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10 Reasons Start-Up Decorators FAIL


Much of the learning that is necessary for success in this industry can be attained by staying abreast with industry publications and attending major industry trade events at least once a year.

August 1, 2013

This year’s crop of start-up decorated apparel companies arrives as its predecessors did: with elevated levels of excitement and optimism, varying degrees of well-warranted apprehensions and trepidations, and a 50% chance of making the cut in this business.

Which candidates are among the half that will succeed in establishing viable businesses? What will they do to maximize their odds relative to those who’ll flounder and fidget until they throw in the proverbial towel?

The differences between the two groups are clear and have remained constant for decades. And while the winning half will demonstrate a diverse set of fortuitous decisions, the other group is more homogeneous as to the causes of their demise. It is this latter group of start-ups that merits your attention if your enterprise is to succeed.
 
Yes, beginner’s luck has its place in our industry. Veterans can tell great stories about beginners who landed on our shores and made a big pile of money — sometimes quickly. But for every such tale, there are many more of entrepreneurs’ dreams of success being dashed upon the rocks of conventional wisdom, ill-founded assumptions, poorly researched solutions and weak execution.
 
My mission here is to catalog the top 10 pathologies that maximize the likelihood of start-ups failing. Having been a full-time management and marketing consultant in the decorated apparel industry for more than 30 years, I can say with certainty that if you find yourself recognizing several of these indicators, you need to rethink how you’re building your business or find another way to make your fortune.
 
I’ve worked inside more than 600 companies in our industry. About 20% of these clients have been start-ups, varying from folks who are not yet in operation to those who’ve been working in the field for up to two years. I’ve also met thousands of other start-up business owners in seminars and workshops, and from talking to readers of my various articles, columns and books I’ve published about marketing decorated apparel.

So, if you’re a beginner in this industry, here’s your opportunity to get a good handle and insight on how well you’ll fare and what you can do to upgrade your chances of success.

1. Failing to Grasp the Industry’s Ways and Cultures: Just because you see most companies operating in certain ways, don’t assume these “norms” are the only or best ways to do business. Industries change, but those start-up practitioners who won’t innovate, instead preferring to follow conventional wisdom, are doomed to fail in this one. The cure here entails extensive research on your part on successful companies and what they do right. You’ll find such stories in Impressions, by meeting and conversing with fellow entrepreneurs at trade events (especially in seminars), and by talking to suppliers and their reps. Also, I’ll personally refer readers to veteran mentors and businesspeople who welcome the opportunity to give back. 

2. Making Technology Your Primary Focus: The majority of newcomers make learning technology their primary focus. If you’re going to be a decorator, you’ll obviously want to learn how to make what you buy do what it’s supposed to do. But taking business away from competitors and establishing your own account base will require considerably more brainpower, money and homework than the relatively easier effort of learning technology.
    
Among your most difficult challenges are getting well-informed, practical answers to fundamental non-technical questions, such as, “How much should I charge?” “What kind of margins should I expect to earn?” “How do I attract business from
major corporate accounts?” Doing your homework provides the answers.

3. Trying to Be All Things to All People: As a newcomer, you’ll find a world of opportunities ahead of you and huge potential. But
attempting to sell and market to too many audiences will prove counterproductive. Focus on only one or two — at most, three — markets, from among businesses, schools, organizations, events, professional communities and more. Each presents good target markets. Remember, however, that each market carries its own rules, cultures and baggage, and each sector has its set of advantages and limitations. Being selective about where and to whom you choose to market dramatically increases your chances of success.   

4. Thinking Your Biggest Investment Will Be Equipment: Getting the right equipment definitely is critical to a production operation’s success. But what will make or break you has more to do with your ability to sell your products and services. If you think your investment in equipment is the most important capital you’ll spend, think again. Equipment obviously is a key consideration in start-up costs, but it’ll prove to be only a small part of what you need to run a decorated apparel business. Operating costs will dwarf whatever you spend on equipment.
  
There are numerous studies that cite lack of capital as the single greatest factor in business failures. In most operations, this industry has lower barriers to entry than most, but insufficient capital resources is tantamount to suffocation.
   
Once you have a handle on how much hardware and software will cost, you’ll soon learn rent, telephones, website development, advertising and other obvious necessities will prove far more costly. Even more money will ultimately be spent on people, unless you’re planning on doing everything yourself. Once you’ve tallied all the costs you think you’re likely to incur during your start-up phase, double that projection. Whatever your marketing assumptions and revenue expectations, assume they are overly optimistic and that your expenses will prove greater than what you anticipate.

