23 Jun Top 5 Reasons Why Shops Fail
Why do shops fail?
Many, just like yours always seem to go out of business. But I’m not saying there is anything wrong with your shop.
I just want to point out that in every shop that fails, they thought they would make it. That the business would work out.
Funny, just like in any other industry, there is a right way and a wrong way to manage things.
But it seems that in this industry there are those that insist on ignoring mountains of informational best practices and just blindly limp along.
It’s not like the information isn’t out there. But that’s another article. In fact, it’s this one.
So, let’s get back on track with this line of thinking. Why are shops failing? If you are an owner, you know how difficult it is to keep the train on the tracks. If you work in a shop, maybe you have an incomplete picture.
Below are the top five points that I believe everyone needs to dig into. These aren’t ranked, as challenges are different all around. But I think these are the ones to pay the most attention to in your shop.
Reason #1 Why Shops Fail – No Clear Market Value Proposition
This one is all about direction.
If I asked you this question, “Tell me about your customers. What is the number one customer you serve in your shop?” What would you say?
For a good many it sounds a lot like, “Whoever walks in the door! We cater to everyone!”
That sounds like a big mistake to me.
Because without a clear direction and purpose on exactly who your best customers are, and more importantly, where to find them…it’s extremely difficult to market your shop.
Taking “whatever walks in the door” is like a brain surgeon that doesn’t advertise his specialty. He can’t be surprised with that hemorrhoid patient that is waiting in the front office. “We cater to everyone!” just doesn’t work.
Which is why you sometimes might have felt like you were working on the wrong end of things, just like that brain surgeon.
I always find it ironical when shops post complaints about their customers wanting something ridiculous. Low orders. Quick turns. Cheap-ass prices. It’s up to you to elevate your marketing conversation to let them know that you are a brain surgeon. That way, the hemorrhoid problem will go somewhere else.
For your shop, if you want more 500 or 5000 piece orders are you marketing that? Do you have higher minimums to discourage those low-end tire kickers?
Maybe you do want those low volume quick turn stuff because you have a DTG printer or single head embroidery machine craving for work? Does your Instagram feed show that?
Do people know that you also do embroidery? Or can custom print Yeti coolers?
What about your creative team? If your shop doesn’t rely on clip art but instead has a kick-butt crew of talent, make sure your customers know that.
Communicate Value Proposition
This is a fancy term that means you should demonstrate why what you do matters to your customers. Are you solving their problems?
You want that alignment.
If you constantly shout one thing, but your target customers care about something else you won’t get much traction.
The first step in doing this is understanding what matters to your customers.
Not what you think you know. What they really think. This can only be achieved by doing one thing.
Actually asking them.
I know. The horror.
What you will find out if you actually do this work is that everything you thought you knew about your customers was wrong.
Special shout out to those shops that have been in business “forever” and think they know it all.
Business models are changing and at a rapid pace.
Here’s something that is going to make you feel extremely old.
Generation Z, which is the generation after the Millennials, is defined as people born between mid-1990’s and early 2000’s and already represents 25% of the population.
This makes them a larger group than the Baby Boomers or Millennials.
So, if you are running your shop with the same sales practices that you used back then, these new kids won’t respond to much of that. And as people retire and move on, the customers that used to buy from you the old way, are being replaced by others that buy completely differently.
Are you even thinking about this stuff?
For most shops, the day consists of heads down cranking out orders and not considering more than a few weeks ahead.
Therefore, what do you think might happen with the head of purchasing or the marketing director that you are used to dealing with for orders is replaced by someone that was born in 1996 and wants to prove that they can make a difference?
“Tomorrow” is here.
What You Can Do
It’s not all doom and gloom yet. Unless of course you are talking to more 21-year-old buyers these days and you are over fifty like me. Yep, I’m a dinosaur.
Value Proposition is all about communicating what matters to the customer. Get that research handled.
Then, learn how to communicate better. You need to define how the customer will have success and solve their biggest problems by using your shop.
When you do get to that marketing point, remember a few things:
- Be clear – don’t fuddle around, really illustrate what you mean.
- Be brief – attention spans are short these days.
- Get some action – use a call to action message and funnel your customers in the right direction. What do you want them to do? Tell them!
