Determining Your Shop’s Location

There’s a lot to consider when deciding on the best place for your embroidery business.

By Connie R. Smith, Contributing Writer

You can get creative with the space you use for your embroidery business if you work from your home, but remember the many things that go into running a home-based business.

September 5, 2014

The level of ease or difficulty in starting a business depends on how much work you do beforehand.

If you take the proper steps and do things correctly, your business will thrive, and before long you will be moving to a new, bigger and better location. With so many possibilities today, choosing the right location for your embroidery business is necessary for success.

Picking a location for your business is only one of a number of factors for success. Other necessary ingredients include permits, insurance, employees, licenses, utilities, signs, vendors, advertising, loans, deadlines and so on.

First, make a decision regarding the business type under which you want to operate. Your company can be an LLC, partnership, DBA or corporation. Do your research to ensure you are doing what is best for you. You can find several independent sources on the Internet to educate you about what each option entails. You do not always need a lawyer’s help, but having one will guarantee you have made the right choice.

You also will need a tax identification number (TIN). Visit the Internal Revenue Service website (irs.gov) to learn more about filing for one. When you start buying from vendors, this number will enable you to get wholesale pricing. You also will need this number to collect sales tax and pay it to the state in which you operate.

Depending on where your business is located, you may need a town, city, county or state business license. Some towns or cities will not issue licenses for home-based businesses. Make sure you have all the proper licenses or you may have to close your shop until they are obtained. This will not only cause a loss of income, but it also can target you for unwanted visits from others interested in what you might have to hide. Remember, most licenses need to be renewed every year.

One thing I have found while doing embroidery consulting is people will pay thousands of dollars to open a business, buy the best tools and top-of-the-line products, and then never give a thought to having insurance to cover these things if lost in a fire, flood or even a robbery. Yes, insurance costs money. But what happens if you lose everything in a fire? Just like homeowner’s insurance, flood insurance is not automatically included in your business policy. Depending on where your business is located, it can be worth the extra cost. Also, if you are operating from your home and have a swimming pool, trampoline, swings, steps or other “hazards,” you may want to add riders to your policy to cover someone getting hurt. You don’t know how important this will be until you need it.

There are many other things to consider when operating a business from your home. For instance, some subdivisions that will not allow delivery trucks every day to the same location. Check with your homeowner’s association for guidelines.

Also, you may need to make a separate handicap-accessible entrance to the business, or bathroom. And if you can’t have a business sign on your property, you need to make sure sidewalks and steps are up to code. There are a lot of things to consider and look into before starting your business.

The most negative thing about working from home is time management. Seeing a sink full of dishes leads to doing a load of laundry. This leads to going to the store, which leads to starting dinner. Before long, it’s time to pick up the kids and you haven’t even turned on the embroidery machine. If you don’t have a separate phone for your business, you will be working after hours. And if you don’t have a separate area for your business that can be closed off from your living area, it also may lead to working longer hours than you expected.

There are many reasons to expand your business. You may have outgrown your current location, need to add more equipment, need a better location or maybe it is just time for a change.

If you decide expansion is needed, check out the possibilities for a new location. Choices include standalone buildings, strip malls, industrial parks or large shopping malls with anchor stores.

Standalone buildings are nice because you can set your own hours, have access to private parking, and you can decorate and paint your space with the colors you want. You also have the option to buy or lease. When leasing, never let someone tell you, “This is a standard lease agreement.” There could be hidden items — like replacing hot water tanks, windows, floors, and even roofs and sidewalks — that can cost you big money if something goes wrong. Make sure your lawyer reads your lease agreement just to be safe. If you don’t like the terms contained therein, you can make amendments to it and negotiate to get what you want. Make sure insurance is included, and then get your own policy to cover your items.

