ave you made your New Year’s resolutions yet? If not, we have some that might excite you, because they have the power to transform your business. From getting paid upfront to increasing your minimum order quantities, we’ve rounded up the top four pieces of advice we've received on The PRES&S this year from distributors and decorators, that you can include in your business resolutions – along with some how-to steps to help take your business to the next level in 2023.
1. Get paid upfront.
It’s time to overcome that ‘fear of losing customers’ mindset. When customers pay you 100% in full upfront, you’re 100% safeguarding your business, bank account and cash flow.
“Shop owners think they can’t get paid upfront. We all pay for things upfront. Your customers will adjust. If they won’t, lose them. They’re not your customers. Good customers pay upfront.”
- Marshall Atkinson, business consultant at Shirt Lab Tribe and Atkinson Consulting
Once you get over the mindset of not being afraid to enforce your upfront payment terms, you’ll start seeing the impact it has on your business. Many entrepreneurs have found that once they started implementing these payment terms, they were in a much better position to succeed. One of the easiest ways to get paid upfront is simply to change the terms of service that your customers sign when they place an order with you.
“Terms of service are often a place on their websites where decorating companies fail miserably.This is your first line of defense for your shop and the place where you explain and outline your policies. Terms of service are also what you’ll reference, if a situation arises where someone doesn't pay as agreed or expected.”
- Kristine Shreve, director of marketing for LynniePinnie Designs
So, if you don’t already have terms of service, or haven’t updated your policies in a while, do that first – as in right now. “When you’re writing your terms, make sure you’ve spelled them out clearly, in an easy-to-understand language that’s simple to read,” Shreve says. Here are the typical options that are given to customers, from the least ideal to the most ideal:
- Net 30:
Your client must pay their entire bill within 30 days of receiving their decorated garments (with penalties and fees outlined for late payment).
- Net 15:
Your client must pay their entire bill within 15 days of receiving their decorated garments (with penalties and fees outlined for late payment).
- 50/50:
Your client pays 50% of the bill upfront and 50% once you’ve delivered the decorated goods.
- Upfront Payment:
Your client pays 100% of the bill at the time they place their order. This eliminates the need for a fee or penalty schedule. Plus, you don’t have to front the costs for supplies or labor, while you’re waiting for their payment.
It’s also important to make it ultra-easy for clients to pay you. First, switch to electronic invoices and billing. For example, a platform like ReliaBills lets you email invoices, send payment reminders and get paid online, before you start the job.
You should also offer a variety of payment options. Credit cards are one method, but you can also include online platforms such as PayPal and Zelle. This not only shows your professionalism and flexibility, but also offers reassurance, as these online payment options have buyer protection programs.
2. Be a problem solver, rather than an order taker.
When you pivot from being an order-taker to a problem solver, you build customer relationships for life. A problem solver asks the right questions to get the whole story before proposing a solution.
“(Problem Solvers) invest time and thought to make sure the outcome is best for the customer – and most efficient and cost effective for their shop to produce the job. Problem solvers also aren’t afraid to suggest other things that work within the customer’s parameters.”
- Kristine Shreve, director of marketing for LynniePinnie Designs
For example, say a prospect asks for an embroidered performance polo with their logo. “The logo has a lot of colors and a small tagline that wouldn’t embroider well on stretchy fabric,” says Brayden Jessen, owner of Zome Design. “Instead, I’d recommend a full-color, direct-to-film transfer that will capture the logo’s fine details, stretch with the garment and more accurately represent the customer’s brand. Our embroidery-only customers are amazed at the quality of DTF transfers when we take the time to make the suggestion.”
Before jumping into the quoting process, Jessen recommends asking a series of questions to figure out exactly what your client needs, such as:
- Who are the recipients of the products?
- How will they use and wear the garments?
- What’s the goal of the decorated products? Is it to get more leads? Increase sales? Raise awareness? Recruit, retain or promote employees?
- What kind of artwork do we need to communicate the message?
- What type of decoration method works best with the shirt style, material and artwork?
It’s also important to charge for the value you bring. Jessen always reminds his team, “When people pay, they pay attention.” For example, if you give everything away for free, customers expect more freebies. However, when you charge for artwork, they put more time into the details they give you, which helps you get artwork right the first time.
Finally, make your offer so focused and detailed to the point it can’t be compared with your competitors solutions. When you act as a solutions provider, customers will begin to see you as the go-to expert for solving their apparel and promotional needs.
“Your clients don’t wake up dreaming of becoming a custom swag expert,” Jessen says. “They do wake up every morning wondering how they’re going to find their next employee or sale. They struggle with how to keep employees engaged and retained. They want to know how to get people to attend their next event.”