Reason #2 Why Shops Fail – Leadership Dysfunction
Why do top employees quit?
This happens every day. According to statistics, employees quit more due to bad managers than any other reason.
“I can’t take it anymore! I’m outta here!”
Have you heard that in your shop?
Sometimes owners or managers of companies run the place into the ground. Frequently simply from inaction. Turning a blind eye to a problem is just a bad as creating something that causes the distraction.
Often precious time is spent micromanaging one thing, but other, more obvious problems are left to grow like black mold on some shower tile. Yuck.
Occasionally, leaders make decisions and nobody can comprehend why. Rather than admit they made an error in judgment or a mistake they will fight to the death that they were right.
This is particularly true with managers that don’t have a lot of experience. Usually, an increase in speech volume is congruent to the lack of expertise in the area in question. It’s a confidence issue.
People with a lot of skill are the “quiet professionals”.
But the ones to look out for are those guys that rant and rave about a minor item. When the real problem isn’t even discussed much.
It’s classic misdirection.
Like a magician that ignites the fire from his hand so you won’t see the white dove being pulled from his cuff.
Good leaders are humble.
They know that if they can elevate the team, everyone wins. One question that I’ve asked forever is, “What can I do today that will make your job easier?”
It’s simply amazing at the lack of training and tools that some people quietly struggle with on a daily basis. Start asking this question and solve your staff’s problems.
Arrogance is impatient.
Leaders that show empathy travel faster toward results that matter. Your job is to bring your team up, not chop them off at their knees at every opportunity.
Quit trying to nail people with problems in a “gotcha” moment. That is a leadership failure, not a success. Notches on your belt don’t count.
Try this. For every mistake or error you want to point out, try saying “Good job”, “Thank You”, or something similar to the staff you manage. Make it a 1:3 ratio.
Those good vibes go a long way.
Leadership is about helping people be successful. Who can you elevate today?
What You Can Do
Be a good example.
You shouldn’t criticise people on their arrival time or end-of-day habits if yours suck. Before you yell at that worker for drinking a Coke on the production floor, you better not be walking around with a coffee. If you are limiting bathroom trips to breaks and lunch, don’t get caught in there any other time.
Your staff is watching you like a hawk. Every move you make they will make note of and discuss it later. Your job is to give them good things to say about you.
Leadership is proactive. You have to think a considerable distance down the road.
This is in all facets of managing. From production scheduling to training. Supply purchasing to equipment maintenance.
If you need to make a change and are getting a lot of pushback, try asking them, “Help me understand this from your point of view. What’s your objection?” Then, solve that suggestion to get buy-in.
Good leaders ask a tremendous amount of questions. Don’t be a “Know it all”, trying being a “Learn it all” instead.
Reason #3 Why Shops Fail – Lack of Basic Business Plan
You’ve seen it on some Facebook forum or online group. Chances are someone has posted this question this week. It may have even been you.
“Price check…customer asked for a price on 145 Gildan G-2000 t-shirts, one color front, three-color back.”
For starters, do you know why this is a bad practice?
Sure, it’s annoying to read every week but what it says to me is that the shop doesn’t know to price or even sell their work. Of course, I understand that the person is simply trying to get some comparative information to see what others are doing.
But deeper than that is this fact.
There is always someone cheaper than you. Always.
Instead of focusing on the price discussion, work on your Value Proposition that I outlined above.
If you have better artwork, the price won’t matter.
Maybe turn times are important, if you ship in five business days and your competitors can’t ship until ten, the price isn’t a factor.
For the brand conscious, PMS color matching matters as well as hitting delivery dates. Yep, for those, the price won’t matter either.
If you are in alignment with what truly matters to your customers, then that price objection will dissolve.
Charge what you need to do to make the money you need. In fact, I’ve often heard that if you aren’t charging enough to get a wince when someone gets the quote, then you are leaving money on the table.
Everything Starts With The Business Plan
It’s no shocker that I’m mentioning this. I’ve written about it before.
Yet, when shop owners contact me for help with their business, should it be surprising that only about 25%-30% of them have this all-important tool?
For the sake of discussion, let’s pretend your shop is a rifle, bow and arrow, or even a set of bar darts.
