Friday, February 05, 2016Embroidery's Voice and Vision

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Erich

Expand your understanding and hone your technical skills as veteran award-winning digitizer, e-commerce manager and all-around technophile Erich Campbell explores and explains the intersection of embroidery, technology, creativity and business. He’s the go-to guy for stitches and tech at Black Duck Embroidery and Screen Printing in Albuquerque, NM, one of the Southwest's largest screen-printing and embroidery firms. You can find him on Facebook at www.facebook.com/erich.campbell, follow him on Twitter at www.twitter.com/blackduckinc or e-mail him at ecampbell@blackduckonline.com.

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Making the Transition from Embroidery Enthusiast to Embroidery Business: Rule #1 – Profit

Any good business, particularly any business that wants to grow, needs to make a profit. It seems like a completely obvious statement, doesn't it? Simple as it is, many new hobbyists-turned-entrepreneurs make this misstep immediately upon opening their doors.


Recently, Wired Magazine's Chris Anderson published a series of blog posts defining a set of 10 rules directed toward 'Maker Businesses.' 'Makers' are here defined as the sort of folks that relish in creating electronics projects and kits, servicing the hobbyist and tinkerer markets. These rules seemed tremendously applicable to the movement of home embroiderers into the embroidery industry – the two groups share some important characteristics. Both groups consist, at least in part, of passionate amateurs who delve deeply into fairly technical, sometimes expensive, hobbyist fields and find themselves wanting to move from weekend fun into doing what they love for a living – moving from participants in the movement to servicers of the population. It's not surprising that both share some very common struggles, not the least of which is the aforementioned Rule #1: Make a Profit.


I've seen this scenario play out a host of times; a newly minted machine embroiderer unpacks and trains on a shiny new commercial single-head machine. She enters the industry excited to work, and immediately finds out that she has a lot of competition. The solutions seems easy enough – she thinks, ''I'm working out of my house, and I'm enjoying myself anyway. I'll just drop my prices well below the reach of the other guys in town – you know, just until I get some customers.'' Immediately, she's set herself up for failure.


Sure, your overhead may be lower than a commercial shop's and, of course, you enjoy the work, but this line of thinking is bound to cause trouble. Here's the problem: You may well have failed to calculate your entire overhead. How much is the machine's lease costing you monthly? How much is the power to run it? How much is the maintenance going to run you each year? How much are you spending on materials?


If overhead isn't enough to think about, what are you doing about growth? Are you advertising, or should you be? Do you want to be working out of the spare bedroom five years from now? What if you get more business than you can physically handle on your single-head machine; are your prices such that you can afford to subcontract those jobs? Even after all of that, we haven't discussed the wages you should be making as the proprietor (and usually, as one single-head embroiderer once told me, the machine operator, receptionist, salesperson and executive chef).


Now, even if you planned ahead, there's still some shortsightedness in the idea that you're just going to start cheap and ramp up prices as you go. Even though I've heard this plan elucidated numerous times, I'm always surprised that the planner in question hasn't considered that customers may not take kindly to a sudden rate change. Unless you are specifically detailing your eventual prices in your quotes and billing your lower rates as a limited-time offer, they'll be sure to remember your changes of heart.


Years of having to deal with customers who change their minds about the level of decoration they want in a job and then balk when increases in stitching mean increases in price have taught me that even when customers ask for more, they aren't usually ready to accept increases on an initial quote without a little friction.


Even when all costs are considered, the oft-debated question as to whether the bargain-shopping customer is a good customer to have in the first place rears its head. Once again, personal experience tells me that customers who want to provide all of their garments and fight over every nickel and dime tend to be fickle, heading off to the newest business willing to charge a fraction less – after all, this competition on price is always the seemingly easiest path, especially to your newest competitor.


So, how can we best keep Rule #1 in mind? It's all about measuring your costs and planning for the future. Take into account not only your current overhead, but the overhead you are planning to have – make sure that when the time comes to move into that commercial space or build out that workshop on your property that you'll have something to cover it. Make sure your machine can be kept in good repair and that you will have capital to replenish your supplies and buy embroiderable stock. Even though there will be initial costs and growing pains, remember that you will eventually need to pay yourself something to live on if this will be your sole business endeavor.

This calculus won't be the same for everyone or every market. Costs and prices won't even be the same from year to year, but one thing does remain clear: You must know what you are spending to get the job done, and plan for what you'll need to keep yourself going. If you don't keep an eye on your real profit – not just the money changing hands – you'll soon find that your profits won't take long to count.

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