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revenue boosters

For nearly 20 years, a slew of local restaurants turned to Sharon Saranpaa for their embroidered apparel. The owner of The Bent

Needle, a six-head shop in Astoria, OR, was happy to oblige, satisfying her cus-tomers with meticulously stitched logos and names. Then, in 2008, the bottom fell out of the economy. Saranpaa watched as “closed” signs appeared in restaurant win-dows, not to be removed. “My customer base is very low right now,” she says, not-ing she recently lost her biggest client, a busing provider that downsized.

Saranpaa’s struggles are felt keenly by many multi-head embroidery shops across the U.S. These decorators, whose

operations include anywhere from six to more than 100 heads, also grapple to minimize expenses, get clients to pay on time, generate profits as order sizes decrease and maintain clients who increasingly shop them on price. “The overarching issue is staying profitable and continuing to deliver excellent service,” says Andrew Shuman, general manager at Topton, PA-based Rockland Embroidery (asi/734150).

The good news is shops like Rockland thrive thanks to astute business practices that keep them ahead of the curve. Here’s a look at top challenges facing multi-head shops with solid ways decorators can overcome them.

LOST CUSTOMERSThe Issue: Jay Conway, owner of AUS Embroidery, a 22-head shop in Indianapolis, says many businesses he embroidered for have been shuttered over the last three years. “They just folded up and are doing other jobs. The hardest part is replacing the customers you’ve lost,” says Conway, echoing the sentiments of many decorators, who say that word-of-mouth and asking for referrals isn’t always enough to replenish the client stream.

1 Target different markets. One way Embroidery FX attracts new customers is by pursuing prospects

in a variety of markets. For a time, the Chattanooga, TN-based decorator gener-ated about a third of its business through

Industry experts tackle multi-head shops’ biggest

stumbling blocks and offer a solid plan for staying profitable.

By Christopher Ruvo

Big Shops In the Black

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a fulfi llment house that was ordering logoed apparel for Coca-Cola. When the fulfi llment house closed, Embroidery FX’s bottom line suffered. But co-owner Steve Coakley didn’t despair; he hustled, calling on schools, hospitals and a vari-ety of small businesses to replace the lost revenue. The point, Coakley says, is that by branching out and targeting differ-ent markets, he was able to diversify his customer base, strengthening his shop’s fi nancial foundation. “There are a lot of organizations – schools, hospitals, govern-ment entities – that have money to spend on embroidery,” says Coakley, who has been in business for 22 years. “Don’t be afraid to take the step and go after them.”

2Turn competitors into partners.Jane Cibulskas creates new business, in part, by forming partnerships

with competitors. In recent years, shops like Cibulskas’ 26-head National Embroi-dery in Berea, OH, have faced increased competition from home-based embroider-ers and other small-scale operators. But rather than fret about market congestion, Cibulskas has turned some competitors into partners, performing contract work for them on larger orders they’re unable to fi ll. “We’ve talked to those people working out of their garage and shown them how they can be profi table by working with us,” Cibulskas says.

3 Network locally. As an ambassador for his local chamber of commerce, Anton Dell’Orefi ce recruits new

businesses to the organization and helps members get the most out of the cham-ber’s resources. In so doing, he forms rela-tionships that lead to sales for his Cheyney, PA-based embroidery company, Delight-ful Detail. At a recent chamber event, Dell’Orefi ce met an electrician. The two became friends, and not long after, the electrician ordered 150 embroidered shirts and 48 caps from Dell’Orefi ce.

Anna Johnson, owner of Phoenix-based

Super Embroidery & Screen Printing (asi/700101), says you can also get leads in whatever activities or organizations you participate in. She has drummed up busi-ness by making contacts with people she has met through her charity work. “It hap-pens naturally,” Johnson says. “It doesn’t feel forced.”

4 Enhance your online presence. Decorators like Johnson know that a strong online presence is pivotal

in an age when consumers increasingly turn to the Internet for products and services. Knowing it’s important to rank high in Google searches relevant to her core business and target demographic, Johnson has a professional website that’s embedded with important keywords that put her site among the top hits when you search a phrase like “embroidery Phoe-nix.” Furthermore, Johnson’s active pres-ence on social media sites like Facebook and LinkedIn has led to sales, including an order for more than 600 shirts that she landed through a LinkedIn connection. “You need to join the Internet revolution,” Johnson says.

RISING COSTSThe Issue: Recently, Rockland Embroidery’s supply costs soared 10% to 70% depending on the item, with staples like thread up 15% to 20%. Freight costs spiked too, and at one point the 250-head shop with more than 50 employ-ees was staring at a 40% increase in health-care costs. “The price you can get for embroi-dery isn’t increasing in the same proportion as the cost of doing the work,” Shuman says.

1Shop around. Like Rockland, many shops are looking for ways to minimize costs so they can keep

prices competitive. One way to lower expenses is to shop for the best price on everything from supplies to insurance. Rockland avoided that 40% health insur-ance increase by switching to a different insurer that provided comparable cover-

age. Eagan, MN-based Team Mates Inc. (asi/90674) reduced supply expenses by purchasing direct. “We get our bobbins straight from the manufacturer,” says owner Mike Little.

