# We're busy and making money, but we're not profitable. Any tips?



## rhino09 (Feb 19, 2009)

We have been in business now for just over 2 years. We have not made a profit yet. We have put all the money made along with our savings back into the business . We have leased a six head emb machine and a 1 head emb machine. 
We have built a shop, bought a Roland GX-24 and a Roland Versacamm, all are paid off. We are crazy busy but we feel like we aren't seeing any profits i.e. putting money back into our savings. Is this typical and are we just being nuts or what? Are we charging too little? Someone explain it in simple terms.


----------



## IYFGraphics (Sep 28, 2009)

rhino09 said:


> We have been in business now for just over 2 years. We have not made a profit yet. We have put all the money made along with our savings back into the business . We have leased a six head emb machine and a 1 head emb machine.
> We have built a shop, bought a Roland GX-24 and a Roland Versacamm, all are paid off. We are crazy busy but we feel like we aren't seeing any profits i.e. putting money back into our savings. Is this typical and are we just being nuts or what? Are we charging too little? Someone explain it in simple terms.


If you have built a shop, paid for a Versacamm & GX24 all in two years IMHO sounds like your doing very well, as to your pricing that not really a question anyone can answer but yourself.

It does sound like your on the down-hill side, not knowing your business I'd expect to make a profit in 2-4 years going into any business venture, but then again in some cases it could take 5 years depending on your ROI.

What's your accountant say?

Hope this helps.


----------



## tshirtn00b (May 23, 2008)

Rhino,
I'd refer back to your business plan to see where things may have shifted. If you don't have one, I strongly suggest you put one together. It's a great tool to have and can help you stay focused and see where and what your gains and losses are amongst other things.

On a side note...I wish I had a versacamm that was PIF!


----------



## jiarby (Feb 8, 2007)

have you been paying yourselves a salary?


----------



## rhino09 (Feb 19, 2009)

No we have not taken any salary to date


----------



## ShirlandDesign (Nov 29, 2009)

Crazy busy on a 6 head should mean $75 to $120 an hour at the bottom end doing contract work. At that rate, paying off the investments you've made should be something you can plot on paper and know when to expect to see the light at the end of the tunnel. I would average 4-6 runs an hour, 24-36 pieces X $2.65 to $3.50 for a average left chest or cap = $63.60 - $84.00 to $95.40 - $126.00 per hour at the absolute bottom end. Xs 8 Xs 5 or 6 per week. Thats $2,544 to $6,048 per week. Or $132 K to 337 K annually.


----------



## studog79 (Jul 13, 2006)

You must know what your cost to produce an item is in order to give a price, but most don't in this industry. They try to beat the guy down the street in order to get the business. If you are doing it for free, or worse losing money then that is not good.


----------



## thutch15 (Sep 8, 2008)

How are you tracking your books? PM me if you would like...I would happily look through them if you are not sure what you are looking at. Troy


----------



## jiarby (Feb 8, 2007)

> No we have not taken any salary to date


Then I would argue that you are not charging enough or your expenses are too high... You have a pricing model that is based on exploiting your free labor. It is unsustainable. You are busy, but can't afford to hire anyone to help because you do not have the profit margin. A business based on zero labor costs is doomed to fail, especially one where (despite having zero labor costs) you are still not making a profit!

What is the point? Being "crazy busy" is not the same thing as "making money". You may have cash flow from sales but all you are really doing is working for free and keeping your suppliers and landlord in business (barely). You will not be be able to sell your business because the books are whacked (no labor costs). If you add in labor costs for the last two years you will see that you have LOST MONEY since day1. A business that loses money every day is worthless. You can only sell your assets for 50¢ on the dollar, pay off your credit card debt (I'll bet you have some!) and go get a job. 

Harsh, I know, but it starts in your business plan. Maybe you made one when you started, but it is time to look at it again. You now have 2 years of sales data to help. 

#1. Budget into the overhead labor costs that you would expect to have to pay someone to do your job. This is VITAL beause later in the plan you need to calculate your sales prices & profit margin using the REAL overhead costs. 