3. Find outsourcing partners.
When you make it a point to build a trusted network of outsourcing partners, you can be a one-stop shop. For decorators, both new and experienced, outsourcing’s a smart option when a client asks you for a decorating option you don’t offer (or one you don’t offer yet).
For example, if you focus mostly on embroidery, and a client wants screen-printed t-shirts and embroidered polos, outsource the screen printing to a partner shop. That way, you’re still the client’s single point of contact.
“Outsourcing can free up your time, allow you to work on other projects at the same time, and increase your overall profit, while taking a smaller cut of jobs. It’s also great for those with health issues who can no longer do the production, or who haven’t gotten the equipment they want or need yet.”
- Tanya Doyscher, owner and graphic designer at The Visual Identity Vault
Doyscher recommends starting this process by making a three-column list, including the following, to decide what to outsource:
- Types of things you don’t enjoy doing or that take too long to complete.
- Services you want to offer, but your budget won’t stretch to equipment purchases or hiring additional staff.
- Tasks you may not be proficient at in-house, graphic design for example.
Some shops outsource a decorating service until they can bring the equipment and production in-house. Others outsource processes they never plan to offer. Outsourcing gives you breathing room. Finding great partners to whom you can outsource will also help you feel more comfortable farming out certain services for the long term.
When outsourcing a decorating method, such as embroidery or screen printing, the shop you choose should live up to your high standards. If they’re local, visit the shop and examine samples. Give them a test order so you can see how the process works, how long it takes and if you like working with the shop. Choose a person in your shop to manage outsourced orders, including doing quality control checks.
Finally, choose the right-sized partner. If the shop is too small, they might not have the systems and processes to handle your orders efficiently and on time.
“If the shop’s too big, you could just be another job, and your order won’t get the attention it needs. A medium-sized shop has the systems to give you a great customer experience and also be small enough, so your order gets done accurately and on time. When outsourcing, you can grow and scale without worrying about hiring or the high capital investment of equipment or labor.”
- Tom Rauen, CEO of Envision
4. Start raising your minimum order quantities.
The biggest advantage of raising your minimum order size is improving your profit margin. Think of it this way: When you increase your order sizes, you print more shirts all day. “It takes about the same amount of time to set up and take down a 12-piece screen-printing job as it does for a 72-piece order,” says Shawn LaFave, president and chief branding officer at NGA Promotions.
Consider this: In an eight-hour shift, how many minutes do you actually spend decorating t-shirts? Atkinson conducted shop studies that show many printers only spend 30% to 40% of their time printing. In other words, out of 480 minutes, they’re only printing for 168 minutes, or 2.5 hours out of eight.
“We only make money when we’re decorating, not when we’re ordering shirts, digitizing, preparing art files or burning screens. Ask yourself how much your press is worth an hour: $300? $1,000? More? You’ll make more an hour with bigger orders. If you’re ready to level up, raise your minimums, so you spend more time decorating.”
- Marshall Atkinson, business consultant at Shirt Lab Tribe and Atkinson Consulting
When you raise your minimums, it doesn’t just have to be in product quantities. “It could also be a minimum dollar amount,” Rauen says. “Dramatically increasing pricing on lower quantities of hoodies, for example, results in a much higher profit margin. That can make smaller orders worthwhile in some cases.” A good starting point is to understand your costs – and your shop’s full financial picture – to produce an order.
“You need to know your monthly operating expenses, including rent, utilities, internet, payroll and so on. Then, total up production costs like current garment inventory, machine payments, and supplies like screens and inks. Divide your monthly costs by the number of hours you’re open each week. Add that with the cost to run an order. Subtract all of that from the money you’ve charged for the order.”
- Shawn LaFave, president and chief branding officer at NGA Promotions
If you aren’t breaking even or hitting the percentage of profitability you need to stay in business, there’s several things you can try:
- Lower your overhead.
- Lower your cost to produce the order.
- Increase your margins or markup on orders.
- Increase your minimums.
Tell customers about your new policies and enforce them. Give them enough advance notice so they can consider the budget and ordering plans on their end. Let them know why you’re implementing the new minimums. Share with them the ways they can continue working with you.
For example, if a client usually places larger orders, you might accommodate smaller orders from them on certain products. “Your new policies will eliminate smaller-order customers and attract larger, more profitable customers,” Rauen says.
Resolve to Build an Even Stronger Shop
Now that you’ve got four super-solid suggestions, from shop owners and experts, who’ve been there and done that, it’s time to start planning how you’ll implement these ideas in 2023. Don’t get too stressed trying to change everything all at once, though. Take time to slowly implement these changes into your business, so all your customers and employees are on the same page and don’t feel too overwhelmed.
You’ll be surprised at the impact even a small change can make in your business, so next year, just start out with the little things, and the big results will come.