2 Maximize effi ciency. Rockland has saved by increasing workplace effi -ciency. Employees are cross-trained

to do multiple jobs so that if one employee is absent, another can step in. Also, Rock-land builds strong relationships and com-municates clearly with customers, educat-ing them on what the shop needs up front to get a job done fast.

Enhancing processing and production can lead to cost-saving labor consolida-tion, too. Johnson experienced savings after combining trimmer and machine operator roles into one job description. Using technology that allows for quicker order processing – say online ordering forms – can also free up workers, improv-ing production fl ow without adding staff. “We’ve invested heavily in technology and minimized the amount of touches per order, which has decreased our staff-ing needs and at the same time increased the volume we can do,” says Rob Dubow, owner of Dubow Textile Inc. (asi/700107), a 60-employee shop in St. Cloud, MN.

Consider, too, that Little recently outfi tted his shop with energy-effi cient lightbulbs, an investment that will shave 25% off his utility bill over time. Johnson installed an energy-effi cient thermostat and routinely maintains her machines – measures that keep her purse fatter in the long run. “We make sure the toilets aren’t leaking; it sounds silly until you see that it can save you $100 a month,” she says.

3 Consider downsizing. Depending on your situation, downsizing could be an option. Several years ago, Coak-

ley scaled back from 42 heads to eight. The leaner operation reduced overhead, but didn’t strip the decorator of the ability to fi ll large orders for key clients. Recently,

�LEARN IT LIVE!Social media is an increasingly integral part of the business landscape. Whether you’re a deco-rator who’s a seasoned “tweeter” or don’t even have a Facebook account, you can learn pow-erful strategies for using social media effectively in ASI Education’s online course “How Top Decorators Connect With Clients Through Social Networking.” You’ll learn how to leverage easy-to-learn social media platforms – Facebook, Twitter and blogs – to reach customers and build relationships with them online. Visit ASICentral.com/onlinelearning.

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Embroidery FX decorated 3,000 caps for a local Volkswagen dealership. “It takes us a little longer to get the big orders out the door, but the customers know that up front,” Coakley says. “They come to us because we always come through with quality.”

4 Manage a price increase. Some-times even the most well-run, fi nan-cially prudent shops must increase

prices to stay profi table. To soften the blow, Johnson gives clients 30 to 90 days notice. “That way, if our customers do any quoting, they’ll be able to do it accurately,” she says. Stitch Designers (asi/741145), a 300-head shop in Louisville, KY, has staff delicately explain to customers that price increases are necessary to meet rising costs. And, after notifying and explaining increases to clients, Team Mates takes the discussion away from price and onto service. “If you’re going to increase your prices, you have to offer as much as you can through service to offset it,” Little says.

CHEAPER COMPETITORSThe Issue: Beset by budget constraints or hampered by tight margins, even satisfi ed cli-ents consider taking their business to decorators that charge less. LaDawne Jenkins, co-owner of eight-head Naperville, IL-based Creative Promotional Solutions (CPS), a division of Sports USA Enterprises Inc. (asi/332577), dealt with this when she learned that a long-time distributor client thought of using another embroider on a decorating job for a major automobile company. “More custom-ers are shopping around,” says Jenkins, who retained the customer.

1 Provide extraordinary ser-vice. Beyond offering competitive prices, the best antidote to “get-

ting shopped” is great service. This starts with delivering superior embroidery on time, but doesn’t end there. Team Mates performs research for customers, helps them shop for items that will please end-users and offers low-priced drop shipping.

HANDLE RUSH ORDERSDecorators can reduce rush demands by

educating clients about the embroidery

process, says Jay Polzien, vice president

of marketing at Kernersville, NC-based

Artwear Embroidery (asi/700276). The

Artwear team gives clients tours of their

shop, walking them through the order

and production process. Once clients un-

derstand what it takes to get decorated

apparel out the door, they’re more apt to

submit orders in advance.

While some rush orders are inevitable,

education can alleviate the headaches they cause. Artwear helps clients understand what’s needed

up front – good artwork, for example – to get apparel embroidered and shipped quickly. If the

rush order causes the production schedule to be reflowed and employees to work overtime, then

Artwear charges a reasonable rush fee. If you educate your clients, they’re more likely to accept the

fee without issue, Polzien says.

Rockland assigns a specifi c staffer to be a point person on a large account, ensur-ing that clients work directly with some-one who knows their particular needs. Johnson makes an array of samples avail-able for clients to show end-users, offers special rush-order service and has staff, including a digitizer, who advise how to get maximum effect from an embroidered design. Decorators like Rockland have free inbound freight agreements with suppli-ers that reduce shipping costs for clients. Wholesale Imprints, a 14-head shop in North Kingsville, OH, educates distribu-tors about digitizing and embroidering on different fabrics so those salespeople can sell more effectively. This initiative makes Wholesale more than a stitcher; it makes the fi rm a solution provider. “If you lose a customer on price, keep in touch,” John-son says. “They may fi nd out the service isn’t the same and come back.”