Strip malls are popping up everywhere, but picking the right one doesn’t mean you should opt for the cheapest rent. First, look around to discover the other types of businesses in the mall. If you don’t have a lot of money to spend on advertising, then make sure there is plenty of walk-by or drive-by traffic. Businesses like coffee shops, cafés, hair and nail salons, florists, grocery stores — or even dance or karate studios — will draw people to your business.

The same goes for industrial areas. A few years ago, I was asked to help a company in Chattanooga, Tenn., that was struggling and considering closing its doors. Just two years prior, the business had moved to a small industrial park — with space for 11 other businesses — located on a main road with heavy traffic.

Upon arrival, I immediately noticed that the sign for the industrial park was parallel to the road, which meant you could not read it without taking your eyes off the road. All the individual signs were the same size and painted the same colors, so it took time to read each one to find what you were looking for.

Next, there were no cars in the parking lot. I looked at the other businesses and saw a landscaper, pest control service, mobile car detail service, land surveyor and carpet cleaner; the rest of the spaces were empty. None of the other businesses had traffic, so there was no way anyone would even know the embroidery business was there unless they heard about it some other way.

I saw a similar park across the street and asked the embroidery shop owner why he hadn’t moved there. He said it was because they wanted $1 more per square foot for rent. I talked him into revisiting the industrial park to see if the offer had been updated. The rent still was more expensive, but the other businesses included a deli, coffee shop, hair salon, liquor store, florist, tax service, pet store, printer, personal mailboxes and convenience store. The parking lot was full and there was a traffic light for entering and exiting the premises. As a bonus, each business had a custom sign out front that was lit at night.

A deal was made on the spot and the embroidery shop owner moved within 30 days. By adding a small area in the front of the store as a gift shop with both embroidered and non-embroidered items, he attracted customers needing last-minute gifts. He even started embroidering shirts, aprons, smocks and hats for the other businesses in the park. One year later, he added screen printing and sales have continued to increase.

Don’t settle for the first thing you find because what you need may be just across the street or down the road.

The most demanding location is a large shopping mall. You will be open seven days a week and you must participate in mall promotions and sales. This sometimes requires extra employees to cover sidewalk sales, or late-night/all-night sales. The rent is by far the most expensive and the better the location, the more it will cost.

Another option, especially for startups, is a kiosk. The downside is that there is no space for storage and everything has to be put away each night. Many malls offer holiday space and if there are stores that have been empty for a long time, you can get a good deal. But there usually is a reason for lots of empty stores.

The hardest thing to gauge is when or why to move or expand. Nearly 20 years ago, I got a call from Elaine Hayward, who was based in Snellville, Ga. She was selling ASI items and outsourcing her embroidery and screen printing. She was tired of her suppliers missing deadlines and doing sub-par work, and she needed help setting up her embroidery business. I trained her on a singlehead machine and she started doing her own orders. She worked from her basement and was on the run going to see customers.

It wasn’t long until she moved into a new home with a larger basement. At that time, she added someone to help with sales and running the machine. She slowly added more machines and help, and she did things the right way by ensuring she didn’t go into debt by adding equipment too quickly.

A few years ago, she bought a freestanding building, remodeled it to fit her needs and added screen printing. Again, she added employees to help with customers and run machines.

Absolutely Specialties now has several multihead embroidery machines, screen printing, engraving, a gift shop and — most of all — loyal employees that have been with the company from the beginning. Knowing when to grow is important. Treating your customers and employees honestly will enable your business to grow and expand at the correct pace.

Remember, if expansion feels right, go for it. If you are not 100% sure, then slow down and wait until the time is right. Do your research and make sure you have the right location, proper permits and licenses. Don’t go into debt if you’re not sure you can make your payments.

I know a lot of people who have made a small fortune in the embroidery business. The problem is they started with a large fortune.

Don’t let that be you!

Connie R. Smith has been in the embroidery industry for more than 30 years and has been an industry speaker and consultant. She also is an award-winning digitizer. For more information or to comment on this article, email Connie at lickatstitch@yahoo.com.