It’s hard to believe, but it’s birthday time again! This weekend the Edible Flower is four years old.
That means it’s time for my year-end finance report published for all the world to see. As usual, this annual blog is a chance for me to reflect on the year gone by and share the nitty gritty of the finances of our business – a 2,500 word antidote to the perfection of the Instagramable life Erin and I lead.
In our year 1 blog, as well as sharing our finances (which seemed quite a shocking thing to do at the time, but is now old hat at The Edible Flower), I questioned the constant pressure to expand any business.
In our year 2 blog I talked about the hidden costs of food, and how hard it can be making decisions about sourcing food.
In our year 3 blog I talked about the challenges of continuing to run a small business with the arrival of our wonderful twin girls.
This year I want to start with a quote – a quote that I typed out on an old typewriter and framed for Erin on valentine’s day this year. It happens to hang on the wall above our nappy changing station – so we both see it a lot!
“Build a good name. Keep your name clean. Don’t make compromises, don’t worry about making a bunch of money or being successful. Be concerned about doing good work. Protect your work and if you build a good name, eventually that name will be its own currency. Life is a roller coaster ride, it is never going to be perfect. It is going to have perfect moments and rough spots, but it’s all worth it.”
It rings so true for Erin and me. We don’t compromise. We try not to worry about money. We believe that we’re doing something worth doing here at The Edible Flower. But to be honest, we’re both physically and mentally exhausted. And it’s so hard to just keep going in those rough spots when it feels like any form of appropriate remuneration is still so far away. But don’t worry. We keep changing nappies. We keep reading our Patti Smith quote and so far at least, we Just Keep Going!
But where are those numbers I here you cry… Give me the figures!
Four Years In – A Financial Summary
Over the last four years we have cooked 7,166 meals and have a cumulative gross income of £214k (£39k in Year 1, £61k in Year 2, £60k in Year 3 and £54k in Year 4). Year 4 would have been our highest turnover by some considerable way if Covid-19 hadn’t kicked in.
In those four years we’ve spent £78k on “project costs”, that is; ingredients, travel, equipment & crockery hire and freelance event staff – giving us average gross profit margin of 64% (we’re aiming for 65% and we were at 63% at the end of Year 3 so we’re heading in the right direction). The overheads of running the business during these four years were £86k. These overheads include our core team staff costs (Shannon and Clare) kitchen equipment, serving ware, electricity, website, IT stuff, insurance, seeds and tools etc.
That has given us a cumulative “profit” of £50k, that is a 23% profit margin (“profit” here is on the basis that Erin and I don’t get paid!!). So £50k remuneration for two people working very hard for four years. An average of £6k each per year (it breaks down to £1k each in year 1, £7k each in year 2 and £8.5k each in years 3 and 4 so we are getting better). Kind of awesome, but also kind of depressing.
In the thrilling, “perfect moments” after a successful supper club or long day wedding catering , I think growing and cooking for a living is a joy and a privilege.
But in the days or weeks leading up to an event, I sometimes think it’s an oxymoronic mixture of boredom and stress (not so different to raising children then! Ha ha!).
Here is a list of things we try to do as efficiently as humanly possible, but are often not that interesting to actually do (i.e. they are boring!) – writing up recipes, costing up recipes, scaling up recipes, generating ingredients lists for events, checking the store cupboards for ingredients, writing shopping lists, doing the shopping, hiring kitchen equipment, crockery and glassware, adjusting hire quotes for numbers of small plates / big plates / cheese plates / side plates (you get the picture) based on updated guest list numbers, preparing quotes for clients, checking recipes for allergens, writing out lists of allergens for clients, writing up our daily kitchen hygiene checklists, writing and checking packing lists of all the equipment, servingware and food we need for jobs.
And here is are the things that are really stressful, the “rough spots” if you like… – dealing with the consequences of getting (pretty much) anything on the list above wrong.
Things were looking pretty positive until everything just stopped back in March 2020.