LATE PAYERS The Issue: For years, the client paid on time for the embroidered shirts ordered from Cor-porate Mark Inc. in St. Paul, MN. But as

tougher times took hold, payments slowed and then stopped. Linda Schwartzbauer, owner of the 14-head shop, called consistently about the bill before the customer fi nally confessed that he couldn’t pay. While this is an extreme example, Schwartzbauer says the ex-client represents the growing number of customers who fail to pay on time. “It’s a problem,” she says. “It affects our cash fl ow.”

1 Require credit cards and cash on delivery. To prevent payment slacking before it starts, Corporate

Mark now requires new customers to pay up front and researches prospects before working with them. Similarly, Johnson has increased receivables, in part, by setting up more COD arrangements. Dubow Tex-tiles has required credit cards that can be charged when orders ship; the decorator also has staff dedicated to acquiring pay-ment. “We send statements,” Dubow says. “If that doesn’t work, we start calling.”

2 Discuss payment options. In dif-fi cult cases, Stitch Designers may meet with clients to discuss payment

options. “Most of the time something can be worked out,” says Joe Thompson, mar-

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keting manager. Shops also notify late pay-ers that they’ll be paying COD, “plus some extra to start paying down their outstand-ing bill,” Thompson says. Coakley stops in for friendly chats with the accounts pay-able person when visiting a client: “It helps to get to know them – it could move your check to the top of the list.”

SMALLER ORDERSThe Issue: Each year, a nonprofi t customer ordered golf shirts from CPS and commis-sioned the decorator to embroider the apparel. Then, the organization started buying fewer shirts. Next, the nonprofi t eschewed ordering

shirts, bringing CPS donated tops to deco-rate. Finally, cash-strapped, the client stopped holding the fundraiser the shirts were for, nixing the orders altogether. “We still do some work for them, but it’s down a lot,” says Jen-kins, whose story of diminishing order sizes has played out in multi-head shops across the country.

1 Diversify and train. Beyond obtain-ing new clients, embroiderers can combat decreased order size by being

a more complete solution source for cur-rent customers. Achieve this by offering multiple decorating options, so that when a customer wants more than embroidery,

“We’ve invested heavily in technology and minimized the amount of touches per order.”Rob Dubow, Dubow Textile Inc. (asi/700107)

HIRE AND RETAIN GOOD EMPLOYEES

Arlene C. Newman, a director on the board of the Human Resources Association of New York, off ers these tips for hiring and retaining good employees:

1. Good people know good people. Ask quality employ-ees if they can recommend someone to fill a vacancy. Off er incentives – cash bonuses, days off – to employees who recommend hires who stay for at least six months.

2. Look for longevity. If a prospective hire’s résumé shows that she has lengthy spells at previous positions, this could be an indication of loyalty and commitment.

3. Pay attention to dress and mannerisms. A neat, well-groomed appearance of-ten indicates the candidate is responsible and serious about the job. If a candidate avoids eye contact and looks down,

that could be a sign he’s lying.4. Ask the right ques-

tions. Ask candidates about their strengths and weakness-es; ask what their previous bosses and co-workers would have improved about them; ask about unemployment pe-riods with a mind to gauging if they were productive while jobless; and ask why candi-dates want to work for you.

5. Make employees feel valued. Once you have a good employee, keep him by paying him appropri-ately, considering him first for promotions and reward-ing him with the occasional extras for a job well-done. Also, recognize birthdays and milestones, listen to her sug-gestions and make time for her when she wants to speak with you.

you can provide it. Dubow Textiles has had success with dye-sublimation, laser appliqué and direct-to-garment digital printing. “Over the years we have invested in new processes so we can sell more to existing customers,” Dubow says. “We just had a record year.” While Dubow’s shop is especially diversifi ed, embroiderers can be a greater resource by adding even a single new medium. “I added screen printing and it’s led to a lot of business,” Johnson says. “I can do T-shirts.”

You can also generate more revenue by diversifying your services. Embroidery FX runs embroidery training sessions. “We train new embroiderers in our shop with several days of classes,” says Coakley, not-ing his wife, co-owner Melanie Coakley, speaks as an embroidery expert at seminars around the country.

2 Maximize a client’s potential. Suc-cessful shops look to get the most out of each order by cross-selling

apparel and accessories. “If they’re buy-ing shirts, we show them hats that would go well with them,” Johnson says. When embroidering for a large company, Coak-ley stirs sales from the business’ various departments. “If the marketing depart-ment isn’t buying much, then I go down the hall to the safety person and see if I can help them,” he says. Thompson says shops that fi nd ways to stay in frequent touch with current clients stand a bet-ter shot of getting more orders. Connect with clients on Facebook and then post articles on topics that will interest them. Do a biweekly e-mail bulletin, and call or stop in occasionally for a chat. Even if that conversation doesn’t lead to an immediate sale, you’ll build a relationship and the client will be more apt to bring business to you. “In other words, if you need more business, do more,” Thomp-son says. .CHRISTOPHER RUVO is a Stitches staff writer. Contact: cruvo@asicentral.com.

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