When the shut-down orders came in mid-March, Christina Stembel, founder and CEO of Farmgirl Flowers, did what so many business owners did: She made drastic cuts, scrambled to get a slice of the government stimulus bill, and retreated to weigh the possibility of her business even surviving.
In the early days of the quarantine, sales at Stembel's direct-to-consumer flower business collapsed by 60 percent. She had no idea how bad things would get. At the time, she said she felt like she was "on the edge of a cliff." With Mother's Day approaching--the floral industry's equivalent of Black Friday, which can help a company survive a summer lull--she was worried and exhausted. Stembel estimated she had eight weeks of financial runway.
The flower business is fragile, even in normal times. The cost and perishability of flowers create some tight margins. Immediately following shelter-in-place, for example, she was forced to compost $150,000 worth of unsold flowers because, as she puts it, "there's no sale rack for flowers."
She got to work, determined to save the business she'd spent the past decade building. Stembel applied for the Paycheck Protection Program through 18 different lenders, but wasn't one of the lucky ones who got approval early. She made hard decisions--and fast. She let go 196 employees (after furloughing them) and moved the business out of pricey San Francisco to a barn 90 minutes south of the city, a move that cost about $200,000 but which allowed her to continue shipping flowers nationwide. (Another packaging and distribution center in Latacunga, Ecuador, is still open, but it is operating under limited hours due to national curfews imposed by the government.) She also cut her entire $150,000 monthly marketing budget.
When Stembel launched Farmgirl, she did so with $49,000 of her own savings. Most of the money Farmgirl made, Stembel put back into the company, fueling its growth and subsidizing the cost of each of the 4,000 to 5,000 arrangements the company ships nationwide on a normal day. Last year, Farmgirl's sales topped $39 million and made the Inc. 5000 list of fasted-growing private companies in the U.S. for the second time. (She says she pays herself $60,000 a year.)
She's turned to YouTube to appeal directly to her customers and explain what's going on with her company. One 26-minute video about her challenges landing PPP has garnered nearly 17,000 views, with over 100 comments. ("I have not purchased any of your product yet but plan on it for Mothers Day" wrote one. And another: "Thank you for being a voice for small businesses like yours and mine. If you ever get out of the flower biz, go into politics.") This, along with other videos and newsletters that laid bare Farmgirl's challenges, led to a sudden boost of sales for Mother's Day, which she estimates will spike 226 percent over last year. That's right--more than three times her Mother's Day sales pre-pandemic.
As a result, she's now far more confident in her company's ability to ride out the downturn, no matter how brutal. Just this week, in fact, she received word that her PPP application was approved, something she deemed a potential "lifesaver." She's now working to bring some employees back and plans to put them to work arranging and shipping bouquets and helping with operations.
"There's way more than a glimmer of hope," she says. "I'm very upbeat because we're in the midst of Mother's Day and our numbers are good."
Stembel is even beginning to sell a new bouquet this week. It's called the PPP Peonies, and $10 of every sale will go to SF New Deal, a nonprofit supporting small businesses and feeding the hungry. "We will pull through," she says. "We'll give it the fight of our lives."