Budgeting for the Flower Farmer's Second Year and Beyond
Ah, budgeting.
Where you sit at the dinner table listening to your spouse’s justifications for needing another 500 dahlia tuber clumps while they already have over 5,000 individual tubers wintering over in the garage.
Obviously, you are too narrow-minded to see the gaps in your existing dahlia collection—the colors and varieties you simply cannot live without. How can you not realize these tubers will easily pay for themselves when everyone flocks to buy flowers next year? It just makes sense, right?
Joking aside, we do like to sit down together at the beginning of the year and rough out a budget. Like a real budget—one with forecasted sales based on industry trends and national economic estimates, and maybe even a few incentives for hitting targets. Isn’t that how they’re supposed to work?
What is Budgeting for a Flower Farm?
If you’re here, you probably aren’t creating a corporate-style budget with complex metrics and detailed forecasting. And that’s okay. The goal is to create a functional, customized budget that helps you plan your flower farming business for the coming season. This blog is focused on second-year flower farmers and beyond. If you're in your first year, check out our beginner’s budgeting guide [linked here].
Goals for Your Flower Farm Budget
Budgeting can be broad and complex or refined and concise, depending on your needs. Typically, it involves creating a profit and loss (P&L) forecast based on your prior year’s activity, analyzing that data, identifying anomalies, and using it to create a plan for the new year.
Here are the steps we’ll cover:
Take prior year activity.
Analyze that activity.
Identify extraordinary events.
Create a strategy for the new year.
Let’s break this down into manageable pieces.
The Three Main Categories of Activity
1. Revenue
Revenue—or sales—is usually the easiest category to identify but the hardest to predict accurately. Start with:
What you know: Hard numbers from contracts, subscriptions, or events already booked.
What you guess: Historical sales data or seasonal patterns.
What you hope: Aspirational goals based on market trends or planned changes in offerings.
2. Cost of Goods Sold (COGS)
COGS are the direct costs of producing your products, including:
Materials for bouquets (e.g., vessels, wire, packaging).
Purchased flowers for resale.
Supplies for specific products (e.g., wreath rings).
The nice thing about COGS is that they tend to scale with revenue:
More sales = More COGS.
Less sales = Less COGS.
For example: If you had $20,000 in revenue last year and $655 in packaging costs, and you expect a 15% increase in revenue, you can estimate your packaging costs like this:
Growth factor: $23,000 ÷ $20,000 = 1.15 (115%)
Estimated packaging cost: $655 × 1.15 = $753
Using this straightforward calculation can save time and ensure your budget aligns closely with expected changes in sales.
3. General & Administrative Expenses (G&A)
G&A expenses encompass a wide range of expenditures not covered under COGS. These include:
Fixed costs: Insurance, subscriptions, rent, property taxes.
Semi-variable costs: Advertising, merchant fees.
Irregular costs: Repairs, utilities, equipment rental, trash removal.
This is where you have the most control over your profitability. Some expenses, like insurance or rent, remain relatively stable, while others, like advertising, can be adjusted based on your strategy. Irregular costs require careful estimation but also present opportunities for cost-saving.
For instance, you might consolidate subscriptions, negotiate lower utility rates, or refine your advertising plan to focus on higher-ROI strategies. G&A expenses often take the most time to budget but offer the most opportunity to achieve your profitability goals.
4. Fixed Assets
Fixed assets are your big-ticket items—equipment or infrastructure investments. Examples include walk-in coolers, high tunnels, or large tools.
Managing fixed assets can be tricky because they don’t appear on your P&L directly. Instead, they’re capitalized on your balance sheet and depreciated over time. For budgeting, you have a few options:
Use the full purchase price if buying outright.
Budget for financing payments if spreading out costs.
Include depreciation expenses calculated by your CPA.
This is where having a licensed CPA is incredibly helpful. They can guide you through managing and classifying fixed assets, ensuring accuracy for tax and financial reporting. While fixed assets don’t directly affect your operating budget, planning for these investments is crucial for long-term growth.
However, how you choose to handle fixed assets is up to you and should align with your business development strategy. Remember, this is not a standard corporatized management budget. It’s a modified and practical budget tailored for small-scale flower farming.
Anticipating Changes for the Coming Year
To plan effectively for the coming year, consider categorizing potential changes into three areas:
What do you know? For example, weddings already booked or subscriptions sold.
What do you guess? Patterns from prior years can help here, such as seasonal peaks for certain products.
What do you hope? Dream big! Set aspirational but realistic goals to guide growth.
What Do You Know?
Start with the concrete commitments you already have in place. These are the numbers you can depend on barring extraordinary circumstances. For example:
Weddings: If you've already booked weddings for the coming season and collected retainer fees, you can confidently project the remaining revenue from those events.
Subscriptions: Payments already collected or committed through subscription plans, like bouquet deliveries.
This category sets the foundation for your budget. It’s about identifying the hard numbers—your baseline revenue—without introducing speculation.
What Do You Guess?
This is where historical data comes into play. Look at patterns from previous years to make educated guesses about what to expect. For example:
Bouquet subscriptions may peak right before deliveries begin.
Bulk bucket requests often come from last-minute brides in June.
The key is to rely on patterns you’ve seen consistently rather than wishful thinking. While not as certain as "what you know," these educated guesses give you a realistic view of potential revenue, which can inform your spending and planning.