What jobs have been profitable, which jobs are not? Find a way to get MORE profitable work and turn down unprofitable jobs. Yes, to make more money you need to turn away some jobs because they gobble up time you can use to do more profitable work. 

Who are your most profitable customers? Where do they come from. How can you improve marketing that targets these profitable jobs?

What customers are the least profitable... the time wasters, the time consuming free graphics work, the small onsie twosie jobs that you do at the 32 piece price. Fire the bottom 20% of your customers. Take that new free time and focus it on getting more top-20% customers. 

Look at each one of your products, and each one of your processes (embroidery, cut vinyl, printing, heat press, DTG, sublimation, screen printing, etc..) and determine what process is making money. You do not have to be a jack of all trades, find out what makes you money and do more of that and less of the other. 

To making money in business you have to understand, inside and out, the REAL costs of producing your goods and services... which means understanding the REAL overhead costs.... NOT just the cost of the raw materials in the job (a shirt and x-number of stitches). THEN when you know you costs you can set your prices to acheive the desired profit margin. 

If you do that but then get no sales, maybe your price is too high... this means your expenses or profit margin is too high. Then you can look at purchasing decisions, rent, shipping, etc to try and lower expenses. Thsi is what the whole business plan is all about... analyzing data to determine how to sell & market a product or a service so that you make a profit. 

The trick is to find the sweet spot.... the balance between expenses, labor, profit, price and sales volume. It is a fine edge.


----------



## rhino09 (Feb 19, 2009)

thutch15 said:


> How are you tracking your books? PM me if you would like...I would happily look through them if you are not sure what you are looking at. Troy


We use Quickbooks Professional


----------



## oneill (Mar 6, 2008)

rhino09 said:


> We have been in business now for just over 2 years. We have not made a profit yet. We have put all the money made along with our savings back into the business . We have leased a six head emb machine and a 1 head emb machine.
> We have built a shop, bought a Roland GX-24 and a Roland Versacamm, all are paid off. We are crazy busy but we feel like we aren't seeing any profits i.e. putting money back into our savings. Is this typical and are we just being nuts or what? Are we charging too little? Someone explain it in simple terms.


I found myself in the same boat, but have cut off some of the "FAT" of the business, focused on what made my business successful and tweaked my pricing. If you have paid off your equipment the profits will begin to start adding up. Give it time, it will come trust me. You are on the right track.


----------



## Malteezer (Sep 4, 2008)

I agree with Jiardy. Though new to T-shirts, I have had my own business for almost 25 years. I had faced the same problem when I started. Definitely go back over your business plan. If you don't have one, make one. It doesn't have to be too detailed. It's a tool for you to stay on track, but keep in mind that things change and you should be flexible with that. Once you put it on paper, you'll be able to see where the money is going. Maybe you could negotiate on rent space, or maybe that overstuffed chair was an unnecessary expense. Little things add up before you know it! Also look into what you're charging. Perhaps a small percentage increase is a good idea. Give your clients plenty of notice, but even a few pennies can make a big difference on your profit margin. In your plan be sure to write down how the extra funds will be spent -- insurance, salary, part-time help, advertising???. Be realistic. Crazy busy doesn't mean crazy profit. Also, Jiardy is right about dropping small (nuisance) clients. We did that a few years ago and I thought, "Oh my god, I have no business!" Not true. I was able to concentrate on the bigger jobs and narrowed our services so now we are not only profitable, but I am able to take some time off _during the week_!!  Anyways, good luck to you. Don't jump ship. Make the time to go over your business plan no matter how "crazy busy" you are!!!


----------



## vctradingcubao (Nov 15, 2006)

rhino09 said:


> We have put all the money made along with our savings back into the business . We have leased a six head emb machine and a 1 head emb machine.
> We have built a shop, bought a Roland GX-24 and a Roland Versacamm, all are paid off.


Because you have already done all these, I'd say you made money (and profit) already, and are doing well. When you finished paying for all those machines, you'll see that you'll start to have savings again. Click that "profit and loss" report on your Quickbooks and you will be inspired again!!!!


