Every Cost Needs to Earn Its Place
Running a florist business means constantly weighing up new expenses — a delivery van, a bigger cold room, a new POS system, extra staff on Saturdays. Every pound committed must be justified by additional revenue, cost savings, or risk reduction. Without a structured approach, spending slowly erodes your margins.
The Five-Step Evaluation Framework
1. What Does It Actually Cost Per Year?
Convert everything to an annual figure. Monthly costs feel small in isolation.
- Van lease at £350/month = £4,200/year
- Part-time florist at £150/week = £7,800/year (before employer NI and pension)
- POS system at £65/month = £780/year
Do not forget hidden costs. A van also needs insurance (£1,200-£1,800), fuel (£1,500-£2,500), and servicing (£400-£600). The true annual cost of that £350/month lease is closer to £7,500 to £9,000.
2. How Many Extra Bouquets Does It Represent?
Divide annual cost by your average profit margin. At £18 margin: £4,200 / £18 = 234 extra bouquets/year (4.5 per week). A £9,000 all-in van cost means 500 bouquets, nearly 10 per week. This makes the commitment tangible.
3. Will It Realistically Generate That Revenue?
Some costs directly drive sales — a van opens new postcodes. Others protect existing revenue — insurance prevents catastrophic loss. Still others save time. Be honest about whether the link between cost and revenue is direct and measurable.
4. What Is the Payback Period?
Payback = Total cost / Monthly net benefit
A £2,000 cold room upgrade reducing waste by £200/month pays for itself in 10 months. A £5,000 shop refit increasing weekly takings by £150 has a 33-month payback — worthwhile, but you need confidence in the projection.
5. What Is the Opportunity Cost?
Every pound spent on one thing cannot be spent elsewhere. Would that £9,000 generate a better return on marketing, cold storage, or hiring? The question is not just “is this worth the money?” but “is this the best use of this money right now?”
Worked Example: Adding a Delivery Van
| Factor | Detail |
|---|---|
| Lease cost | £350/month |
| Insurance, fuel, servicing, tax | £400/month |
| Total annual cost | £9,000 |
| Extra bouquets needed at £18 margin | 500/year (9.6/week) |
| Estimated new delivery orders | 12-15/week |
| Estimated new weekly margin | £216-£270 |
| Annual net benefit | £2,200-£5,000 |
This works because expected orders comfortably exceed break-even, with a clear link between the van and additional revenue.
Worked Example: Cold Room Upgrade
| Factor | Detail |
|---|---|
| One-off cost | £2,000 |
| Current monthly waste cost | £350 |
| Projected waste after upgrade | £150 |
| Monthly saving | £200 |
| Payback period | 10 months |
| Annual saving after payback | £2,400 |
A strong investment — known, measurable cost reduction with a payback well under a year.
Calculating Return on Investment
Calculate ROI over a defined period — typically three years for equipment:
ROI = (Total benefit - Total cost) / Total cost x 100
For the van over three years: benefit of £6,600 to £15,000 against cost of £27,000. The lower end shows negative ROI, meaning your order estimates must be reliable. The upper end is solid. This forces you to stress-test assumptions.
When to Cut Costs Versus Invest
Cut costs when paying for things that no longer deliver value — unused subscriptions, unproductive marketing, or overpriced suppliers. Review every recurring cost annually.
Invest when you have identified a clear bottleneck — turning away delivery orders, losing stock to waste, or working unsustainable hours because you lack staff.
When to Say No
If you cannot identify a clear time saving, revenue increase, or risk reduction, the answer is not yet. Revisit in three to six months.
Use the Cost Evaluation Calculator to model scenarios and the Operating Cost Calculator to see how any new cost fits into your overall overhead picture.