In front of you is the classic target. Round, with rings for different levels of accuracy with the “bullseye” in the center.
Could you hit the bullseye by some random gesture when you shoot?
Consistently? No way.
What You Can Do
A business plan is a tool that helps you aim your company toward your bullseye. It defines the strategy you will use to compete.
Shops fail because they don’t have this clear direction. They have not mapped out what success should look like. If your company doesn’t recognize the road you are traveling, will it be any wonder if you don’t reach a successful destination?
Think you can operate without one? Plenty of shops do.
Maybe you don’t have a business plan, or you might want to update the one you have. I’ve written a $49 eBook, Shop Basic Info Pack, that has two business plan templates, and it is written specifically for the decorated apparel industry. Answer the questions. Do the work.
Create a roadmap for the future.
Reason #4 Why Shops Fail – Cash Isn’t King
Let’s face it. We’re in business to make money.
We’re not a bunch of communists.
Money drives everything. Yet, shops constantly struggle with how money flows through the shop. Often, nobody has a clear understanding of the actual costs for what you do every day.
Do you know off the top of your head, your current average Cost Per Impression for your shop? (An impression is one decoration location. A one-color left chest and a three-color full back equal two impressions)
The top shops have this dialed in and know it like the back of their hand.
They know that the difference between what something costs to do and what they charge is their profit margin. Sure, you might have the quote in front of you for that order. But unless you know what it costs you, how are you understanding that profit margin gap?
Not understanding your money is like driving your car at 85 mph down the freeway, at night, with the lights off. The moon is out a little bit, and you can sort of see the road.
Don’t you think that’s a little dangerous?
What do Amazon, a Burger King drive-thru, your doctor, and going to the movies all have in common?
Before you get what you want, payment always comes first.
So why in the decorated apparel industry do shops continually “hope” that the customer will pay us?
We’ve all been burned. I’ve got the scars to prove it.
Why aren’t we charging 100% for the order up front as a common practice? Other industries do this and it isn’t even questioned.
Some shops charge 50% now, and the other half upon delivery. Have you ever had a customer that didn’t pay you the balance? Or it was on your accounts receivable list past ninety days? A select few never pick up the order!
If you read this article and want to make a significant improvement to your shop’s overall health, I want you to remember one thing.
Cash is king.
The better job you do of handling your money, the stronger your company will become.
Imagine how much stress and worry would be alleviated if all of your orders were pre-paid, and all you had to do was execute the jobs in production. Trying to juggle all of the financial obligations is where many shops struggle.
You’ve seen on the news that some local business closed it’s doors unexpectedly. Everyone is in shock! They were constantly busy. You just went in there last week.
They closed because they didn’t manage their money well.
Don’t let that be you. Be humble. Ask a financial professional for help. Be open to suggestions.
Understand your costs.
Charge for your work.
Get paid upfront.
Profit is not a dirty word.
What You Can Do
Shop owners need to concisely understand how the money gets made in their shop. If you don’t, your sunk.
Right now, do you know where you are losing money every day? This won’t show up on your P&L statement. The only way you will discover this is to dig in and spend the time obsessing over how the sausage gets made in your shop.
How everything works. Learn how bottlenecks and inefficiency cost you money. Using the cheapest product you can find might actually be a bad idea instead of a good one.
Ok, so here’s another one. I have an eBook that is written just for your screen-printing shop that can help you dial in your money. It’s called Price for Profit, and it is organized to give you the tools to analyze your Cost Per Impression and build a price list that uses your shop’s efficiency level and cost data.
Imagine how great it would be to have a price list that reflects how your shop operates every day, not some mystical average of all the shops around you.
Reason #5 Why Shops Fail – Production Disasters
You can have the greatest sales engine on the planet, but if your production team fails you, the end result is a disaster.
This happens in a few areas. Let’s take a stab at outlining some of the most prevalent.
Keeping an accurate production schedule is one of the hardest things that a shop can build. Seriously.
How about your shop? Do you struggle with this?
Without a predictable production schedule shops constantly have too much expedited freight, overtime, and even scores of frustrated customers. Sales and customer service teams will have a zero trust level that jobs will go out.
It’s a dog chasing its tail.
