Decorators get involved in embroidery for a variety of reasons. Regardless of your inspiration, though, if your shop is not profitable, eventually you’re going to run out of money, and all your hard work will have been for naught. Worse yet, many businesses fail or never do well not because the owner is lacking in talent, passion or the ability to do great work, but because of struggles with the financial side of things.
Improving your profitability can be tackled the same way as any other aspect of your business in the sense it’s simply a matter of identifying what needs to be done and then doing it. If you want to make more money, figure out those areas of your business that need to be improved upon and then improve them. What follows are a sample of seven different ideas for helping you on your way.
No. 1 Quality Control and Decorated Apparel
“Quality control is important to profitability,” says Gary Glenn of Illinois-based StitchMine Custom Embroidery (stitchmine.com). “Every person in my shop, no matter who they are, can pull a bad item and say this is not good enough for the client.
Glenn adds he has heard of vendors who put all their “bad” stuff at the bottom of the box, where they hope their customers “won’t see it until later,” but that’s most definitely not the way things work at StitchMine.
Quality is key to any successful embroidery business. Don’t be afraid to pull any garments that fail to meet either the customer’s or you own high standards. Photo by warloka79 – stock.adobe.com
“We are not afraid to absorb our losses. If we screw up an item or it doesn’t look good, we don’t give it to the client, even if it’s an expensive item. I think of it this way, if I’ve got a customer, I’m billing $15,000 to $20,000 a year, am I going to take the chance of losing them for a $25 shirt?” he says.
Glenn adds this kind of attention to quality doesn’t just apply to the finished product, but the entire process, from start to finish.
“One thing I have observed in embroidery is the lack of quality often not in the sewing, but in the digitizing. If you’ve got bad digitizing, nothing’s going to sew well,” he says. “Another neglected area is machine maintenance. If you’re not maintaining your machines, you’re not going to turn out good embroidery. A design we stitched in April may not stitch the same in November. Why? Because the machines change.
No matter how long we’ve had a client—and we’ve got customers we’ve had since we started the business—we check their design.”
In many ways, Glenn says, it’s the “little things” his clients are paying for. By way of example, he notes there’s no one backing to be used with every product. “You’re not putting white backing on a dark blue shirt or putting cotton backing on a polyester shirt,” he explains.
Similarly, he says, his company won’t hesitate to change the thread weight it’s using to match the size of the lettering. If that means taking the time to redo a bunch of machines, well, that’s business. “We have a pile of rejects because stuff happens. We have redone entire orders. I’ll spend $1,000 bucks to keep a $100,000 client,” Glenn says, with respect to the lengths his company will go to ensure it gets things right.
No. 2 Targeted Marketing
Another one of the big mistakes many businesses make, especially when starting out, is trying to be all things to all people. Your staff, equipment, location and size will all play a part in determining the types of orders that are going to be the most profitable ones as far as your business is concerned. This in turn means your marketing messaging and brand image needs to communicate the type of work you specialize in and most want to attract. Your photos, commentary and content should all serve to reinforce the things you do well, at the same time reflecting your uniqueness, quality and values.
“With cold calling and getting the word out, the shotgun method is hit or miss,” Glenn says. “We rely on full marketing. We want to find people who are in the process or about to get into the process of buying. To accomplish that we spend most of our time and efforts on web marketing, including Google and SEO strategies.”
“There are three ways we are going to get a sale,” he adds. “One is with customers who already order embroidery but are upset with their current vendor. Another is with [the customer] of a vendor who has gone out of business. The third is a new buyer. This is someone who sees our information first. In all of these cases, the majority of these people are looking online. They are Googling ‘custom embroidery near me.’”
No. 3 Follow the Four Rules for Profitable Orders
In his shop, Glenn identifies his most profitable orders by focusing on the following four factors:
- They have the least number of touches
- They have the least number of colors
- They have the lowest stitch counts
- They take the least amount of machine time
“It’s just common sense that anything that is on the machine less is more profitable. We’ve created spreadsheets for this. Estimating stitch time is an area where a lot of people misjudge. Fortunately, I’ve got a shop manager who has been with me for 12 years and is really good at judging time,” Glenn says.
This is not to say you should be turning down all other offers. However, recognizing your most profitable jobs serves as a valuable point of reference when going after new work or encouraging more of the most-profitable work among your customers. Taking a close look at your most time-consuming jobs internally can also result in finding ways of doing them faster.
And we’re not just talking about actual embroidery time here. “It’s the time it takes from setup to being folded and packed in the box,” Glenn emphasizes. “I suggest new people time their workers, because the finishing time can sometimes be as long as the embroidery. We trim the backing and jump stitches, steam out hoop burn and retail fold every piece. We also sort and pack by size. This is where we get backed up. We have 18 heads and have three people, and the machines sew much faster than our people can finish.”
No. 4 Accurate Pricing: Don’t Be the Cheapest
“I will never understand why any shop wants to be the cheapest, unless they don’t understand how life works,” says Glenn. “They say to themselves, ‘I’m charging 20 percent less, but I’ll make it up in volume.’ That’s not going to happen. There’s a fixed cost of business. Your cost to do the embroidery is the same. Your landlord is not going to charge you less rent.”
