Five Keys to Embroidery Business Survival

The first five years of starting a business are all about surviving to make it to the next five. I've made it this far — and so can you! Here's how.
March 3, 2008

By Steven Batts

The first five years of starting a business are all about surviving to make it to the next five years. Make it that far, the statistics tell us, and you have a decent chance of survival. Based on my own experience, I've narrowed down the embroidery startup survival manual to the five areas a shop owner needs to focus on to make it to that magical fifth anniversary.

1. Don't Quit Your Day Job
While it's hard to work two jobs, the best way to get a small business off the ground is to have enough capital to start up and stay afloat. If you jump full-time into business, unless you have a serious nest egg saved, you'll find yourself strapped for cash and going into debt to keep the business going. Then, if the business doesn't make it, you could spend years re-paying debts or making payments on a machine you don't use any more.

Any good business coach encourages companies to grow slowly. Embroidery can be a great part-time income source while you continue to grow the business and maintain another job. Even if you go full-time, it may be wise to take on a part-time job on the side to help with cash flow until the business can stand on its own.

2. Build Repeat Business
Building up your booked business is crucial. The idea is to land enough repeat business to ensure that your overall sales volume eventually becomes steady. Some customers you might only see at certain times of the year; others might be regular, bringing business every couple of months. If you can build up a large enough customer base, the business will be steady instead of having peaks and valleys of work.

Of course, getting and maintaining customers are two different things. To maintain customers, service is critically important. I'm not just talking about providing an excellent product. That should go without saying. On-time delivery, returning phone calls and follow-up after the sale are related to providing good service.

3. Narrow Your Focus
When you're first starting your business, you tend to go after any possible job out there. This approach is necessary at this stage until you establish the type of business model that fits you best. This is really the essence of what a niche is — applying your knowledge or skill to a particular market where you become known to be good at what you do.

We've all heard the phrase "Jack of all trades, master of none." In a small business, it's important to master what your business is about. This may mean not focusing on digitizing to become more proficient at embroidering. It also may mean not pursuing certain customers because they're outside your area of focus. This is hard to do, and virtually impossible until you gain some experience. You may feel as if you're turning away a sale, but after a while, you'll get better at discerning which clients are worth pursuing and which are not.

4. Keep an Eye on the Books
A successful business is all about cash flow. In many cases, it simply flows in and right back out. However, it's very easy to get so busy doing the work that you don't take the time to invoice or keep track of what stuff costs. You have to be good at both sides of accounting; payables and receivables. If you don't keep up with payables, you get behind with vendors, miss payments and face higher operating costs because of fees and penalties.

On the other hand, if you neglect the receivables, your cash flow will be more like a dripping faucet until you turn it back on. The key word is "flow" — not "off" or "on." Consistently invoicing and recording payments is imperative, as is following up on late paying customers. It doesn't do any good to produce a lot of work if you don't get paid for it.

5. Discipline
If the three rules of real estate are location, location, location, then the three most important keys to running a small business, particularly a home-based business, are discipline, discipline, discipline. When you're your own boss, no one tells you that you have to go to work today. No one is there to check behind you to make sure you're meeting production deadlines or follow up to make sure you meet your sales quotas. If you goof off during the day, there are no repercussions, at least not until the bills come due. By then, it's too late.

The best way to avoid this situation is to create your own self-disciplinary safeguards. These can be as simple as a chart you use to check off your progress every day. Or it could be a friend or advisor who serves as an accountability partner. Whatever it is, it's important to instigate a system to hold yourself accountable.

My stating five principles is not to say that I've mastered them. I'm terrible at some of these, and that's how I identified them as being important. They came back to haunt me. Nor is this list all-inclusive. If it was, there would be a lot of authors and small business coaches out of work. There are lots of keys to being a successful small embroidery shop, but these are a good place to start.

Steven Batts, a 14-year veteran of the embroidery industry, is a regular speaker at the Imprinted Sportswear Shows. He owns Righteous Threads Embroidery, Greensboro, N.C., which offers digitizing, embroidery, machine maintenance and repair, and consulting. Call him at (336) 379-9380 or e-mail righteousthreads@gmail.com.

Needle Knowledge Pays Off for Embroiderers
The needle is one of the smallest parts of an embroidery machine, yet it is one of the most vital components.
The needle is kind of like your little toe; you don't think about it a whole lot, but when something isn't right with it, it causes you a lot of pain.
December 08, 2008

How to Beat the Odds in a Recession
Economic upheavals produce worries through the business world — follow these tips for finding new niches.
After months of speculation of whether we are or aren’t, we are officially in an economic recession. This is not all bad news. It is a little-known fact that when markets go down in one area they tend to go up in others.
November 21, 2008

5 Tips to Digitize Efficiently
Learn how to decrease design run time to increase profitability.
In this politically charged season there has been a lot talk from all sides about wasting resources and the need for change because current policies are ineffective. This week, I’m jumping into the fray.
October 24, 2008

Finding the Right Digitizing System for Your Shop
Quality and efficiency are two major points to consider when shopping for digitizing software.
As we continue to explore the differences between hobbyists and commercial embroiderers, I would like to focus on digitizing systems. When comparing consumer-grade vs. commercial-grade machinery, there is a huge difference in capability and functionality. The same is true when it comes to digitizing software, but not necessarily the way you might think.
October 10, 2008

Tips for Improving Embroidery Productivity
Modern stabilizers and hooping systems aren't necessarily time-saving, profit-boosting conveniences. Sometimes, conventional practices yield the greatest results.

As we continue to look at the differences between a home hobbyist and a commercial embroiderer, let me reiterate that the difference between the two is not just a matter of location. I am a commercial embroiderer who works from home. The difference is mainly a matter of mindset. We can get technical and try to classify embroiders by their equipment, but the reality is that a commercial embroiderer is in business for profit and the other in it for fun.
September 15, 2008