5. Avoiding Becoming a Salesperson: Except for a rare few who quickly discover a magic formula for getting up and running with a great location, dream website or other miracle marketing device, newcomers will soon learn that attracting business doesn’t happen by itself. The sooner the owner gets in front of prospects and gains command of the process, the better his chances for success. In time, of course, you can engage others to handle sales or develop the correct marketing mix to generate business.

Translation: If you hate selling and think you’ll create an account base without doing it, find another line of work.  

6. Failing to Properly Market Your Business: How will you market your business? How much time and money will you devote to advertising, networking, and generating accounts? Do you know which advertising media will work best for you in your chosen markets? Which ones don’t work at all? Learning our technologies is important, but what good is it if you don’t have orders to fulfill?
 
Establishing a market position for your company and its products and services isn’t a luxury, it’s absolutely critical to your success. What about your company’s name? Will it help attract business or become an obstacle to your marketing efforts?

Perhaps the biggest question you need to address is: Why should customers buy from you instead of the competition? You’ll need to develop a compelling explanation to convince buyers that your company is a good choice for them. If you can’t address all these questions with reasonably sound answers, you need to revisit your gameplan and timelines. Marketing a new business in any industry is challenging. In our industry, this core issue is compounded by the maturity and dynamics of the marketplace and the fact that long-entrenched competitors appear to offer so much more in the way of services and capabilities — until you prove your own enterprise worthy.

Note: The faith-based marketing model, characterized by the boss sitting by his telephone and praying for it to ring, should be avoided. Winners market their businesses; losers don’t.

7. Thinking Industry Knowledge is Finite: The business of decorated apparel is a profession entailing constant learning of decorating and communications technologies, management skills and more. You have a lifetime of learning ahead of you if you want to maintain your edge in our business and keep competitors at bay. Much of this learning can be accomplished simply by staying abreast with industry publications and attending major industry trade events at least once a year.

But maintaining currency isn’t enough. Knowing when to make changes — and recognizing the changes that are needed — is an acquired skill, one that gets more challenging over time given the conflict between wanting to stay with what you already know versus realizing that the world around you doesn’t wait for procrastinators. In time, though, it may be your competitors who compel you to change or innovate.  

8. Making Accounting a Low Priority: Show me a new entrepreneur and I’ll show you someone who thinks he has more important things to worry about than accounting. Too often, accounting doesn’t become a priority until after something has gone so wrong that the owner can’t quite figure out how things got so screwed up. If accounting is new to you, start by hiring a good small-business adviser who can help establish your chart of accounts, obtain industry-specific operating ratios benchmarks and help you understand what your numbers are really telling you. Oh, and actually look at your numbers at least weekly. Failing to make your scorekeeping a priority from the start means paying more for your garments and your leases.   

9. Not Acknowledging Customer Input: Sure, there’s a lot on your plate and customers are not always right. But running your business strictly from your vantage point can be hazardous to your economic well-being. Customers tell you in many ways about their attitudes, concerns and desires about doing business with you. Learning what they’re telling you should give you ample thought to modify policies and make reasonable accommodations when it’s intelligent to do so. Too many entrepreneurs, though, seem predisposed to dismiss customer input with perfunctory actions without really trying to digest what you might gain from this knowledge.
  
Once you have six months of survival under your belt, consider establishing a customer advisory council and invite a few customers to serve on it. Convening it two or three times a year will pay big dividends in helping you see your company through the eyes of the people who pay your salary.

10. Buying Garments Primarily on Price: Industry
neophytes erroneously conclude that they can shop every purchase and save a few pennies on every garment. This practice, however, is counterproductive in the long run.

Garment vendors value buyers who order frequently, pay their bills and demonstrate consistent loyalty. Establishing relationships soon begins to pay off well beyond the perceived pennies per item. What begins to accrue to loyal customers are lowered prices, meeting your pricing needs on key orders, occasional free samples, extended terms when necessary and a friendlier level of overall service. Once you’re seen by your vendor as a loyal partner, the bonds between buyer and seller grow stronger with every transaction.

Hopefully, by reading this, you can evaluate how you may do certain things better in your business, and gain some validation for the things you’re already doing well. It’s of greater value for you to learn about these critical issues in this manner than through unfortunate, costly experiences in the months and years to come.

Mark L. Venit, MBA, is president of the Apparel Graphics Institute LLC, a full-time management and marketing consultancy
established in 1982 for the decorated apparel industry. He has published more than 400 articles on apparel decorating management. His latest book, “The Business of T-Shirts: A Textbook for Success in Marketing and Selling Decorated Apparel,” is available at
thebusinessoftshirts.com. For more information or to comment on this article, email Mark at markvenit@cs.com.