What Do You Hope?
Here’s your chance to dream big. What would you like to achieve this year? Aspirational goals might include:
Entering new sales channels, such as farmers' markets or online sales.
Increasing revenue from specific categories, like weddings or custom arrangements.
Expanding your offerings to attract new customers.
While these goals may be less grounded than your "know" and "guess" numbers, they provide direction and motivation. However, be cautious—aspirations should align with your overall strategy and not overextend your resources. Set stretch goals that inspire growth while maintaining financial feasibility.
Pulling Your Flower Farming Budget Together
If you haven’t guessed by now, the first step is to pull out last year’s Profit & Loss (P&L) statement. This will be the foundation for your budget.
To make things easier, we’ve provided a free budgeting template for our Flower Farming Newsletter subscribers. The template is available in Excel, Numbers, or as a printable PDF. The digital versions come with pre-set formulas to help you streamline the process. Not a subscriber? Sign up to access this and other resources.
Pro Tip: If you’re comfortable with Excel or QuickBooks, export your P&L to an Excel file and format it to match our template. This will save time and make future budgeting even faster.
Budget Worksheet Overview
The template organizes your budget into four columns:
Prior Year Activity: Enter last year’s actual numbers.
Known Activity: Include revenue and expenses you’ve already committed to for the coming year.
Estimated Activity: Use historical data and market trends to make educated guesses.
Total Budgeted Amounts: Combine known and estimated amounts for each category.
Step 1: Revenue
Start with revenue—your sales. Focus on three categories:
What you know: Hard numbers like booked weddings or subscription payments.
What you guess: Seasonal patterns or historical data.
What you hope: Aspirational goals based on new offerings or growth strategies.
For example:
If last year’s revenue was $20,000, and you’re projecting a 15% increase, calculate your growth factor:
23,000÷20,000=1.15(11523,000÷20,000=1.15(115
Use this factor to estimate changes in related expenses.
Step 2: Cost of Goods Sold (COGS)
COGS includes all direct costs associated with your products, such as packaging, materials, or purchased flowers. COGS tends to scale with revenue:
More sales = More COGS.
Less sales = Less COGS.
Example:
Last year’s packaging cost: $655
Growth factor: 1.15
Budgeted packaging cost: $655 × 1.15 = $753
Step 3: General & Administrative Expenses (G&A)
G&A covers all other operating costs. These fall into three groups:
Fixed costs: Insurance, subscriptions, rent.
Semi-variable costs: Advertising, merchant fees.
Irregular costs: Repairs, utilities, equipment rental.
This is where you have the most control. Analyze opportunities to save or optimize, such as consolidating subscriptions or prioritizing high-ROI advertising strategies.
Step 4: Totaling Your Budget
Once you’ve completed all categories, total your known and estimated amounts to arrive at your budgeted numbers for the year. Keep in mind, this is a flexible plan, not a rigid rulebook. Use it to guide decisions, track progress, and adapt as needed.
What to Do with Your Completed Budget
Congratulations! You’ve completed your flower farming budget—now what?
Do you pin it to the fridge with your kids' artwork and ignore it all year? Toss it in a junk drawer to be forgotten? Of course not.
Your budget is a tool to guide your business decisions, help you stay on track, and motivate you to achieve your goals.
Think of your budget less as a rigid road map and more as bowling with bumpers. While the exact path might change, the budget keeps you heading in the right direction, helping you avoid the "gutters" of overspending or missed opportunities. It’s not a guarantee of success, but it ensures you’re always working toward your goals.
Using Your Budget in Real Life
When it’s time to make financial decisions—like ordering seeds or deciding on big equipment purchases—refer back to your budget:
Staying Within Limits: If your seed order goes over budget by $300, consider cutting back on non-essential varieties.
Delaying Big Investments: If your budget only nets $4,000 for the year, it might not be the time for a big purchase like a BCS tractor.
At Sierra Flower Farm, we use our budget to ensure we save enough for fall orders when sales slow down. It also guides which infrastructure investments our business has "earned" for the year, such as a high tunnel or walk-in cooler.
The Motivational Side of Budgeting
While budgeting might feel restrictive, it’s also a powerful motivator. Think of the big picture:
Game-Changing Investments: Imagine how a walk-in cooler could extend the life of your flowers or how a high tunnel could add six weeks to your season.
Focused Savings: Instead of watching profits disappear into small, emotional purchases, use your budget to save for projects that transform your farm’s future.
This year, we’re sticking to our budget for some ambitious projects. While it feels tight now, we know these investments will be game-changers for our farm.
Invest in Yourself and Your Business
Taking time to plan your budget is an investment in your flower farming business. It helps ensure you’re making decisions with purpose, rather than reacting to immediate wants or needs.
For our Flower Farming Newsletter Subscribers, we’ve created a free downloadable budgeting template to help you get started. Visit the subscribers-only page to access this resource. Not a subscriber yet? Sign up below to unlock the template and other exclusive goodies.
Remember, the most impactful change to your bottom line might not be the sales you make—but the expenses you avoid. Take this time to pencil out your budget. It’s worth it for you and your flower-farming business.
We are looking forward to sharing more blooms with you soon.
Graham & Jessica