----------



## wormil (Jan 7, 2008)

It sounds like you are making profit, just not paying yourself anything. The concept is simple, it's called, "Pay Yourself First."


----------



## gmille39 (Oct 18, 2006)

Pretty typical. Most business plans state what year you plan on turning a profit. I started my business in November 2007 and spent money at the end of the year so I wouldn't have a profit. The loss reduces my taxable income since I still work full time. The first few years of any business will be spent building up inventory, equipment, samples, etc. As long as you are making enough to pay the bills, and making a profit on each order, you will begin to see a profit as your spending decreases.


----------



## jiarby (Feb 8, 2007)

> Because you have already done all these, I'd say you made money (and profit) already, and are doing well.


I do not agree with this... what does a versacamm and a GX24 cost?? Maybe 20k...or so. Divided across 2 years that is $800/mo. That is still not enough money to claim that they are profitable. Especially since they are not getting paid either. Paying off equipment is fine but the numbers are not substantial enough to say thay if they had that money in their pocket then they would be fine. $800 a month is $200 a week, and divided into how many people? two? The receipt checker at WalMart makes more. 

If they are making sales, which they are, then the prices are too low, or there are some other expenses lurking somewhere. 

Raise prices, lose 50% of your customers, make 100% more profit from the ones you keep and do half the work! Then as you rebuild sales (at the correct prices) you have available work capacity and can also take on help if you need it. This model is scaleable. A customer that you do not make a profit on is worse than none at all. Send them to your competition and soon THEY will be out of business instead of you!


----------



## vctradingcubao (Nov 15, 2006)

jiarby said:


> If they are making sales, which they are, then the prices are too low, or there are some other expenses lurking somewhere.


I'm assuming that the OP's business is single proprietorship, or maybe they are a husband and wife team, and that they get all of their daily living expenses from their business; maybe even all of their "entertainment" expenses. (Please tell me I'm right, Alex rhino09) 

They were able to pay their bills and live a considerably comfortable life, although not indulging (yet) on some luxurious vacations, and buying expensive cars (which I expect they could do when savings starts coming in). They are in fact paying themselves first by doing so. As a beginner, it's better not to be picky with customers because although time is gold and money, that time would be of no value if you are not doing anything and just laying around waiting for the "perfect customer".


----------



## Dannzegos (Apr 25, 2010)

Here is my advice... (This is coming from more of a sign shop slant, but it applies to any service business)

You need to analyze your entire financial structure. You need to know your bottom line so that you know what to charge.

The easiest way to do that is with software.

Here is what I use, and it makes life easier...

EstiMate Software

Sign Pricing Software | Sign Business Management Software | EstiMate

This software was originally designed for the vinyl sign business. It is an easy to use quoting system. 

They have pricing plugins that you can buy (they are cheap) that include:

Vinyl Signs
Thermal Printing
Embroidered Items
Wide Format Inkjet
Screen Printed Signs
Screen Printed Garments
Flatbed Digital Printing
and the list goes on...

There are several ways to buy the software, outright, monthly and installments. One way or another it will fit your budget.

Back to my point... This software will help you determine at what rate, or how much to charge to make a profit.

When you first install the software it will interview you, and ask you all your costs, including rent, utilities and etc.. It goes into great depth.

Before installing the software make sure you have all your bills and costs in front of you, it will make the interview go quicker.

It will also ask what you want to bring home, and then it will compute everything you gave it and will give you a basic shop rate that you must go by to make a profit. That might not mean much at the moment, but then you install your Screen printing plugin/s.

When you install the plugin/s it will interview you again and it specific to the plugin industry (screen printing) to determine what to charge to make a profit.

Once all the configuring, the hard part is done, then the easy part starts...

You get a call to quote a shirt (providing you have the software running already) you just input the specifics into Estimate software, colors, shirts, sizes, materials, and in seconds it will give you a live quote to give your customer.

Built into that quote is your overhead, plus what you told it you wanted to bring home. This will help you make consistent profits, deal after deal.

Just to clarify, I am a customer of Estimate and in no way affiliated with them outside of that.