As I said, after a totally mad summer in 2019 (our biggest quarter by far), Year 4 was looking pretty positive until Lockdown. It was due to be our busiest year to date but within a few days in March 2020 we had to cancel and refund all our events, all our catering jobs were cancelled or postponed and to be honest we just sat around (looking after our children, so never actually sitting still), not really knowing what to do next.
However, there are definitely some positives to come out of Covid-19. Our Year 5 forecasts may have gone from a healthy £75k of turnover to £0k in just a few days but I did manage to do a thousand and one jobs around the house, garden and outbuildings that desperately needed doing in April. And now, we’re slowly rebuilding the business with some new lockdown-friendly ventures.
Oh, and we painted our staircase blue and our bathroom green. It brings us a lot of joy…
Lockdown Venture No 1 – Salad Leaves
This winter I was “on it” with my kitchen garden planning. I knew we had three big weddings in May 2020 and I needed salad leaves for most and beautiful edible flowers for all of them. I overwintered lots and started my spring seedlings earlier than ever this year. Of course, all those weddings never happened, so instead, we decided to start selling our salad leaves.
As of yesterday, we’d sold just over £1,000 of salad leaves since May when we started. It has been so nice to not see all that hard work and lovely leaves go to waste. However, to pick, wash and pack those leaves, it’s taken us over 90 hours of our time (often early in the morning, before the babies wake up, in the rain!). Once you include delivery costs and time, packaging, printing labels, the three years of getting our soil to the state it’s in now, the propagation, planting and weeding, it’s easy to question whether expanding this side of the business is a good idea or not. However, if lockdown had never happened we would never have found the time to actually start selling our leaves and never have learnt all that we have. There is a profitable business there somewhere. We just need to scale up and keep pushing our efficiencies without compromising the product.
Lockdown Venture No 2 – Edible Flower Cakes
One of the reasons we set up The Edible Flower in the first place is that it brings us great joy to make beautiful food and feed people. We missed that when everything stopped in March 2020. We also had hundreds of lovely edible flowers that I had grown in readiness for those May weddings and the events beyond, and had nothing to do with them.
Erin started pressing them. Then she started putting the pressed flowers on biscuits. And then on cakes. They were so beautiful and people randomly got in touch to ask Erin to make them a cake too. So we decided to make it official and start selling 6-inch cakes for lockdown mini-celebrations. Erin sold one cake in May, four cakes in June and so far, 14 in July. Given the ingredients costs, the time taken to grow & press the flowers and the time taken to bake a cake, ice and decorate it I think they should be more expensive. But for now, it’s a nice bit of regular income. (If you want a cake, read all the details here)
Lockdown Venture No 3 – Weekly Vegetable Boxes
Our final Covid-19 inspired bit of business diversification started just a fortnight ago. We decided to run a weekly vegetable box scheme. We’ve kept the scheme small with just 5 people/families getting a weekly box. It’s a chance to get some really detailed records about exactly what we can harvest and when, and understand what would be required in terms of produce in the garden, and labour for harvesting and packing if we were to expand the scheme in future years.
I’ve always thought a veg box scheme would sit nicely alongside growing for our business. Our business is so irregular in it’s demand for produce as some weekends we have a wedding for a hundred people, then some weeks it’s just veg for Erin, me and the girls. A vegetable box scheme would level things out a bit.
As you can see from the chart above, after a crazy April 2020 of exactly £0 income, we are slowly rebuilding. The problem with all these new ventures, the small food deliveries and classes & workshops that we’re doing more of, is that they are priced on the basis that Erin or I do all the work, and whatever income we get is a bonus.
Once we start bringing in our awesome network of free-lance staff we need to pay them a reasonable wage (we pay £10 an hour, plus free food!), and that means these activities start losing us money.
So, in summary, Erin and I are working too much. We’re exhausted and feel like we’re back in 2017 when we were just figuring everything out after yet another burnout (except this time we’ve also got two 22-month old children to look after).
