The Cost of Creativity

It’s no big news that the embroidery industry is a very creative place, but realize from a business standpoint, it’s a highly technical place too.

If you’re a hobbyist, the creative side is most important to you and you probably have never gone too far down the road to figuring your business expenses and the cost of doing business.

If you’re a commercial embroiderer, you better have, because without this information you are flying blind and can easily go into the red. Red is bad. Black is good. Even just the basics will give you a picture in your head to help you make decisions that are best for your bottom line. After all, for you, you’re in it for the profit and the love of the embroidery.

First, list all your expenses for a year’s time. Everything from turning on the lights (if you have a shop) to yearly fees and subscriptions/memberships, supplies, office expenses, web cost (if you have a website) and any help (bookkeeping, accountant, web designer) everything…if you spend money on it, related to your business, count it.

Divide this total, breaking it into a monthly expense by dividing by 12 or a weekly expense dividing by 52 (weeks/year). This way you can see exactly how much work and money you need to bring in each week to break even. This is not profit, just cost to do business. If you want to know your daily “break even”, divide that weekly total by how many days you work per week. This can be scary and make you feel a bit pressured but it’s good to know.

Now, whatever this daily total is, you know that you have to exceed this to be “in the black”. You need to start pricing jobs by how long it will take you to do them, start to finish. How much do you need to make per hour? If an extra step is added, such as re-bagging the garments, the price needs to go up. To figure running time for a design: stitch count divided by machine running speed SPM (stitches per minute) = # of minutes to run. In this way, you can figure how many hours you will need to complete your order whether you have a multi head or a single head.

If you are a one person shop, it gets more difficult because you wear all the hats, i.e.: receptionist, production manager and machine operator. You can go a long way to being efficient if you schedule and organize your time. Don’t let the phone interrupt your production 50 times a day. If you have to, schedule call backs for a certain time each day and tell your customers exactly what you’re doing. If they understand that you will call them back and that you’re not letting other customers interrupt you while doing their orders, they will feel special and appreciate your attention to their jobs. Doing this will make you more efficient at the machine.

If you are a multi person shop, these figures can help you keep up with whether you can afford that new machine, an extra person to help or get another machine operator. Just so you know, a good machine operator averages around 35,000 stitches per hour.

This industry is a wonderful and creative way to make a living; you just have to be smart about your business costs and pricing. Cut expenses where you can to raise your profit margin and compete not only on pricing but quality and customer service.

Focus your time on the production and your customers and let NeedleUp take care of the digitizing for you! You’ll get professional designs that will run efficiently every time which will get you through your order faster and grow your profits exponentially.
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NeedleUp Digitizing LLC is owned and operated by Donna Lehmann, a 20yr veteran of the embroidery/digitizing industry. She can be reached at NeedleUp, 303-287-6633 for digitizing, consultation and classes M-F.