I have said it in other posts, I do not like accounting and book keeping, I try to keep it automated, and this software allows me to quote in seconds and know I am not violating my profit margins.

I do both vinyl signs and screen printing, so this software has helped me out tremendously.

If you don't have an accountant or a book keeper at least, I recommend you get one, don't spend your time doing something that will sap your creative energies, or take you away from the thing you do best, making money.

I would also recommend Quickbooks, Estimate software will export your quote into Quickbooks allowing you to bill directly from the quote, saving time and money.

I hope this helps...

DZ


----------



## TshirtGuru (Jul 9, 2008)

If you aren't paying yourself, how did you pay to live for 2 years? Sometimes profit is mistaken for savings. When I don't save much I feel like I'm not profiting. But the truth is, my profits from my business end up being money I use to pay my personal bills,mortgage, entertainment etc. But once I do that and I don't have much left to put into savings, it makes it seem I didn't make any profit. 

I just had a discussion with my fiancé about it yesterday. Although we take home enough to pay for things, it's not preparing us for the future in savings. We decided to look over prices again and raised it slightly. We also planned ways to reduce our business cost down a little. And although were crazy busy right now working non stop, we can't afford to pay a full time employee. So were also trying to figure out how much more we need to make to be able to afford help so I can concentrate on bringing more sales in. I had a loose business plan when i started 3 years ago, but i end up tweaking it almost every half year. I also adjust prices accordingly after each tax time once i know my final numbers. You have to be flexible and change with the times. Maybe that 2 story house and luxury car wasn't such a good idea LOL. Jk, I do this so we can live comfortably.


----------



## TshirtGuru (Jul 9, 2008)

I'm going to refine my price list this weekend, and hopefully I have time doing it. It's be nice to see other peoples math so that everyone can see how others calculate what they want to take home, including myself. 

Let's pick some fantasy numbers to use and use them to plug into your equation.
Rent: $2000 month
Electricity: $300 month
Other expenses such as Internet, office supplies: $200 month.
Phone: $150 month
Insurance: $100 month
Equipment lease: $1000 month


----------



## crackerjackshack (Dec 4, 2009)

Dannzegos - I am very intrigued by your post. I have been looking for production software for quite some time, but what I've seen hasn't appealed to me at all. I am pretty savvy on this computer, but my husband isn't, so I feel like I have to find something that he can feel comfortable with.

We've looked at Shopworks, but I hate the interface. There's another one we've looked at, but the name doesn't come to mind right now. What we want is production software that can generate pricing, but also follows a sale from artwork to delivery and tracks progress as it moves through the system. Will the software you recommend do that?

We use QuickBooks (God bless whoever thought that program up!) but as far as tracking to be sure all the steps are getting completed and deadlines are being met...we're doing that manually. Literally, we have shopping bags in our staging area with invoices attached. Each invoice has a check box for each stage of production, so we can tell at a glance what still needs to be done for that particular order. Then, we arrange all the bags according to deadlines. As deadlines are met, the bags get moved closer to the front of the line. It's primitive, I know, but it works. We are generally looking at 30-50 orders at a time this way - but that doesn't count what we're currently bidding, or what is on the horizon, so it always "feels" like I've got loose ends to keep up with. I think software designed for this business would help with that.

As far as pricing, I've developed an Excel spreadsheet for generating quotes based on our costs/expenses and it works pretty well for me, but hubby hates it! All those columns and formulas look intimidating to him (although the process is pretty simple) and he just can't seem to get the hang of it. (He's one of those guys who would still pay with a bucket of gold and a stack of furs if he could! LOL)

Would you say that the interface and "user friendliness" of EstiMate software is sufficient enough to be able to train employees (and my poor computer-challenged husband) to use it?

BTW - My husband EXCELS at selling, so his lack of computer skills are readily forgiven! )


----------



## jiarby (Feb 8, 2007)

Where is your 40 a week of labor? You have to include that cost into your expenses before you consider a profit margin. 

You are missing the main point:
Profit = Gross Sales - Total Expenses 

Part of the "Total Expense" is the labor costs of producing the work. 