There are a few things that you need to do here.
First, you have to understand your shop’s overall Capacity. On an average day, how much work do you typically pump out? Take a snapshot of that.
Then, learn what your equipment Velocity looks like. How long do things take to do?
If you know your Capacity – what you can do daily, and you know your Velocity – how long things take…you can build a schedule that reflects your average capabilities.
Not so fast. Where shops get into trouble is that they routinely dogpile jobs on top of an already crowded and booked schedule.
Think of your shop like an airport. If the airport can only handle thirty flights a day, what do you think if suddenly fifty flights come roaring in? Crash and burn time.
That’s why airports have rules. You should too.
Rules to Use
- All orders use real ship dates. No padding. Adding days to the ship date as a buffer only confuses the issue. Similiar to how setting a clock ten minutes ahead so you are never late, doesn’t work either.
- Production is complete one business day before shipping. That’s the goal. Work backward from that to make it happen. This means if the job is to ship Friday, or the customer is set to pick it up on that day, it was finished and ready to go on Thursday.
- Stage all production work today, for anything to be worked on tomorrow. Get 100% of everything you need organized and lined up by the workstations today, for anything to run tomorrow. Line these up in the order they need to be produced.
- Print a schedule today, for anything to be worked on tomorrow. For each workgroup. Use a highlighter and draw a line where lunch and breaks should be in relation to the jobs. The expectation is that all jobs on their list will be completed before they leave.
- Organize and stage by priority. The mantra is Rush, Late, Today, Tomorrow. Get the critical work out first every day.
- Measure everything. Data is your friend. Remember, you can’t manage what you don’t measure.
- Downtime is cancer. If your production crews aren’t decorating a shirt you are not making money. Every minute should be accounted for and researched into why things take so long.
Another way shops fail in production is their level of craftsmanship.
How is the skill in your shop?
Take it from me, you should always be learning how to improve and do something better. That journey never ends. Nobody knows it all.
Can you name one thing you are trying to improve in your shop this week?
For most shops, they don’t work on this until they ruin a gigantic pile of shirts. They have a furious customer on their hands, and an expensive check to write to make up for the problem.
Yet, not much work is being done proactively. They just wave their hands in the air and yell, “How did this happen?”
Have you thought about how screens influence quality in your print, the embroidery digitizing file prevents problems, or how the pretreatment step locks in the quality of the digital print?
How does the artwork play a role in all of that?
Maybe the consumables you use, such as ink, emulsion, thread, or chemicals?
True craftsmanship oriented shops have less than 1% defect rate per impression on orders in their shop.
If you don’t know what that is, a 300 piece order with a 1 color left chest and a four-color back should have less than 6 shirts rejected. Here’s where a zero wins.
How the reject rate in your shop? Are you even measuring this?
When you combine the challenges of missing deadlines, with customer orders that are chock full of problems, your reputation is taking a nosedive.
Trying to expand sales with that albatross is going to be a futile attempt.
What You Can Do
For starters, get someone that knows what they are doing to be the captain of this ship.
Well experienced production managers are out there.
To get things back on track, consider making a change in your leadership. Sounds like a drastic step?
Maybe, but don’t forget there is only so long that the status quo is going to be acceptable. Somewhere in the near future, if your challenges aren’t addressed you can probably expect that doom and gloom scenario to click into place.
Currently, the labor market is tight. Acquiring someone with the breadth of knowledge needed to get things on track may be more expensive than what the market might have borne only a few years ago. People that know what they are doing won’t come cheap.
Keep Your People
Of course, there is another route you can take and that is to train the staff you have.
For the most part, industry managers usually were the best operator, artist, or salesperson. They get bumped up into management and are expected to lead. But they aren’t trained in management techniques.
Get these folks the help they need by supporting them with education. There are plenty of resources for this, both in the industry and around you locally.
You can also help you shop by finding an industry coach. Need some help? That’s what I’m here for pal!
Schedule a short 15-minute chat with me here and let’s talk about your shop and how I can help.
“If you don’t understand the details of your business you are going to fail.” – Jeff Bezos
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
“We never fail when we try to do our duty, we always fail when we neglect to do it.” – Robert Baden-Powell
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