The Business & Pleasure of Flowers

Interview with Bill LaFever: Effects of Covid 19 on the floral industry and benefits of CARES Act

• Vonda LaFever & Lori Wilson • Episode 14

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Episode 014: Join Vonda and Lori as they talk with Bill LaFever, owner of the Bill Doran Company. Bill shares his experiences as the owner of 25 wholesale florist locations and the impact on his business and his customers.  We also discuss the CARES Act Relief and the benefits it might have to you as a small business owner.

For more information: https://www.thebusinessandpleasureofflowers.com/

Sponsored by:
Flower Clique
Flower Clique Prep School
Real Life Retail Florist

Speaker 1:

[ music plays]

Vonda:

possibilities for SBA loans. Is that a good option for people?

Bill:

The first bill that was passed into law for this pandemic is now being referred to as supplemental one.

Vonda:

welcome to the business and pleasure of flowers. We're your hosts, Vonda LaFever.

Lori:

and Lori Wilson, and we believe that business and fun are a perfect combination, kind of like us. Vonda

Vonda:

welcome back cliquers. We're so glad you're here. It's trying times out there. We know for sure today. Lori, we have a special guest.

Lori:

We do. I'm very excited to talk to Mr. Bill LaFever. Do you know him Vonda?

Vonda:

I do know Bill. Yes I do. He's the owner of the Bill Doran company, which is a wholesale florist with 25 locations in 18 States serving 32 States. Wow. He's a past president of the wholesale florist and florist supplier association and the current chairman of the board for the society of American florists. Welcome, Bill.

Bill:

Great to be on here.

Vonda:

So bill, you know, I would just want to let everybody know this is about education and a little bit of amusement. It's not legal or accounting.

Bill:

Correct. I'm a wholesale florist. I'm not a lawyer nor a an accountant, but I'll give my best advice based upon what I've learned out there.

Vonda:

Okay, sounds good. Give us a little bit of idea what you're hearing from your managers and all of the different locations.

Bill:

Yeah, and then I can ever go a half step back. You know the, the farms are still producing flowers in California and in South America. They're still being shipped into the U S and on to trucking companies. We had a, our California trucking companies, they stopped shipping for about a seven day window of time and they're going to start shipping flowers out of California again, starting this coming Thursday for arrival a week from today into our branches, so we're still receiving flowers. We are open for pickup business. We are not doing many or, or if any deliveries in most of the markets where we've been shuttered in because floral has not been deemed essential in some markets floral has been put under agriculture so it's been able to do a little bit more things, but then the local municipalities are really where it's coming into play and whether flower shops are able to still do curbside and delivery or not is based really the local municipalities and the regulations there. So we're still bringing in flowers. We're probably down to 25% of our volumes. What we would normally be anticipating right now at our individual branches, but we want to be there for the customers that need flowers. That's for sure.

Vonda:

I was talking to a shop this morning and she was saying that she's not doing deliveries but she is answering the phone and people are picking up on her front stoop. She's using safe practices of washing everything down and leaving it on the front steps and people are picking up, the local authorities say that's fine, cause she is checked with those. And I think Lori, like we've talked about it's location to location.

Lori:

It absolutely is. Even what one County is allowing might not be what the other like I'm in Houston, what Harris County was allowing my County was allowed to until recently, a lot of those neighboring counties start following suit, but most of the shops I've spoken with, especially all the flower clique members, they go back and they check with their state local government. I've been really pleasantly surprised how many have actually received emails with the specifics of what they consider an essential or not non-essential. So that's good. At least they have people getting back to them.

Vonda:

Yeah, it's all about clarification for sure. At this point in the game. So bill, what do you think the pulse of the retail flower shop is? From your perspective? What are you hearing?

Bill:

It varies greatly, that's for sure. The ones that are still operational and they're enjoying a little bit of success because a lot of their cohorts are closed completely. A lot of mass market. The grocery store chains have pallets of water and other items, so flowers aren't available there. So there's a little bit of resurgence back in in some regards, but it varies cause a tremendous number of our customers have closed the doors. They've disappeared, you know, operating at a small percentage of sales doesn't make sense for them. So they closed their doors completely. And that's obviously what a lot of wholesalers have done as well. We would probably be saving money if we closed completely versus trying to operate at 25% of our sales volume. But we also know that that would cripple our core customers, our key people. So that's, that's one of the reasons we decided to stay open at all of our locations.

Vonda:

When I owned a flower shop, we did business with Bill Doran company and that was because of the customer service. It's like you're not thinking right now of the business as a whole. You're thinking of it as the people that you're serving.