Profit is what is left after you pay all that. Labor is not profit. It is an expense. If you are not considering the costs of your labor when pricing your goods then you will be underpricing. 

If you price correctly, as your sales increase and exceed your labor capacity, you can easily add an employee because the additional labor costs are already built into the extra sales. Your benefit as a business owner is the extra profit margin from those sales. 

Business fail when they become seemingly busy because their business model is not scalable. They base prices solely on COGS, without considering labor or overhead. 

So... *WHAT IS THE MAGIC FORMULA*??

There isn't one! It depends on your sales volume, your market, and your competition. Use your 2 years of sales and expense data to help you figure that out. 

Look at your P&L for the last year. Now add in labor (what it would cost you to hire someone to be you). How does that change your numbers? How much do you have to raise revenue to offset the labor. Now do it AGAIN to add in a desired profit. Maybe you want to make 25k in profit... as an example. Now you have 15k (minimum wage) in labor and 25k in profit. Spread that across all the sales you made last year and this will give you the amount that you need to raise prices. 

Another way to do this is upsell. Raise your $$/customer. If the customer wants a 3x8 banner then when you quote it show them how much a 4x8 one is also. Sometimes they will upgrade and you make more money. When someone buys embroidery, show them their art on a coffee mug too. Give them a chance to supersize it or add a dessert. McDonalds does that because it works.

When we sell a banner it gets packaged in a ULINE Heavy Kraft bag, or a tube (depending on size). We always print a couple vinyl decals of the banner. One goes onto the package, and the other one gets handed to the customer with their receipt. I can't tell you how many times that has led to an additional sale of just the decals. 

Overall I think your problem is that you are grossly underesitmating your expenses when quoting jobs. You are winging it and looking at the COGS, then adding whatever you think you can get. You have to have a solid understanding of your REAL expenses (including labor) and be disciplined when quoting a job. Say no to unprofitable work. Set a shop minimum. Create RUSH fees. Charge for digitizing and redrawing art.


----------



## Dannzegos (Apr 25, 2010)

crackerjackshack said:


> What we want is production software that can generate pricing, but also follows a sale from artwork to delivery and tracks progress as it moves through the system. Will the software you recommend do that?


Estimate is powerful software, but I only use the quoting and Quickbooks export (and knowing my shop rate) side of it. If you follow that link I gave, you will find product tours, tutorials, information and just about anything you need to know about the product.

I recommend you do some research on it and report back what you find concerning your question.

Thanks, DZ


----------



## crackerjackshack (Dec 4, 2009)

From what I can tell, it does the exact same calculations our spreadsheet does, only it looks a lot nicer. I don't see any indication that it covers production issues. Bummer.


----------



## Rodney (Nov 3, 2004)

crackerjackshack said:


> What we want is production software that can generate pricing, but also follows a sale from artwork to delivery and tracks progress as it moves through the system. Will the software you recommend do that?


You can check out T-Quoter: http://www.t-shirtforums.com/business-finance/t105045.html

http://www.t-shirtforums.com/business-finance/t88474.html

I've also heard Impress is a software that can do what you describe, but it's pretty expensive.

There's also a web based software coming out: Meshcount: Simple software for instant screen printing quotes.


----------



## crackerjackshack (Dec 4, 2009)

T-Quoter looks good. We'll have to do more research.


----------



## rhino09 (Feb 19, 2009)

I just wanted to thank everyone that replied. Awesome good advice. I truly appreciate everything.


----------



## rhino09 (Feb 19, 2009)

yes we are a husband and wife sole proprietership. No we both have full-time jobs. But would like thisto be our mainstay eventually


----------



## vctradingcubao (Nov 15, 2006)

rhino09 said:


> yes we are a husband and wife sole proprietership. No we both have full-time jobs. But would like thisto be our mainstay eventually


thanks Alex.
So, what's the verdict, is your "side-line" actually profitable, or are you working for free?


