers are different strategies and tactics you can use inside of your business to physically increase your profit, to measurably increase your profit margins inside of your flower farm and to actually pay yourself a living wage and hopefully better than just a living wage, right? We don't want to just survive, we want to thrive. And honestly, this is one of the biggest ideas underneath everything I do inside of my business program that's called six figure flower farming.
Because I'm not interested in giving every flower farmer the same exact prescription and saying, you need to raise your your prices or you need to grow more or you need to post on Instagram five times a week because I don't know that that's your problem without diving into the specifics of your business. What I want you to be able to understand is that I want you to know your business well enough to be able to look at your numbers, your products, your time, your marketing and sales and say, here.
Here is where my biggest opportunity is, and then focus your energy there. And that's a huge part of what we work on inside of six-figure flower farming. I want you to know where your biggest opportunities are, and I want to teach you how to figure out what that is. Now, enrollment for this program is opening on October 13th, 2026. And I'll obviously be sharing more about it as we get closer. But to celebrate the program enrollment opening again.
I'm hosting a completely free training for flower farmers where we're gonna dig into some of these ideas much more deeply and help you start looking for the biggest opportunities to improve in your own business. And so if today's episode had you thinking, okay, I understand that there are certain profit levers, things that I can do to make more profit in my business, but I don't actually know which of these levers I should be pulling and I don't know how to execute them inside my business.
I really want you at this free training. I think it will help a lot. It's totally free and you can go and register at trademarkfarmer dot com forward slash training. That's T-R-A-I-N-I-N-G, trademarkfarmer dot com forward slash training. So head over there to save your seat.
I'll also drop that link in the show notes so you can just go and click on that to save your C. I hope that I'll see you there. So to wrap up this whole episode, the question comes to what should your flower farm's profit margin be? Well, I can't give you one magical percentage that's right for every flower farm, but I can tell you this: you have far more influence over your profitability than you think or that you might think. Profit really.
Doesn't just happen. It's something that you as the business owner have to intentionally create, manage, and protect. And if yours isn't where you want it to be, please don't immediately assume that you need to work harder or grow more flowers or find a hundred new customers. Step back, look at all the options, all of the levers that you can pull inside of your business and figure out where your biggest opportunity actually is. And if you want help doing that.
It would be an honor to work with you and I would love for you to get started with that free training I mentioned at trademarkfarmer dot com forward slash training.
Thanks again for being here for another episode of the Six Figure Flower Farming Podcast. Don't forget we publish new episodes every single Monday. So I'll see you next week. Same time, same place. Bye for now.
