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For those who really enjoy getting ink on their hands and think it is the only way to decorate shirts, these articles are for you. Before you screenprinters think I’ve gone mad let me put it in perspective. The cheapest way to decorate a shirt or sign is screenprinting. But when you factor in time and labor and depending on order size, it may by more expensive than you think. Obviously, to do colored or black shirts screenprinting is still the answer. There are advantages to screenprinting that no other printing discipline can take over. But that is true about embroidery, engraving and all other ways we decorate ad specialties. They all have their place. Finding that place is the trick and the answer.

This first article is to lay the groundwork on this new business direction in very general terms. But this article is to tell you why the marketplace demands that we all look at our business and decide if we want to grow and how we should grow.

Who is the largest corporation in terms of gross dollars? If you said Wal-Mart you would be correct. Now what does this have to do with my business? You may be thinking, “My company is me and my four-color screenprint press or my four-head embroidery system, and no time to take on a new business in my shop. Well in most cases you are wrong. It is hard to change old habits but without change businesses die. You may become a casualty and not know what hit you. It is time to work smarter and not harder.

There is a saying I use a lot in my seminars. “You can be on the right track but if you are not moving forward the next train will run you over”.

The Wal-Mart Doctrine

The Wal-Mart Doctrine according to the book of JOHN (Benedetto)

This doctrine of mine states the following: “Any store where I can get my oil changed, buy socks and do my grocery shopping is where I like to shop.”

What did he say? Basically we all like to one-stop shop. That is what our customers want to do as well. It saves us time and money and the same for our customers.

More and more companies we know are Wal-Marting (a verb I invented). Here are a couple of examples. Let’s look at Kinko’s. They started with copy machines. Then they added computers. Now they have gone after the digital sign market. You can purchase office supplies, business books, do FedEx and book binding at each location--- One-Stop Shopping.

Many sign shops such as Sign-A-Rama now offer promotional products. Some do screenprinting of T-shirts and with their sister franchise, Embroid Me, they can do embroidery. Can you see the concept all around you? You need to take a look at this and how it can fit into your grand design.

The Economic Pyramid

The Economic Pyramid or Why the Egyptians Had It Right. It is all in the base. The Egyptians learning early in Pyramid building that to go higher you needed a bigger base. This idea has spilled over into the business arena.

Funny thing is that this concept works for every product you can find--- automobiles, jewelry, toys and promotional products. We will be using T-shirts in this example. First you need to answer two questions:

Questions #1 - What is your average order? Not the largest, but your average. In T-shirts, it is broken down like this, 144 average shirts and above reflects 1% of the printers, 72 ­ 143 average shirts reflects 1% of the printers and 0 ­71 are 98% of the screenprinters in the world. So if I was a betting man and I am, the odds, by far, favor that you are a small volume printer. This should not worry you because small orders make you more profit.

Question #2 ­ Has your average order been shrinking over the last few years? Not the largest, but your average order. In most cases the answer is yes. From my personal example, my average order five years ago was 48 t-shirts per order and today it is 24. There is a reason for the shrinkage. It can be explained with the economic pyramid and the economy.

A
on the pyramid are the big dogs in the yard for T-shirts. This would be groups like the NFL, major league baseball, NBA, and groups that purchase huge amounts of T-shirts with few design changes each and every year. The problem is we never see this work. Most, if not all the work, goes overseas where labor and productions costs are cheaper than here in the USA.

B
on the pyramid is the clothing manufacturer for T-shirts with such names as, the Gap, Abercrombie and Fitch, and Nike who purchase huge amounts of T-shirts each and every year. Their problem is that they sell more shirts, but utilize many different designs over the course of a year. We never see this work either. Most if not all the work goes overseas where labor and productions costs are cheaper than here in the USA.

C
on the pyramid is the middle to large corporations that are everywhere, such as Xerox, Ford, Microsoft and the like. In this category are smaller lesser known corporations and companies. Many colleges and schools fall into this category as well. They use t-shirts for advertising and profit makers. They purchase 1000’s each and every year.

Do you have a chance at their business? YES you do. Some of us out here print for this group. As a rule it is very competitive and the profit margins are thin in this marketplace. You need to sharpen your pencil and know exactly what everything costs you to produce. You can work yourself right out of business if you do not know your costs. I have seen it happen far too often.

D
on the pyramid is the area where most of us make our living. It is the base. It is the largest part of the pyramid. It has more customers available to us than any other part of the printing pyramid. These customers need T-shirts too. They, in most cases, do not get serviced properly. The profit margins in the base area are much higher. The customers tend to be more loyal.

The down side is that it takes just as long to make a screen for a one-color job to print six shirts as it does to print 144 shirts. Your time becomes a major factor in this area. But if controlled correctly you can make large profits and not work as hard. I can show you how.