----------



## Ruby MHarvey (Mar 29, 2008)

I am so glad you posted this inquiry, I am some what in the same position. First I do not have a business plan and really don't know how to write one. I have a single head machine that I have had about a year and a half. I am still making payments on it, I added a heat press and I purchase heat transfers, just started doing the transfers. the heat press is paid for and I have purchase a building that I am still paying for.
What would be the steps to take in setting up my business plan? I need all the help I can get.


----------



## Ruby MHarvey (Mar 29, 2008)

You all have given some good and helpful advice I am so glad that I started checking the forum again. I been in business since 2007, I work it from home and I still work so I will be checking regular. Thanks again for all the good help.


----------



## jiarby (Feb 8, 2007)

SCORE

These guys can help you learn about business plans.


----------



## curiousity (Feb 15, 2009)

Find a local SBA adviser for your business plan. My adviser helped me enormously with my business plan.

Small Business Administration - Local Resources

AND they are free!


----------



## BenG (Apr 12, 2010)

Your honesty and willing to ask questions will help you reach your goals. I agree with those who have a good feeling about your progress to date.

I've been an entrepreneur for 20 years, and I can share a few thoughts:

- An experienced man once said to me, "Anyone can be busy. But are you making money?" It is my belief that you should pay yourself something, because there are levels in the tax code (earner income credit) where you actually come out ahead on taxes. I believe this is about 8K per year for an individual.
- Stats shows that most small businesses take five years to hit their stride. If you are reinvesting with this in mind, you are setting yourself up for future success.
- Should you wish to borrow, paying yourself the recommended 8K will make your loan app stronger.
- I can tell with a sniff whether a business is marked for death. You sound like you are building a fine enterprise and I applaud you.
- Study your product and service lines, and see what makes you the most profit. Concentrate on that.
- Take comfort that t-shirts are a relatively low capital business to start. The last business I started burned through in a month when it costs me to build my developing shirt business now.
- Sell confidence. The guy who tries to undercut looks desperate. A good price point is to be a little bit higher than your competition and able to explain to customers that your prices allow you to do a quality, not slapdash, job. Be relaxed with customers.
- Studies of industry tend to show that most profits come from (roughly) 25% of customers. 25-50% are break evens and 25% are money losers. (My memory of the exact figures is shaky, so call these approximate.) Try to price the money losing and break even customers so that you will either make money or they will go to the guy down the street and cost him money.
- Take excellent care of your best customers. Beat your own deadline, spend extra time getting to know them, and have your best salesperson (probably you) be their contact. Keep them informed about how their project is coming along, as they will wonder and develop ideas that it is almost done when perhaps it hasn't been started. Give them progress reports.
- Be warm to your best accounts. Treat them like personal friends, master their names and offer them coffee or a similar perk when they stop in your shop.
- The guy who offers the best value and quality at the lowest price will make money. But if the value is compromised -- like if the t-shirts perform poorly in the wash -- he isn't really offering value, just cheapness. Educate your customers on the difference between value and cheapness so they know what they are paying for if your price is somewhat higher. Let them know that you don't stoop do doing sub-par work.
- Make appointments to talk to your best customers about possible jobs. Meet in a local coffee shop if you don't have a place to sit and talk in your shop. It's much better to be able to concentrate on each good customer than to be constantly interrupted by drop-ins. Plus, people who invest time in a sit-down lose interest in shopping around if the meeting goes well. People want a relationship built on trust, quality and value. Offer it.

I bet you know a lot of these tips, but maybe they'll be of interest to others. I have a good feeling about your business but would like to see you getting paid if only to get the tax break and build up social security work quarters. I skipped paying myself for a while, didn't accrue the 40 quarters needed for social security disability, and was hit by a DUI driver. I survived, but I was unable to collect SS support.

Best of luck to you. If I can be of further help, just ask. - Ben


----------



## crackerjackshack (Dec 4, 2009)

Ben - Thank you very much for your words of experience! I work closely with a mentor from the SBA. He owned a graphic arts printing company for years, and his words ring very true to yours. He has been a truly valuable resource, and I always recommend people who are starting out to seek advice from others who have been there. 

I'm printing your comments and posting them by my desk!