Bill:

Correct. We need our retail floors to be as financially healthy as possible today, tomorrow, six months down the road, whenever this fully goes through, we want them to be there.

Vonda:

So society of American florists is providing a lot of really valuable information for shops during this challenging time and they're addressing those most asked questions in all aspects of the floral industry, but the one that keeps coming back, Lori and I get this question over and over and over again is what should we do about the financial side? I understand that there was a first supplement came out that had possibilities for SBA loans. Is that a good option for people?

Bill:

The first bill that was passed into law for this pandemic is now being referred to as supplemental one and that was really just making the pandemic a national disaster, which allows for the SPA to give money out to small businesses at a rapid pace. If that was our only option right now, then obviously we were promoting people, but we have supplemental three, which we'll talk about here in a second. Just give a little more detailed on supplemental one. It's the economic injury disaster loan program, the EIDL, there's a tremendous amount of paperwork associated with that. The dollar amount that you're able to get the loan for is based upon your working capital needs and that is where you have to prove how your business operates, what your capital expenditures are, what your variable expenses are, and you have to do a lot of math. The burden of proof is on you to prove the dollar amount that you need for that loan. The third phase, which just got approved, which is the cares act, that's what we're referring to as a supplemental number three a supplemental two just for the record is much more about a family medical leave act and healthcare worker and funding the hospitals and things. So it really doesn't apply to our industry as much. So just skipping right to supplemental three, that's where the paperwork is a lot easier, but if you already did start supplement one and you're in that paperwork, the loan will get converted to one of the components of the cares act is the paycheck protection program. So that's really what's probably more aplicable and easier for all of us in our industry.

Vonda:

Okay. Bill, tell me a little bit more about this. Easier to say PPP, right?

Bill:

Yeah. I think that's what you're going to hear a lot about. It's one of the components of the cares act that just got passed and the form is not out yet. This is were Monday night, the 30th and we don't know exactly what the forms like but we've been assured that it's going to be very simple process and the level of burden of proof isn't there like it's required in phase one, the dollar amount per your loan instead of have to calculate working capital needs is going to be based off of payroll which benefits our industry compared to a lot of other industry. It really does work for small business. The general math is you're going to take your 2019 employee compensation, total payroll associated with all components, the healthcare benefits, the taxes, everything associated with your payroll that you declared on your company taxes, whether it's an LLC or not. That component, you're going to divide by 12 to get your average month, and then you're going to multiply two by 2.5 that gives you your 10 week window. And that's what they talk about with the 10 week window. That's the dollar amount that you're going to apply for a loan, for the record. You want that to be as large as possible. It's gotta be based off of some factual numbers there, and that is also the maximum dollar amount then that you'll be taking out, from the SBA seven a loan, which then has a high potential to be forgiven to have that be washed away in essence.

Vonda:

So let's do the math on one Bill. Let's say that it's a 500,000 annual revenue shop, then their payroll at 30% should be 150 grand. And I'm going to divide that by 12. So that would be 12,500 per month. And I'm going to take that times 2.5. So their amount of their loan could be$31,250.

Bill:

Correct. My understanding is it's going to be kind of a single page, just what you just did like that is exactly what you'll do, and then the person filling this out, the owner will sign an affidavit saying to the best of their knowledge, these numbers are accurate. Then it's based off of your 2019 tax return, so you sign that affidavit, that dollar amount that you just calculated there would then be put into the bank account associated with that business where you've been paying your taxes, where you've received your, your tax refunds in the past, so you're not waiting for a check. Once that gets processed, that dollar amount goes into that bank account.

Vonda:

Okay, so the how do we know whether we have to pay that back or not? Because I think a lot of it is going to be forgiven is what we're told. Correct?

Bill:

