Taking out a loan or leasing to increase production capacity can help grow your embroidery, screen-printing or heat-pressing business, but do your homework first.FULL STORY
Build Your Business: Management
Considering Contract Printing?
As a contract printer, artwork often is provided but not in the format needed for screen printing. Many times, it must be revised to be useable. Photo courtesy of Anderson Studio, Nashville, Tenn.
When compared to custom screen printing, contract printing has its own set of advantages and challenges, from business and production standpoints. Knowing them before taking the plunge into this kind of work will help ensure it’s a sound decision.
Whether you’re contemplating supplementing your custom-printing business with contract work or completely overhauling your company’s focus, the following are basic pros and cons to consider.
One of contract printing’s main advantages is it doesn’t require an initial cash outlay, if it’s set up properly. Money isn’t tied up in inventory, and someone else is generating sales and doing the associated legwork. Simply supplying labor eliminates the need to factor in the cost of blank garments for little or no profit. This played a major role in my decision to switch to contract printing in the 1980s; it became a necessary evil.
In those days, I was a custom screen printer who bought blank garments directly from the mills. However, as they signed deals with distributors, I soon found that most of my customers could buy the same shirts directly from these middlemen. I wasn’t in business to only provide labor, and the problem became so widespread that I had to either switch to contract printing or shut my doors.
Another advantage of contract work is that it can be done throughout the year. Some markets — such as music and sports — are seasonal. Others — such as promotional products, corporate and subcontracting — encompass varied ordering cycles. There are enough opportunities that it’s usually possible to develop a complementary contract business to keep the screen-printing presses running. If not, the gap can be used for housekeeping, sampling, and research and development that can put you ahead of the game, or for custom work.
Pick up a few accounts that order regularly and service them well at a good price. The goal is to build a customer base. As you grow, you can create tiered volume pricing and use it as an incentive to get more work. The increased volume will compensate for contract prices being lower than those for short-run, custom jobs.
Pondering the Pitfalls
The downside to contract printing exclusively is that you’re at the customer’s mercy for artwork approval, garment delivery, timeframe, etc. Often, contract art is designed by ad agencies or artists who don’t understand screen printing, so it must be reworked for proper reproduction.
Too often, a contract printer makes corrections or fixes artwork without extra compensation. We charge an hourly fee for corrections and reseparations when possible, but it often depends on the situation and client. Sometimes, it’s better to eat the cost rather than risk losing the client.
A similar dynamic exists with regard to garments. When blanks arrive for a contract order and the count is incorrect, we often get involved — although it’s technically the client’s responsibility. Ideally, we’d set up the press once, print the order and be done. However, in many cases — especially for an event like a concert — being a day late means missing the show.
So if we get a shipment that falls a few shirts short, we still set up the press, print the shirts we have and ship them. When the missing shirts finally arrive, we set up the press again to print the leftovers. They often have to be rush shipped, but that cost is passed on to the client. However, setting up the press a second time is too often done at no additional cost to the customer.
Sometimes, to avoid the above hassle we even order the missing shirts, which can entail determining which shirts are needed, searching online or making calls to find out who has them, and placing a rush order. None of this effort is compensated.
Contract printers must ensure they have enough clients who pay on time to cover monthly bills. Because of the need for business volume, there’s a tendency to bend over backward to keep a regular customer who pays on time happy. As a contract screen-printing business owner, you must decide how much you will do for free. If you think a customer is taking advantage or if you’re doing a 12-color setup, it may be appropriate to charge extra. The decision boils down to weighing the value of the account against any extra effort and incurred costs. Consider how much business the customer brings in and whether an issue is a hiccup or part of an ongoing pattern.
Although it’s important to build enough business to ensure a steady income, remember that developing a solid contract customer base takes time. It’s usually smart not to give up custom work until you have enough eggs in the contract basket. Plus, contract work can take you away from the printing aspects you really enjoy. Keeping custom printing in the mix can minimize this.
It’s not difficult to offer both custom and contract printing as long as sufficient press time is available. However, once you commit to contract printing and the volume starts increasing, you may find that it cuts into the time allotted for custom work. Thus, you may have to turn down orders for the latter.
Key Points in Contract Printing
Find a market. When ad agencies, ad-specialty suppliers, sports franchises and others started buying their own garments, they also began exploring decorating options, making them contract customers. After dabbling with contract jobs for the music industry early on, we recognized the potential presented by garment-buying trends and started contract printing for catalog merchandisers. That led to contract work in the ad-specialty, promotional products and sports markets, as well as other arenas.
Some of the biggest contract-printing markets include ad-specialty distributors, sports teams, tour merchandise and licensed products. In almost any city, there are four to 10 promotional products companies that need printing services.
Subcontracting for other printers is another way to go. Or, thinking outside the box, you could cultivate cut-piece work.
Know your costs and capabilities. It’s essential for any aspiring contract-printing shop to know its hourly operating cost to allow for fixed and variable expenses, and gross profit. It’s important to have a standardized system in place so you can be consistent when charging for time spent on jobs.
Costs often are driven by the printer’s location and competition. But just because you do better work than the other guy doesn’t mean you’ll necessarily land the job. It also helps to be good at sampling and color matching; if you can’t match PMS colors, you shouldn’t do contract work.
Also, set cost-effective minimums. For example, we try to stay away from full- color orders for less than 72 pieces, unless the customer is willing to pay extra.
Get set for success. Job documentation always has been key to the consistency, repetition and predictability that ensure customers return. This is more important than ever with the influx of new garment fabrics, and makes production faster and easier, particularly in the contract-printing arena.
Communicate clearly. If you don’t fully understand a client’s expectations before starting production, you can end up losing money on a large order. We recently picked up a job from a customer who originally had used another printer. She wanted a full-color design, but the previous printer misunderstood, thinking she wanted a single-color halftone print. When she picked up her order, it didn’t even marginally represent what she was expecting.
In our shop, we have a strict policy of obtaining customer approval before beginning production. The client must either see a digital proof or — even better — come into the shop to see a printed sample. If that’s not possible, we’ll overnight the sample for inspection. Never print anything without the customer’s approval.
Andy Anderson is president of Anderson Studio, Nashville, Tennessee. He is a 40-year veteran and a pioneer in the screen-printing industry, being one of the first to master the art of four-color process screen printing. He has won more than 100 industry awards for his work. For more information or to comment on this article, email Andy at firstname.lastname@example.org.
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