----------



## JAF (Oct 12, 2008)

I agree with all the advice that you have receive here. I know how tight money can get, I've been doing this for 13 years. Sounds like you are still leasing the single head. If you are not using it all the time, can you cancel the lease? Are you using the Versa Camm to it's full potential? Ten yrs ago I purchase a printer cutter and only used it for vinyl cutting. I thought it would bring in more business and increase my profit but it didn't. I've sold it and it was a good decision. I just didn't have the time to do everything. Concentrate on what makes money for your business. 
I didn't show a profit on paper for the first 5 yrs but I was paying my bills. So, even though I wasn't taking a paycheck, I was making money.


----------



## wormil (Jan 7, 2008)

BenG said:


> - Studies of industry tend to show that most profits come from (roughly) 25% of customers.


I agree with your whole post but I want to reiterate that in my experience, about 80% of my profits come from about 20% of my customers. Not because I don't make money off the other 80% but that top 20% are the big customers and loyal customers, these are the ones you want to give your special attention.


----------



## _NaN_ (May 5, 2010)

wormil said:


> about 80% of my profits come from about 20% of my customers.


The Pareto Principle


----------



## wormil (Jan 7, 2008)

_NaN_ said:


> The Pareto Principle


Ha ha, fantastic! I've rediscovered something that everyone else already knew!


----------



## _NaN_ (May 5, 2010)

you don't need to be sarcastic; just because you know it, doesn't means that everyone must know it...


----------



## jakeinmn (Jan 27, 2010)

I wish I was in OP's shoes.


----------



## wormil (Jan 7, 2008)

_NaN_ said:


> you don't need to be sarcastic; just because you know it, doesn't means that everyone must know it...


Sorry, I wasn't being sarcastic. I really didn't know the concept had a name, I just figured it out through experience.


----------



## _NaN_ (May 5, 2010)

I had a "not so good day" when I post that, so excuse me if I was on the defensive... 
I'm pleased to know that my first contribution was real!


----------



## rhino09 (Feb 19, 2009)

When you say average design,are you fiquring on a 5K stitch count or lower or higher


----------



## Rodney (Nov 3, 2004)

BenG said:


> - Sell confidence. The guy who tries to undercut looks desperate. A good price point is to be a little bit higher than your competition and able to explain to customers that your prices allow you to do a quality, not slapdash, job. Be relaxed with customers.


There were so many good points in your post Ben, but I wanted to spotlight this one. 

Being confident in your pricing and your quality goes a LOOONG way when talking to customers. If you "hem and haw" when they ask you for a huge discount or say the guy down the street is half price, you should be able to politely, professionally, and firmly back up your pricing and quality. 

Which ties into another one of Ben's points...some customers just aren't profitable. You don't have to spend too much energy or worry on those, but still treat them professionally, even if it means professionally sending them somewhere else


----------



## ShirlandDesign (Nov 29, 2009)

Alex there are so many replies I'm not sure your referencing _my_ average run, but yeah over a 12 year period the average left chest or hat (doing mostly corporate) was anywhere from 4 to 6 thousand stitches. I ran the Tajima at 650 rpm and got about 1000 stitches in 2 minutes, or 8 to ten minutes a run, so 5 or 6 runs an hour was (conservative) typical, often more, seldom less. Usually I could stage the next order and tie on while running the current order. I think the most we ever ran in a day was close to 700 shirts on 6 heads, it was a really long , bustin your rear, low stitch count day. I think we were doing about 14 runs an hour. One person counting in, verifying p.o.'s, and working with clients. One machine operator. One person trimming, steaming folding, boxing, and shipping. Oh, and two dogs, mostly napping.


----------



## txteevee (Mar 24, 2010)

jiarby said:


> Then I would argue that you are not charging enough or your expenses are too high... You have a pricing model that is based on exploiting your free labor. It is unsustainable. ......The trick is to find the sweet spot.... the balance between expenses, labor, profit, price and sales volume. It is a fine edge.