Downward Pressure

The next problem is that many of the A group of printers in the USA have been replaced by overseas printers. The only choices they have are to go out of business or to become B group printers. That forces the B group printers to either go out of business or become C group printers. This forces the C group printers to either go out of business or become D group printers. That impacts our area. This is why my average orders over the last five years have diminished from 48 down to 24.

D group printers do not panic. It is OK. Most C group companies can not transition down to D group because they have factories, employees, insurance, leases and office staff. Most of the D group is either working from home or in a small location with maybe one other employee.

This is why you need to change to the marketplace. The marketplace will never change to you. This is why you want to be a mini Wal-Mart. This is why you want to add new technologies to your repertoire, such as sublimation. It allows you to personalize in full color by using your computer. Personalization and customization will never go overseas. It will always be a main stay for you if you embrace it and not fight it. You can transform your business very easily. The profit margins on many sublimated items can be 75% or better.

Vertical business growth verses Horizontal business growth

To understand Vertical business growth I will use embroidery for my example. You start off in your home and like sewing so you go to a trade show and purchase a single head single needle machine to start your business. You start getting busy and realize that changing the thread is time consuming, so you trade in your machine for a single head multi-needle. Business gets better. You trade up for a four-head multi-needle. To keep the machine busy you start getting larger orders at lower profit margins (danger Will Robinson). But you keep growing so you trade up again to a 12-head system. You have moved from your home and one employee to a warehouse and many employees. It is what we were taught in school. Any one can be a General Motors. This is not true in most cases. The higher vertically you go the easier it is to topple over.

Horizontal business growth goes like this. You start off in embroidery single head multi-needle but instead of going to a four-head system you look at your customer and realize that your customer is buying embroidered t-shirts from you and screenprinted shirts from another guy across town.

You realize that it is easier to sell both embroidered and screenprinted t-shirts to this customer. So you add screenprinting equipment. Then later you realize that this t-shirt customer you have purchases golf balls and coffee mugs from another company in town. So instead of buying more screenprinting or embroidery equipment you purchase a pad printer to service this customer. What you are doing is adding to your base.

When you talk to a potential customer and all you provide is embroidery, then that is all you can sell them. But if you have embroidery, screenprinting, pad printing, sign making and promotional products, your chances to sell the potential customer a product of some kind are exponentially increased.

Guess what you just built. You built your very own mini Wal-Mart for the printing, signs and ad specialty business.

Note:
Did you know that it takes 10 times more energy and time to sell a new customer as it does to sell something new to your existing customer?

Great Service, Low Prices and Great Quality

Now on to reinventing your direction. I once heard that if you give great service at low prices and good quality customers will beat a path to your door. Do you think this is a true statement? Do you pattern your business on great service, low prices and great quality?

If you do then you will lose. If you try to do all three you will, at best, be mediocre. It is a great statement but it is a falsehood. Right now you are saying, “is this guy crazy?” My wife thinks I am but that is an article for another day. You need to open your mind and listen to what I am about to tell you.

Out of the three items listed Great Service, Low Prices and Great Quality you can only do two out of the three. You can choose the two you want to pattern your business on. Let me explain with an example. For the example let’s use the All-American Hamburger. You are going out to buy dinner for you and your family.

Plug any restaurant into this equation and it will come out with two out of three. Take the example and plug it into your business and what do you get? Most screenprinters I know will go for low prices thinking that is the only way to get the work. The quality suffers because you are going so fast to get the work out and to get to the next job. You need to do fast jobs to make money. Or your customer service suffers by not picking up and delivering or by promising a delivery date and not hitting it. I have seen it for 13 years.

That is why I took a different tack in my shop. I decided what item I did not want to worry about or deal with. I chose low prices. I am not the cheapest in town and I tell people that. You pay for what you get. If they want cheap I tell them where they can go in town to get cheap. I have a published price list and I do not vary from it. I make my profit margins or I do not do the job. Period!

If I eliminate low prices then I only have two things to work on. That’s right, great service and great quality. Two out of three is easy when you only have two to worry about. It makes you work smarter rather than harder.

Tying it all together

“So what?” may be your remarks at this time but let me tie it together. You are doing small run orders (personalization and customization) and you can never be threatened from overseas competition. You have a small but growing loyal customer base. You give that customer base great service and great quality. You have told them you are not the cheapest, but you are worth every penny of it. They know what it costs. You reach all your profit margins. Your profit margins are higher on short runs. You are building a horizontal business and not a vertical business. YOU WIN!!!!!

In the next installment I will tell you why sublimation may fit all your needs to build your mini-Wal-Mart. I will explain the process and how it works and why you should consider it. I will point out the limitations and the pit falls.

Please email me with your comments, questions positive or negative. You can find my screenprinting information at: www.machinesource.com

Keep Producing,
John Benedetto
john@promotionuniverse.com