Starting up

Jim J · January 15th, 2014, 05:49 PM

Hello,

I am thinking very seriously of starting a home embroidery business here in North Texas. I am not ready to quit my job but hopefully I can in a couple of years and rely on this income. I am looking at a Melco machine. I am involved in a motorcycle organization and have had to order name tags from a local business that charged me $20 for a name tag with 8 letters. I believe I can make it a go by making custom patches and caps. Any advice will be appreciated. Still have to get the dba and tax thing done. Fortunately I live out of the city limits and do not have to worry about the city code.

Thanks

Jim

Robert Young · January 16th, 2014, 08:58 AM

Congrats on your new venture! PLEASE put together a business plan NUMBER ONE. you can get software at Best Buy or even on line at pretty reasonable rates. I advise of this because it will guide you through questions you haven't thought of. (you don't know what you don't know) so anything you can do up front to edumacate (a word I love to use, lol) yourself will be beneficial. I cannot tell you the number of people I have met who have bought machines and now they are just in the guest bedroom or garage... kind of like fancy exercise equipment. best of intentions but life gets in the way.

The software would walk you through the $20 name tag.... how much did the software cost to create the lettering? how many name tags would you need to sell to break even? what are the costs of the raw materials? do you buy in bulk to save per piece pricing and have that sitting around or do you buy in small quantities and eat more out of your pricing. TIME... how much time will it take you to sew each one... from setup to trimming and ready for client. What is your time worth. etc... you may find $20 might not work for you.

LogoAdvantage · January 16th, 2014, 04:23 PM

I agree with Robert, Planning up front is the KEY !

There are areas of embroidery that are more profitable than others and having been in the industry for a pretty long time I will tell you that there are areas of business that I love and areas of business that I avoid.

Developing a Niche is often one of the more profitable areas of business in this industry and getting known for that niche makes it easy to get sales.
I do alot of Fire Dept work for example and my name has been passed around to the city and counties that are close to my business.

One piece of advice I would give is to sell to the equipment you own as much as possible. Note you cannot always do that but do it as often as you can.

If you start off with a single head target work that should be done on a single head machine and then develop a working relationship with a contract embroidery shop to handle your larger jobs. So if you do get that order for 1000 shirts you can contract them out and make more money then trying to run them in house on a single head machine.

Here is an example order that will give you an idea of what can be done on an order for 24 Golf Shirts.
Lets say the shirt cost you $10 and you sell it for $25 with a left chest design with 7000 stitches. Pretty average order.
Shirt Cost 10 x 24 = $240
Customer Paid $600
Profit of $360

You will also have some thread and backing and bobbin to consider as well but to be honest they are normally pretty small factors.

OK so RUN time on this should be somewhere around 6 to 7 minutes unless you have alot of trims and color changes. Could actually be less than 6 but most designs have a few places where they stop and trim etc.

Lets use 9 minute figure to allow for time between runs and hooping etc etc etc. So at 9 miuntes it would take you around 3.6 hours to make that profit of $360

As your business grows you can get bigger machines and run an order like that on a 4 head and cut your time by 75% but you need to have the business to justify that investment in equipment as well.

You also must factor in the time it takes you to deal with the customer, deal with ordering the garments, doing a delivery, etc etc etc.

Do NOT loose sight of the fact that your time if valuable and has to be considered on all aspects of the job !

So if you got a few jobs like that each month your machine payment is more than made and your starting to make a profit as well. Of coarse there are other variables like insurance, rent, taxes, and other costs but this should give you an idea of what can be done and the profits that can be made with the equipment.

Ok im off my soap box. Follow Roberts instructions and develop a plan, do market research, and figure out your strategy to move forward with and try and find a Niche market to get started with that is something you enjoy

Rick

pd87 · January 17th, 2014, 09:57 AM

Hallo Jim,
I agree with the two previous posts. A good plan is the most important thing before you start your embroidery business. For the beginning you should choose a good embroidery machine. Melco is not my personal favored (it's Barudan and ZSK :-)) but I think they are building very good machines. But I would recommend you to visit an exhibition and have a look at the different manufactures and machines. Melco is doing things a lot different than other manufacturers and it might be difficult to switch if you have to. Barudan, ZSK, Tajima and Happy are very good machines too. If you like to repair your machines on your own, they would be easier to handle.
On the other hand Melcos are very fast. I think with 1500 Stitches/min they are the second fastest I know...only Fortron is faster with 1800 St/min
In the end they are all good machines and you should test them and if one feels right, you go with it.
But stay away from Chinese machines. The price is very tempting but they are nothing for beginners. Usually you have to change the tension springs, because they are not well hardened. If you know what you are doing, they are capable to produce a good stitch quality for a very low price...

Software:
This is always a tricky question. Good digitizing software can cost more than the machine if you buy top of the line.
For the beginning I would recommend you to buy a lower level of Wilcom, Pulse or others. For Melco you need Amaya OS. If you like digitizing you can upgrade later on. But it is easier to hire a digitizer at the beginning. Most of them are doing an excellent job and usually you can charge your customers the fees. But I would recommend you a good lettering software with a lot of predigitized fonts, because you will have a lot of jobs with different names or simple logos with just some text.

Just try to sleep a night before making a decision. The worst ones I made usually happened in a rush of excitement. Don't let anybody force you buy something right away, especially on exhibitions...compares price looks if all specifications meet your requirements and at home you will sit down with a cup of tea and make your choices.