It think we’ve pretty much come to the conclusion that it’s time to go big or go home! The VAT threshold (of £85k turnover pa) is a big deal for us – a genuine barrier to our growth.
I said this three years ago and I’ll say it again. Once we register for VAT we will be 20% less competitive. Pretty much all our input costs are 0% VAT rated (i.e. raw ingredients) and pretty much all our outputs (i.e. catering and events) are standard (20%) rated. When we hit the threshold and register for VAT, we will become 20% more expensive overnight. On average Erin and I take 25% or so of total turnover as our earnings, so that means almost everything we earn would be wiped out.
However, we need help. Ignoring our massive Covid-19 blip for a moment, we can’t continue to have an annual turnover of around £75k*, work stupid, stupid hours to take home £10k each if we’re lucky. To do what we want to do and keep doing it, we need others to help us. And if we’re going to be able to afford to employ others we need a bigger turnover than £75k.
*I say £75k even though the VAT threshold is £85k. That’s because you have to look at a rolling total for every 12-month period rather than simply the total for each financial year. Given the very lumpy nature of our work (really big jobs, often clustered together) we have found we have to stay well below the threshold of £85k to avoid the need to register for VAT.
So, we’ve come to the (exhausting & terrifying) conclusion that we need to do more & become less profitable to keep going. We need to be more expensive, potentially making our food a lot less accessible and deal with it some how. We need to make things more complicated in order to have any chance of one day making things simple.
We’ve also come to the conclusion we need a holiday, or at least a day off.
But What’s The Point!?
We keep asking ourselves (normally in one of those rough spots) “What are we doing?!!!”. One of us could just go and get a job with a salary and life would be so much simpler. Here’s why, so far we haven’t.
I’ve been obsessed with food since I was little. I used to think it was an odd thing to be obsessed with but now I feel like I was right all along. Food has a unique position in life. We can either get it right as humans, or we can get it wrong.
Food keeps us alive. It can either nourish us or malnourish us (sadly at the moment as humans in the western world, it is making us overweight and malnourished). It has the ability to bring us joy three times a day, or the ability to bring stress and pain three times a day (don’t underestimate the number of people in the world with a terrible relationship with food). Food production has the ability to store carbon or produce it (in massive amounts!). It has the ability to make huge amounts of waste or work as a circular economy. It has the ability to work with nature, increase biodiversity and resilience of our rural landscapes against climate change, improve water systems and drainage or to fight against nature. It can regenerate or it can degrade our environment. It has the ability to create great jobs, or to create rubbish jobs.
Our food system is continuing to change. Before we know it, much of the meat we eat will be produced as protein in labs and the plants we consume will be grown in vertical farms with LEDs in big black-box sheds. That’s where the investment is and that’s where the next food billionaires will come from.
The economics of food has a fundamental flaw. There is only so much food that humans need on a daily basis. So if you want your business to grow, the answer is to “add value” by processing food. And if you want to increase your market share by producing and processing food across the whole globe, you need homogeneous products and processes that work in any climate, any environment – hence lab meat and black-box farming.
But we already have the technology to feed ourselves as humans on planet earth – we’re just not doing it very well. Our vision of the future of food looks pretty different. It’s about local networks of small producers doing brilliant things. It’s about celebrating diversity, creating and supporting local food cultures and traditions that give us the knowledge and skills to feed ourselves well and teach our children to do the same. It’s about changing how we value food.
Erin and I were contemplating how much things had changed for us in terms of our relationships with food – now different “normal” is now in terms of what we buy, eat, cook and grow, to how it was a decade ago. If you want to make a big change in your life, make a small change, keep making small changes and one day you’ll surprise yourself with how different normal now is. For me, changing is all about forming habits. Just start doing what you want to do, start being what you want to be. Soon that will be what you do and who you are. Simple!
I started with a quote and so I’ll end with one. This is the quote I wrote on the first page of my first ever notebook entering the world of work as a naive, enthusiastic, recently-graduated environmental engineer:
“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”