As the president of the National Network of Embroidery Professionals (nnep.com), I have had the opportunity to discuss just about every scenario you can imagine when it comes to operating an embroidery business. For nearly 30 years, thousands of business owners have shared their “challenge du jour,” seeking input and suggestions on how to proceed in their particular situation. In this article, I will be sharing some of these challenges, and the ideas we have come up with to help these business owners.
What Kind of Markup on Custom Embroidery?
I have a large company looking to order from me. They have a store within their company and also sell online. It will be a lot of merchandise. They, of course, resell to their company workers, and to whoever buys online. I can’t price my goods at retail for them. I would like to get this client. I don’t know what percentage to add to my wholesale price in order for them to be able to mark it up as well and resell it. They offer caps, jackets, T-shirts, polos, etc. What do you recommend as my markup?
What to Do:
Are you providing just the decorating or the product + the decorating? Are you shipping to your customer or to the end user, i.e., the specific person buying the merchandise? Are they expecting a reasonable turnaround time, or are they expecting you to maintain some inventory for fast fulfillment? How are you being paid? Will they put a card on file that you can charge every week or every order? Or do you have to invoice and then wait to be paid? What will the payment window be?
I would factor all of these things into my decision-making process to determine the markup. Figure at least a 25 percent markup on both the goods and decoration if the orders are coming in batches. If, on the other hand, the orders are coming in as single items, it would be more like a 40- to 50-percent markup, as those orders are going to be pretty inefficient and disrupt other workflows regularly.
Beyond that, the percent I would charge would be influenced by the average size of the orders, including the expected turnaround time, the pay model and any other factors that are going to impact your business. If it is a large company, will its orders apply financial pressure on you as you have to order the inventory and then wait to be paid for those goods? Are you acting as a factoring agent for them? If so, they are getting you to use your money for a good bit of time and not paying you for that privilege. This is not a great way for you to do business.
A Popular Model of Blank Apparel Discontinued
My customer has ordered a particular product for years. Unfortunately, the manufacturer has discontinued making that product. What do I do now?
What to Do:
Don’t you hate it when this happens? It is so frustrating knowing there is an order—and income—ready and waiting for you, only to be foiled by the insurmountable lack of a specific product because it is no longer being manufactured.
Are the uniforms one of your regular customers prefers no longer in production? Not to worry. That may very well result in them ordering new uniforms for the entire team! Photo by Louis-Photo – stock.adobe.com
By way of a solution, I would find out from the customer what their most important criteria are. Is it essential that the items match their previous purchases, or can the new items simply function the same? Do they need to be at the same price point, or does it turn out they were ordering more of that item simply because that is what they knew was available? Do not assume the fact that the items need to be an exact match is the default priority, as it is often not the case.
If the order is for some sort kind of team, an exact match is probably essential, as team uniforms do, indeed, need to match. But guess what? Now they need to order new uniforms for the entire team!
Most of the time you will still have an opportunity to land the order simply by presenting a series of alternative products along with the statement, “This is what people are now wearing…” Show them some other products that will meet their needs, solve their problems and still allow them to accomplish their desired outcome. Remember, everyone out there already has a closet full of clothes. They are not buying clothes; they are looking to buy embroidered and decorated apparel to meet a specific need. Showcase the products that will meet that need, and you will be that much more likely to still land the order, even though the initial item the customer asked for is no longer available.
Removing an Existing Embroidered Patch
A parent just brought in her son’s varsity jacket. He is no longer playing one of the sports listed on the back of the jacket and wanted that sport removed. The parent removed the chenille letters only to discover that the adhesive from the back of the letters would not come off of the wool fabric. She brought me the jacket to see if it could be “rescued.”