When it comes to pricing, don’t undervalue the products or services you’re providing. Photo by mavoimages – stock.adobe.com
Granted, for people just getting started, it can be hard turning away new business. However, it’s better in the long run to price your work correctly right out of the gate as opposed to spending hours of your time on orders that are going to do nothing to help you grow your bottom line. This is especially true, Glenn says, given the fact those same clients obsessed with driving prices down all too often end up being the highest-maintenance clients as well. “Even if you get the order, it’s going to be a client who’s never going to be happy with what you’re doing. Filter them out as quickly as possible because time is finite,” he says.
Along these same lines, those same startups that justify being the cheapest in the beginning in the interest of building up their business may find themselves stuck with the same barebones pricing they started up with further down the line as well. Why? Because clients interested in price and price alone will immediately move on if they think they can find another cheaper shop elsewhere. Low prices can also create the perception of low quality and deprive you of the funds you require to invest in expanding or even just maintaining your shop’s current production capacity.
No. 5 Don’t Work with Difficult Customers
Over time, every shop will find itself facing a situation in which the client makes a mistake in their ordering and blames the embroiderer. Typically, the first time this happens, you acquiesce. Then it happens again—and again.
To avoid these kinds of problems, Glenn recommends documenting everything you do, with newer clients especially. “We don’t like taking telephone orders. We tell people to send an email,” he says. In response his shop will reply with e-mail including a quote for the client to sign. No signature, no embroidery.
“We never stitch anything until they’ve approved it,” he says. “In some cases, we’ll do a sample. If there’s any doubt in their mind, we’ll stitch it out…and take a photo so they can see the size and the orientation.”
Similarly, Rob Dubow, CEO of Dubow Textile (dubowtextile.com), a company that generates a fair bit of revenue engaging in contract decoration, says, “There are times we’ve turned down a job when I felt the customer’s expectations were above and beyond. This scares me, because as a contract decorator our exposure is significant.”
No. 6 Calculate How Much Your Machine Makes Per Hour
When thinking about the way you run your business, a key piece of information you’ll need in your quest to maximize profitability is knowing how much money each of your machines can generate. “The question you have to ask is how much money are you trying to make per machine per hour?” says Marshall Atkinson, principal of Atkinson Consulting (atkinsontshirt.com).
Focusing on key performance indicators, like the number of garments a machine can decorate per hour, is critical to maximizing profitability. Photo by funfunphoto – stock.adobe.com
“On average, how many embroidery runs can you get out (over a given period of time)?” he says. “Think about it this way when running a singlehead. If the embroidery sew speed is 900 stitches a minute, and it’s a left-chest logo, it’s somewhere around 9,000 stitches. If it takes 10 minutes a logo, how many of those can you pump out? Are you getting five or six, or are you getting three because you’re inefficient or you’re hanging out on Facebook or whatever else people do.”
Next, Atkinson says, multiply whatever figure you arrive at by the number of machines you have. If you are outputting five logos an hour per singlehead and you have six singleheads, then you’re outputting 60 pieces an hour. How much money is that making? Put that into your calculations.
“In the end, you want to think about the outcome: how much money do you want to make per hour, not only what it costs you to produce an item. How much money can you get? Can you sell a polo shirt for $80? Then why sell it for $20?” Atkinson says.
“Most people grossly underestimate their time,” agrees Stitchmine’s Glenn. “The best thing to do is take a timer or your phone, and when you sit down at the computer to do anything, hit the stopwatch. Do the same as you are loading the machine. Some people don’t include that. Using a stopwatch, work your way through how much time everything takes to do the order.”
No. 7 Identify Key Performance Indicators
Another great tool for improving your company’s profitability is evaluating its performance by analyzing various other key performance indicators, or KPI’s, like the number of sales leads being obtained or the number of units passing through your shop per week.
“Examples of the things I’d be tracking in an embroidery shop include the number of orders produced, the number of shirts sold and how many orders are being shipped per day,” Atkinson says. “The next question to ask yourself is, ‘What is a good number, and what is a bad number?’ Let’s say you are shipping 50 orders a day. That might sound pretty good until you realize you should be shipping 300.”
According to Atkinson, another metric worth tracking is the number of errors or rejects your shop is generating, at the same time making a point of defining the types of errors your shop is making as well. Anything you can’t sell to the client should be tracked, along with how much these errors are costing you. The results will not only help you cut down on your direct costs but make for a more efficient, i.e., profitable, operation in general.
Knowing your machine output and other KPIs can also help with scheduling, Atkinson says. “You know what you can produce on average in a day and that helps you determine if you need to pay overtime to get orders completed by deadline. Or it might indicate that it’s time to buy another machine to keep up with sales,” he explains.
By way of another example, Atkinson says, “Let’s say you’re having problems with your thread. How is it being stored? Is it getting brittle? Are the thread breaks a digitizing or tension problem?” By noting and recording indicators you can figure out where the root of the problem lies and come up with a plan to fix it, he says.
Bottom line: Having a busy shop does not mean you have a profitable one. Every shop owner needs to know whether they are profitable, and if not, what steps have to be taken to improve the situation. These are just a few areas that if examined can help you on your quest to make more money and continue to grow and thrive as a business.
Deborah Sexton is a former editor of Impressions Magazine and now owns her own company, Saracen Communications, doing digital media marketing, copywriting and public relations work for companies in the decorated apparel industry. You can reach her at [email protected].
