Issue link: https://docs.hic.us/i/403552
we didn't focus on the stitch count, or a particular markup, we focused on the hourly output versus the hourly cost. Everything discussed so far has been in general terms. As you investigate how the cost concepts apply to your business, you will (and should) get much more specific and precise. If you don't know how to use spreadsheets, learn! They are an invaluable tool for ALL business owners. Okay, so know that you have a clue as to what it costs to run an order, the nest step is to develop a strict set of pricing guidelines. Create a price list that ensures profit for you, while offering a fair price to the customer, and stick with it. If you have to go below the breakeven point, then you shouldn't take the order because you will lose money. This is perhaps the hardest part to deal with. I constantly get beat-up in Seminars by Embroiderers who say that the competition is cheaper, so they are forced to sell at the same levels. Well, I'm here to tell you, that the numbers don't lie. If you try to sell it for less than it costs to produce, you won't have to worry about the competition for too long because you'll be out of business. This leads me to the next aspect of profitability – choosing the correct market to pursue. Some markets will support your price structure and some will not. If you can't get your asking price in a given market, then you are in the wrong market. Basically, you have three choices: 1) Take the job at a loss. 2) Close down your shop. 3) Find a market that fits your business. Identify your strengths and weaknesses, then capitalize on the strong points. What do you have to offer, beside price, that the competition does not? A lot of the discount shops have long turn-around times. Maybe you can offer quick delivery. Many of the discount shops have poor quality work. Focus on having the best embroidery quality and letting your potential customers know that. If they don't care about that, then maybe you don't want them as a client. And be sure to refuse any job that you have doubts over. If you aren't sure you can do it right, then don't do it at all. The hardest thing to say is NO, but sometimes it's the most important word in a Shop Owners vocabulary. Finding a good niche market is another piece of the profitability puzzle. Look for specialty markets that the other shops have either ignored, or never identified. Niche markets can be very lucrative. Typically they will take research and possibly a special approach, but the long-term results can be quite profitable. If you are the first, and only shop serving this market, then you are in the position to control the price points significantly (but within reason). (Reference my series of articles on Niche Embroidery Markets in Stitches.) You must realize that you are running a Business that does Embroidery rather than Embroidery as a business. It's important that you focus on the embroidery aspects, but it's critical that you stay on top of the business issues. Though profitability is affected most by your production costs, there are other avenues to www.hsi.us care@hsi.us 143