Wearables

A Growing Problem

Good news: your shop is growing. Here’s how to make it last.

A Growing ProblemYou are among the elite if you are lucky enough to have the “problem” of a growing business. Although this is a much better situation to have than the alternative, it can still create problems and challenges that will need to be addressed. In my opinion, there are four major issues that come with a growing business: staffing, equipment, space and cash flow.
    It’s important when you decide to expand that it’s thought out and calculated. Do not go out and buy an automatic press because you got your first 1,000-piece order, or hire a new person for the office because you could barely manage the phones for a week straight.

When you see a growth trend, consider the reasons for this increase. If you can weed out all of the possibilities that your growth is just limited to a season, then start getting yourself into the growth frame of mind – start looking at and analyzing numbers, but hold off on any major hiring or equipment purchases. I usually spend two to three months putting in the extra hours that it takes to facilitate the increase in volume before I pull the trigger on a major decision towards expansion. By that time, you should have a pretty comfortable sense of the magnitude that you should expand to. Let’s look at the four major issues again.

Staffing

Can you facilitate the increase in volume with the current staff that you employ? If not, to what degree will you need to staff up? Assess your needs and determine whether you need help dealing with customers (a customer service rep) or on the floor with a production employee. Also, be careful in looking for experienced veterans. Printers will resist conforming to the way you want things done and may prefer doing it the way they always have. This can be very disruptive to your operations. On the other hand, when it comes to hiring additional office personnel, I tend to lean toward hiring seasoned professionals. The learning curve is smaller and they can potentially come with their own leads and accounts. Be sure to remember how much these employees might cost – not just their hourly wage or salary, but taxes, uniforms, benefits, insurance and other miscellaneous costs.

Equipment

This depends on the nature of your growth. If you just picked up a bunch of sports teams and schools that are bogging you down with lots of short-run team orders, you would not consider bringing in an automatic, but rather an additional manual press or two. On the flipside, if you are seeing an influx of corporate-style large runs, you should decide which automatic to bring in. Your equipment needs must match the demands of your clientele. Making a mistake here can be very costly. Once you decide whether you need to bring in manual or automatic equipment, you’ll need to consider the other costs such as screens, squeegees, air compressors, etc. Be sure that you have the space required for the equipment that you will be bringing in.

Also, figuring out a budget for the expansion is a must. When you have a solid budget worked up, you can decide on new or used equipment. I personally am a huge advocate of buying new, American-made equipment. This equipment will have one main purpose, and that is to produce and generate income. I do not like to gamble on production, and I feel that is exactly what you are doing when buying used equipment. If you do not have the cash to buy new equipment outright, I would finance it. I would also try sticking with American-made companies. I find that you get better customer service and an overall superior machine when you keep it in the states.

Space

I have dealt with this one more than I wish since starting my company. If you are leasing a building, try to sign a one-year lease. This way you never have to wait for more than 12 months should you need to expand. Thats rarely possible, though, as a landlord typically wants at least a three-year commitment from you. In that scenario, I would lease a space that is large enough to grow into. Even if you are a manual shop, be sure there is ample electric to facilitate automatics when looking for a new building. If your business grows into an auto, it will be thousands cheaper if you just have to pull the electric from the box versus first bringing ample electric your building.

Cash Flow

I’m saving this for last, but it could very well be the most important. A growing decorated-apparel company requires strategy and cash. Yes, there are those obvious cash requirements that we already touched on, but what about the other somewhat hidden or less-thought about cash issues that are bound to come up with a growing business? For example, workers’ compensation costs are based on payroll. As payroll goes up, so does workers’ comp. The payroll companies charge you based on how many checks they process. Your accounting charges are based on the complexity of your books, and let’s not forget that Uncle Sam is going to get his piece of the pie as well. You must be sure that your cash flow can support your growth. This one thing alone, if not managed properly, can put a growing business out of business.