Yes. The goal is to have a lot of forgiven because they're calling the paycheck protection program because they want us to use that dollar amount to keep people on the payroll and as long as we keep people on the payroll and pay critical bills, it will be forgiven. So even though it was enacted into law last Friday, not all the details have been finalized. When the law got passed, they gave some parameters to allow the governing bodies, basically small business administration and some other entities that have some insight into this. The wherewithal to provide the specific details going forward, which we will hear about supposedly within the next 24, 48 hours. We're going to have a lot of this come out. The whole idea is that you'll be using this money to employ people. That's where they're calling it the paycheck protection program. They want to keep money going out to the individual people and so with that dollar amount you can pay people, you can pay rent and you can pay utilities and the dollar spent on those three categories will be forgiven. Provided you hit a couple different criteria. Now the criteria where we need a little more detail. So as of right now on Monday night, what it looks like is there's going to be like an A, B or C category and if you hit one or the other or a combination of them, you'll be able to get that money forgiven. It will be, have you employed 90% of your payroll back on? And we don't know if it's full time equivalent hours, we don't know if it's 90% of dollars they're using the 90% if you do that in a 10 week period, the money will be forgiven. So the other component, the option B is to get all your employees back employed by you by the end of June, June 30th if you have 90% of the employees back on staff at that point, then you can prove that that's where the money is being spent going forward. You'll be able to have all that loan forgiven as well. You don't want to abide by as many of these plans in advance to gear up towards those. But if you don't hit it perfectly, it's not an all or nothing on the forgiveness, if you miss it by 10% within 10% of the loan won't be forgiven. If you miss by 20% 20% alone won't be forgiven. So you don't have to worry about an all or nothing on that. And then the part that isn't forgiven gets converted into a loan and the loan is amortized over 10 years and the first payment isn't even due until one year after the disbursement. The maximum interest at any point in those 10 years is 4% interest. It's worth applying for the most amount you can on, on the initial loan. There's no early prepayment issues at all. Even if you can't get it all forgiven, you're still in a pretty good zone going forward with that, with those dollars a month.

Vonda:

Yeah. It sounds like there's no reason you wouldn't apply for this, especially with them making the paperwork so simple.

Bill:

Exactly. And the resolution, the paperwork supposedly is going to be just as easy when you go to do your taxes, whether you're doing in December or whether you wait until next March and do them, you're going to fill out a very similar form that says, my initial loan that I received in this SBA sub and a program was 31,750 my payroll during the 10 week period of time and there's a couple of different options on where you can be able to use the 10 weeks because if you don't get your staff back until June 30th then you use the 10 weeks there and that's what those guidelines will get a little easier, but on this form you'll say in this 10 week period of time, I spent this amount on payroll, I spent this same amount on rent, on utilities, and it totals, obviously you can't go, you can't take more than the 31,000 or which your loan is, but as long as you get into that number, that's what will be forgiven.

Vonda:

Wow.

Lori:

I have a question. Is any of those times sensitive? Like do you think they should all get on this now? Or if I wait two weeks and try will all the money be gone? Like what, what do you,

Bill:

what we're understanding is that there's two fold here. One is that it's not like the government's sitting on the$2 trillion, which is what they're allocated for supplement three and just quick math there. That's$6,000 for every American that's alive, regardless of age. One month old, a hundred years old, they're pumping in$6,000 per American into just supplement three. So there's not a limited dollar amount associated with that or this component. But what I've been told is also they're already working on supplement four and five cause they know this isn't going to be enough and they want to be prepared with additional supplements. So I would start the process because we don't know how quickly it's going to take, but it's not first come first serve by any means.

Lori:

And it's also, it wouldn't be something that if I did number three and then they bring out four and five, well I already did three, I can't do the others.

Bill:

No. What will happen is if four and five end up being better than three, they'll allow you to roll three into four, kind of what they're doing with number one, people talk about the$10,000 quick loan on the economic injury disaster, advanced law. It's a$10,000 loan you can get pretty quick. Well that would roll right into a paycheck protection program because it's a better program. So is four or five end up being better, it will roll into there as well.

Lori:

You mentioned the date, the importance of, you know, having everybody back employeed by June 30th. If I'm a shop and I'm filling out all of this stuff and I'm saying yes, you know, that is the goal. But as we know, we don't really know the future. What happens if that date comes and we're still in a situation where we can't honor our commitment.

Bill:

Well, and yeah, the good point, there's what happens there is, twofold. You're going to have multiple ways of of getting the loan forgiven. That's one of the components is the June 30th, in that case, if you don't hit that, you'll probably focus on finding another 10 week period of time where your payroll hits a bigger dollar amount and reflective. So that'll be easier to see when we get more guidelines and you won't have to make those final decisions until your first payment on the loan is due, which is 12 months after the dispersal. So you're going to have a little bit of time to look at the numbers and figure out what's best for you. But it's not an all or nothing anyways. If you only able to use 80% of the funds appropriately, that last 20 just rolls into the loan or you can pay it back immediately they are being about as business friendly as you could possibly imagine with this. That's how they've set it up and really eliminate a lot of the red tape. There's no onuses on providing all the data associated with needs and things like that.

Lori:

Right, right. Good Vonda and I both, and I'm sure you have too, we've spoken with so many shops that are, they're leery, they want to make sure they're not signing their life away or you know, getting themselves locked into something. But I think from hearing you, they understand that and they are making this as friendly as possible for a small business owner.

Bill:

For sure.

