Fresh out of university, I started work as an economic engineer in the rocket and space industry. My future husband and I wanted to buy a house in Moscow and have children, but on the salary of an engineer, that would take 10 years at least if we were to avoid taking on a mortgage. So, we decided we had to drastically alter our future and enter the world of entrepreneurship to achieve the kind of life we dreamed of. Opening a floral shop seemed to us a way to get to where we wanted to be.
We realized taking on a business comes with a big risk of going bankrupt and losing money in vain, but we believed in our business and dreamed of buying an apartment without a mortgage.
According to our calculations, we needed 350,000 rubles ($4,500) to open. We ended up spending 800,000 [$10,000] instead.
We didn’t choose the floral business by chance. At work, I was responsible for arranging for flowers for colleagues for birthdays and corporate events. I enjoyed the process of choosing flowers and making bouquets. When you work as an engineer, aesthetics and something beautiful and creative can be left wanting. To me, flowers were an outlet. In addition, there are no special sanitary and fire regulations for opening a flower shop, which means we would face fewer bureaucratic hurdles and red tape.
It took some time to make up our minds. Neither of us had experience in industry, and it seemed very difficult to organize a business. What ultimately decided it for us was the chance drop in price of our dream premise.
I had been keeping my eye on a place near my work. I often walked past. It was an area that I really liked. It was right next to the Theater of the Russian Army, and was located in a historic area with many old buildings displaying extraordinary architecture, hipster coffee houses and parks. The rental price, however was horrific and well out of our range at 150,000 rubles a month for 25m². Nevertheless, I left my number with several local realtors. Six months later, when we had all but given up, I received a called me informing me that the rent had dropped to 90,000.
We took on a line of credit to open the store, and my now husband decided to register as an individual entrepreneur. We chose the simplified tax system because it makes it easier to keep records: you just pay 6% tax on profits every month and do not have to pay VAT. On average, our taxes amount to around 40,000 rubles per month. No additional certificates and documents are required to open a flower shop.
We didn’t draw up a business plan—we just googled how much the equipment and flowers cost and roughly calculated all the expenses. We arrived at 350,000 rubles for the opening, which we had enough savings to cover.
We had no backup plan, only a clear goal. We planed to open in a six weeks, because September 1st was approaching. September 1st is one of the main lucrative holidays for florists.
We had no extra money for the following months should the business not turn an immediate profit. The plan was to deal with problems as they came and not let fear of what might be stop us. We knew that in a worst case scenario, it was possible to borrow or take out a loan.
The cost of opening a flower shop, 2019—796,800r.
Repairs 200 000r.
Rent with a communal apartment for two months 190 000r.
First purchase of flowers 160 000r.
Equipment and tools 117 000r.
Signboard and marquise on the street 74 000r.
Website and advertising 25 000r.
Furniture 15 000r.
Cashbox 15 000r.
So, as you can see, our plans to open for just 350,000 quickly succumbed to reality and we ended up spending more than double. New expenses constantly appeared. The first purchase of flowers and accessories turned out to be more expensive than we thought. We had also forgotten about little things, such as waste baskets and certain consumables. We faced unexpected emergencies as well. For example, the sewer system burst twice during repairs. The extra costs were covered by taking on credit.
If you decide to start a flower business, calculate all the costs and multiply that amount by three. Then you will have a sufficient supply of money in case of problems. In our experience the flower business can be safely started for between 800,000 to 1,000,000r. If you are willing to wait for at least two years to pay off these expenses. We plan to break even by 2021.
Corona crisis and reopening in June
We survived the period of self-isolation quite successfully. The biggest holiday of the year came on the eve of the quarantine—March 8, International Woman’s Day. Shops typically accumulate two-month’s worth of revenue in or more over a period of just 3 or 4 days. This revenue got us through the quarantine.
In April it became clear that the isolation would be delayed, we talked with the landlord, and he met us halfway—he did not take rent for two months of downtime.
Since June, the store has been fully operational. My husband planted wild grapes at the facade, we began to carry flowers out into the street. Thanks to this, people began to pay attention to the store, and the flow of customers grew by about 50% compared to the traffic before quarantine.
Our main clients are our neighbors, because it is not customary to travel far for flowers.
Net profit for August 240 885r.
Expenses for August 541 514r.
Purchase costs 285 714r.
Salary fund 100 000r.
Rent 90 000r.
Tax 48 000r..
Advertising and marketing 10 000r.
Communal [building] expenses 7800r.