 
_"heavens to merkatroid batman - what an answer!_" i am cutting and pasting your whole post to a separate document to read and re-read and re-read. we have a promotional products business grossing over $800k/yr and don't turn a profit (not a "real" one anyway). we DO have lots of overhead and labor costs. i fight with my partner all the time about CUTTING costs and raising our prices. he just wants to make more money and bring in the "big fish" --- which he does. thats his answer to ALL our problems. in addition to the areas which you highlight, i've noticed that we invoice and sometimes don't follow through and collect the money when a customer "forgets" to pay. can you believe that? how ridiculous is that????? 

anyhoo, THANK YOU for this detailed post!


----------



## jiarby (Feb 8, 2007)

I think there are alot of businesses like yours out there:
They look busy, the phone is ringing, orders come and go, but at the end of the month what is there to show for it? You should see your bank balance getting bigger every month! 

Remember that funny salesman quote...

"We lose money on every sale... but at least we make it up on volume!"

If you raise your prices you may see sales fall 25%.... but profit RISE 100%! 

I'd see if the partner wants to buy you out!


----------



## txteevee (Mar 24, 2010)

jiarby said:


> I think there are alot of businesses like yours out there:
> They look busy, the phone is ringing, orders come and go, but at the end of the month what is there to show for it? You should see your bank balance getting bigger every month!
> 
> Remember that funny salesman quote...
> ...


 
the "partner" is my husband. LOL!  and i only came into the biz because he wanted me to. i want to "opt out" every other day...


----------



## L2Printing (May 4, 2010)

Don't overlook hiring an accountant. Keeping good records along with your books can definitely help map out a roadmap in a sense to finding where you can be saving/spending (in terms of salary as well)

If you have one already, utilize the accountant and take some advice. 

If you're busy and making money, but haven't seen good profits just yet, I would still stick to the game plan. It's better that your making money, rather than going downhill in the negatives without any clients.


----------



## BenG (Apr 12, 2010)

I think the reasons why people work at a loss, or break-even, is fear that they don't deserve to make a profit. Perhaps they are workaholics and they don't want their addiction disrupted.

A gradual way to tackle this is to set a profit goal so that you can buy something you need with the money. Often, people who are frightened by profit will go along with such a plan.

After that, convert the item gradually into things that are less and less essential: items for the shop, items for the house, items for the staff, a rainy day fund (not to be touched), a charity fund, a profit fund (to be touched whenever it reaches a certain amount and half the money taken out) and so on.

But to be sure, it's the fear that the profit is not deserved that holds many people back, and gradually being reassuring on that notion might help turn it around. Good luck.

Business is about cost plus something for your trouble, such as having the right gear. Try to make it an art form. Take a planned amount out and stick it somewhere, then earn it back by raising prices or cutting costs.

Sorry some of this is redundant.


----------



## echorick (Apr 14, 2010)

rhino09 said:


> We have been in business now for just over 2 years. We have not made a profit yet. We have put all the money made along with our savings back into the business . We have leased a six head emb machine and a 1 head emb machine.
> We have built a shop, bought a Roland GX-24 and a Roland Versacamm, all are paid off. We are crazy busy but we feel like we aren't seeing any profits i.e. putting money back into our savings. Is this typical and are we just being nuts or what? Are we charging too little? Someone explain it in simple terms.


sounds like your doing all the right things - be patient


----------



## robby (Oct 29, 2007)

I think as long as you are precisely sure that you earn profit from each order, your business is basically profitable.

If it turns out that you don't see the money in your bank account, there are some things that may cause this. For example, maybe you put too much of your profit to fund for your next orders. Another example, perhaps there is unexpected cost that you miss to calculate. Or as you said, you forget to follow up the payment. Simplest things can cause this feeling that you don't earn anything 

Well, all in all, Good luck!


----------



## abaoafu (Apr 11, 2010)

BenG said:


> I think the reasons why people work at a loss, or break-even, is fear that they don't deserve to make a profit. Perhaps they are workaholics and they don't want their addiction disrupted.
> 
> A gradual way to tackle this is to set a profit goal so that you can buy something you need with the money. Often, people who are frightened by profit will go along with such a plan.
> 
> ...


I'm one of them, thanks for your advice!


----------