Vonda:

Well that's the thing at Flower Clique we've always been very careful of giving legal advice because that's been such a gray area. I think just now we've got more clarification and we appreciate that Bill because we look at it much like a flower shop owner and go, wait a minute, this is, there's so much here. What should I do? What should I do going forward?

Bill:

Yeah. And as we kicked off this podcast, you know, we said everybody's situation is a little bit different than others. Take us as educational still spend a little bit of time looking for your specific thoughts. Now after you listen to this, you hopefully have a little more information to talk to your personal accountant about. So you're a little more informed there. Hopefully this just helps. Helps get everyone lined up properly. That's for sure.

Lori:

Another thing I was thinking today, I've noticed our chamber of commerce and small business associations they're having lots of zoom meetings and Facebook lies for each other to really kind of walk through these for the small businesses to help them understand these guidelines. They're not floral specific but they are small business specific so I think that's something to a shop that they don't have an attorney readily available. Contact your small business association within your community or your chamber of commerce.

Bill:

for sure and you know I probably should have thrown this caveat out there as well. There are certain guidelines and some regulations in there. You know when we were talked about that calculation Vonda of your, of the payroll amount, that assumption in that math that we just did was that no individual person received more than$100,000 on an annualized basis in 2019 that was one of the assumptions we made in the math that you did a little bit earlier. There are a couple of minor things like that that's more than minor, but that's why you'll want to read the document yourself as you're filling them out. Because in that affidavit, that's one of the things that you'll sign the saying that no individual person to make you more than a hundred thousand dollars in 19 or you adjusted it down to the 100,000 when you did the math.

Vonda:

Right. Okay. And then there's some other things about healthcare and so you really have to look at those calculations, but it sounds like it's supposed to be a pretty easy worksheet to be able to figure it out

Bill:

for sure.

:

That's great. Lori, anything else you want to ask or add?

Lori:

No, I appreciate you coming on here. I know you were, we kind of caught you at the very last minute today. We are very gracious that you came on to help kind of walk through this with us.

Vonda:

So Lori, you got to ask that question.

Lori:

Oh, yes. Okay. So Mr LaFever, I do have a super important question. This is a question that we ask everybody that comes on our podcast. The question is what is giving you life right now? Like in the midst of all of this? I know it's hard to see, but what are you, what's giving you joy or what are you really loving? Like even at this very moment or something that happened today?

Bill:

Oh, there's a, there's a quote that I've kinda just been repeating to myself and it's"challenges don't create character challenges reveal character" and I keep, you know, I just keep repeating that to myself as I come across these different challenges. I think, you know, how do I want to be perceived in these situations? And then that, that's really where I'm gaining my comfort from my thought process.

Lori:

That's good. That's perfect. That is good. Vonda, you got to answer too sister. What's giving you life right now?

Vonda:

Interesting enough, it's actually Bill being here answering these questions for us. It's been a real weight on our shoulder, my shoulder with people asking, what is it that we can do it? Should we do this? Should we not do this? And a little bit of clarification actually does give me a lot of life right now. And Lori?

Lori:

You know, I am an extrovert. I am not one to sit at home and do nothing and I have been sitting at home doing nothing but this weekend doing things as simple as coming up and finding some Teddy bears to put in our window because of the little kids in our neighborhood. were going on a bear hunt and wanting to find bears. And so my 25 year old daughter and I coming up with some bears and doing those kinds of things, I'm like, you know what, it's going to be okay. It's going to be okay.

Vonda:

That's right. We'll get through it and we'll all get through it stronger for sure. Phil, any closing words? Anything else?

Bill:

Uh, no. I think, I think we've really kind of ran through it all there. I, you know, the industry is going to be fine. There will be some wash out unfortunately, whether it's at the grower level, the wholesale level and the retail level, but we're going to have to look at that as opportunity for all of us that make it through and onto the other side. And we'll be a little bit leaner, a little bit smarter, and then have a little bit more opportunity for all of us too. So, you know, buckle down and, and the other side of this will be definitely be a little sunnier, that's for sure.

Vonda:

Great. Well thank you. Thanks so much for joining us, bill.

Bill:

Thank you guys for having me.

Lori:

We have certainly enjoyed our time together today and we look forward to being with you guys. Again, if you have any questions, concerns, comments, anything we would love to hear from you, you can always email Lori@flowerclique.com also, if you enjoy our little podcast, go ahead and click that subscribe button. That's very helpful for us. And you can even leave a review and we hope you join us next week.

:

Yes. So please come back and join us and discover how a bit of knowledge and one small change in your mindset can take you to new levels in your life and business.

Speaker 1:

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