What to Do:
While the most profitable solution would be to tell the customer she is out of luck and that it was time for her to order a new jacket (especially since as an embroiderer, this kind of thing really isn’t in your wheelhouse, so to speak), there is another option. Suggest the customer apply a product like Goo Gone to the affected area to loosen up the residual adhesive as a first step. Goo Gone should break down the adhesive sufficiently to where it can be removed without affecting the color of the underlying fabric. Advise the customer to have the jacket dry cleaned as well to remove the last of the Goo Gone product and any residual scent.
Personally, I would not accept the jacket and attempt to remove the adhesive for the parent myself. If, however, you choose to go this route, charging a fee for your time, the Goo Gone and dry cleaning is appropriate and reasonable. Conservatively, this process will take at least an hour, maybe two. Account for your time, patience, errand-running and the expenses incurred. The good news is you will (hopefully) have made a new customer for life. Never underestimate the power of paying it forward in the world of business!
Making Sense of Custom Commercial Embroidery Success
I have been in business since 2005. Over the years my business has exploded beyond my imagination. I now have a retail location and a web store. We’ve also set up custom web stores for many of our clients. We’ve even developed a custom line of clothing for kids and young adults, with pet clothing coming soon! I have employees and have added equipment. In the beginning, I remembered all the details for all the orders coming in. Now, I have so many orders I feel as if I am treading water like crazy just to keep up with all the information. I need a system to wrangle all the details of the different kinds of orders we receive. I tried a spreadsheet, but my brain does not process data that way.
What to Do:
First of all, congratulations on the growth and ongoing success of your business! We went through similar growing pains as our embroidery business grew and evolved. I feel your “overwhelm!” Fortunately, there are several companies out there offering software solutions specifically designed for apparel-decoration business owners like you.
Documenting the various processes that to go into making your business a success offers a number of benefits. Photo by Surasak – stock.adobe.com
Look into as many options as you can to see which ones best suit you and your business. The companies in question invariably offer demo versions of their products for you to try out in order for you to see what you think. Examples of these kinds of businesses include DecoNetwork (deconetwork.com), YoPrint (yoprint.com) and Inktavo (inktavo.com). There are plenty of other similar organizations out there.
As you are checking out what the industry has to offer, I would also strongly encourage you to start documenting the different procedures you now use for the various types of orders you handle: from your “onesie-twosie” retail orders where the customer provides their own product to the larger orders you receive for hundreds of high-dollar items that you then have to order and decorate.
Take the “how-to-eat-an-elephant” approach—one bite at a time. It’s not necessary to create and document all the procedures for all of the processes you use at once. In my own case, we found we created no documentation when we tried this all-at-once approach.
Pick one process, such as creating a new customer web store. The next time you receive an order to create one, document all the steps you take to complete the job as you are doing so. Include as many details as you can. Make no assumptions about what you already know how to do or what you will remember to do in the future.
An excellent way to test this kind of documentation is to use it, step-by-step, the next time you find yourself having to complete the same task. Edit, update and modify your procedures in the event you come across any omissions or errors. The final proof of the effectiveness of your documentation will be having someone else create your next web store, following the procedures as written. This will immediately uncover any gaps or errors in your documentation.
When you’re finished documenting your web store procedures (or whatever other part of your business you’ve been documenting), move on to the next part of your business you want to document, for example, the walk-in retail orders process or your team orders procedures. It doesn’t really matter what you document when. The main thing is you start documenting!
On a side note: you will find there are a number of other upsides to developing these kinds of procedures. These include that fact that 1) you no longer have to feel like you need to remember everything; 2) the rest of your staff can now take on any of these processes successfully; and 3) being able to document your operations will add immeasurably to the business’s value should you ever decide to sell it.
As the founder of the National Network of Embroidery Professionals (NNEP), Jennifer Cox has worked with thousands of embroidery- and decorated-apparel business owners to help them build successful businesses for over the past 25 years. NNEP supports members with services, savings and programs designed to help its members find customers, keep customers and make money. To find out more, or share any of the challenges your own company me currently be experiencing, go to NNEP.com.
