Issue link: https://docs.hic.us/i/403552
Avoid Jobs That Are Too Large It might be tempting to take on large jobs, but if your shop is not equipped for such volume, then you will be hurting yourself from a cash flow standpoint. As an example, suppose you are a single head operation that normally focuses on jobs of 1-24 pieces. Typically, you will be able to finish several jobs per day. That means that everyday, you are bringing in real money. Now suppose that someone wants you to sew 400 caps. If each cap took 15 minutes, then it would take a minimum of 100 hours or 12.5 days to complete this order. Meanwhile, since all of your resources are tied up with this one job, you are unable to produce anything else. Suddenly, you find yourself with no money coming in the door for about two weeks, but you still have bills to pay. On paper, this might look like a profitable order (and it might be), but from a cash flow point of view, it could be a disaster. You would better off to contract the order out to a larger Embroiderer. You still make money, the job gets done in less time, and your cash flow is not adversely affected. Beware Of Rapid Growth Rapid growth can kill a business, as it tends to create negative cash flow. When an Embroiderer enters a period of rapid growth, they tend to be overwhelmed with orders that are typically larger and more frequent. If you have to go out an purchase the garments in advance, you suddenly find that all of your financial resources are tied up in merchandise and your bank account is empty. And by having larger orders, it's taking longer to get the money back in. And then when it does come in, you need all of it to purchase more merchandise. This is a very viscous cycle that can doom your business. How do you solve this problem? Having more lines of credit lines is not the solution. Here are some methods to deal with rapid growth issues: • Contract out the excess work. • Learn how to say no. • Add staff and an extra shift. • Invest in additional equipment. • Require full payment in advance. NOTE: Refer to Attachment I to learn more about Monthly Cash Flow projections. www.hsi.us care@hsi.us 71