Last year, about 650,000 new small businesses opened their doors, while another 565,000 folded, according to the Small Business Administration. Out of the 26.8 million thriving U.S. businesses, that’s not a huge percentage of closures – but you sure don’t want your embroidery business to be one of the casualties.

Stitches asked successful embroiderers and industry consultants how to aggressively grow a business. Their feedback shows how much help is out there, in terms of networking with other shop owners and professional organizations, for your embroidery company.

Two-thirds of new businesses survive two years, and 44% last at least four years, according to a recent study. As we surveyed successful business owners, there were a few areas they really concentrated on in their first couple years in business to ensure they’d keep their doors open: Build a customer base, hire the best salespeople, get their digitizing done right and join a trade organization.

Tip 1 - GROW YOUR CUSTOMER BASE

“Developing a niche market of customers can help you grow your business,” says Jennifer Cox, cofounder and president of the National Network of Embroidery Professionals. “For example, if you’re a farmer, you know a great deal about crops, animals, equipment and the entire process. You’re now uniquely qualified to sell decorated apparel to other similar farmers. You’ll select the right products, and you’ll be able to create or identify the designs that would appeal to your fellow farmers.”

Cox advises new embroidery business owners to look to their before-embroidery life for potential customers. Ask yourself these questions: What are your hobbies, occupation and interests? What embroidered apparel or products would make sense to anyone who has hobbies, a career or interests in common with you?

So, building a client base becomes the vital long-term goal of most embroidery businesses – it’s the key step to avoiding having those expensive machines fall silent. Mirroring Cox’s experience with NNEP’s 2,000 embroidery business members, most successful embroidery businesses build their customer base from their local community. This works for several reasons. First, folks like to do business with people they know. Second, people like to do business in person, face-to-face. Third, most people like to see, touch and try on apparel before they buy it. Because of these tendencies, shopping for embroidered goods locally appeals to many potential consumers.

Don Donovan, proprietor of Superior Image (asi/700117), runs 70 heads for two shifts. “I’ve grown my business by doing a good job and mostly getting referrals,” he says.

When Donovan opened his doors in 2001, he didn’t have a stable of Advertising Specialty Institute vendors filling his shop with orders. “I made cold calls,” he says. “That was the key way we brought on new clients in our first days.”

Part of Donovan’s cold-calling strategy was to prepare samples of his work, and make appointments with ad specialty distributors. “I never liked just showing up on someone’s doorstep,” he says. “I felt it was really important to be able to show potential clients our samples, which were decorated with our very best embroidery work.”

To ensure quality output, Donovan advises against having the person running the embroidery equipment also doing the quality inspection. Having two sets of eyes on a job helps makes sure it’s done right.

“Remember, customers test you. First, they give you a few small orders,” Donovan says. “They test you, they test you and they test you some more. And if your quality, service and delivery are excellent, then the volume will come.”

Donovan also learned that embroidery is a seasonal business. The weather drives the business. “If the fleece season doesn’t come, buyers don’t buy fleece,” he says.

Similarly, Robin Preston, manager of Stegmeier’s Embroidery, says her customers are often in a two-week time frame for delivery. So based upon the time of year, within a month, it can be both feast and famine for embroidery work. That’s why it’s so important to develop a solid stable of clients.

Tip 2 - CONSIDER CONTRACT CUSTOMERS

Superior Image just doesn’t “work both sides of the street,” as Donovan puts it. His business is a contract shop and services just the ASI marketplace of ad specialty suppliers and distributors; he’s made the choice not to sell his services to end-users.

Preston’s business also doesn’t sell to end-users. “We don’t advertise, and we purposely decided to post just a small sign for our business to minimize the walk-in traffic,” she says. “We primarily work for ad specialty firms and get our business from word-of-mouth and referrals.”

While contract decorating may have its own set of challenges, there’s an incredible amount of business to be had in this area, says Andy Shuman, general manager of Rockland Embroidery Inc. (asi/734150). He offers several tips for running a successful contract shop.

1. Use employees to their fullest potential. Cross-train each employee so they can act in several roles; that way, they can easily step in if another employee is sick or on vacation. Plus, when it’s crunch time, you’ll have more hands.
2. Educate your customers. So that your business runs smoothly, outline for your clients your procedure for receiving art, and product and shipping information. This will ultimately save time and eliminate confusion.
3. Set the right price. Make sure you’re not undercharging for your services. Set a price structure that reflects the actual value of your services.

Tip 3 - HIRE THE RIGHT SALESPEOPLE

Deb Thomas is proprietor of an EmbroidMe franchise in West Chester, OH. A self-professed “techno geek” with many years in corporate information technology, Thomas bought the franchise after recognizing its potential.

“My major marketing tool is being visible in the community,” Thomas says. She has a storefront in a grocery center on a major thoroughfare in the affluent suburb. Many of her clients call her with work after having seen her sign and well-decorated storefront during their trips to the grocery store. The top-of-mind awareness of having a great location works for her.

“I’m at the stage now that I know about what amount of business is going to walk in the door,” Thomas says. “But at first, what really grew my business was finding the right outside salesperson.”

Thomas credits her outside salesperson with bringing in new clients and with keeping her abreast of what the competition in the community is really up to and what kind of corporate business is available.

“My first outside salesperson wasn’t adept at relationship-type selling. Selling embroidery is all about relationships,” Thomas says. “Price is important, of course, and I make sure our quality and delivery are excellent, but without a relationship with the buyer, we can’t get that business – and my outside person does that for me.”

Thomas started her business by setting monthly sales goals, but she says, “It was kind of like throwing darts at a board, and I had to reevaluate many times.” But now, she can at least seasonally figure her sales goals fairly accurately.

Donovan agrees that it’s important to set sales goals. “I started by setting a budget and then working my profit goals into the picture,” he says. “I’m at a point where I plan how much growth we can handle and still provide superior work and service.”

Tip 4 - DEAL WITH DIGITIZING

Digitizing is an art form, and many embroidery houses do farm out this part of their business now. Preston does her own digitizing (Donovan doesn’t), and because of her reputation for quality and on-time delivery, many of her clients followed her to Stegmeier’s. Donovan does have the ability to edit and to design small designs and key in letters, and Preston started digitizing by learning to do the same. Getting good designs is the key, but there doesn’t seem to be a better way as long as the digitizer – contract or in-house – does excellent work.

“If you’re trying to earn a profit with your embroidery business, and you’ve been in business for less than two years, it’s often more practical to send your digitizing to an independent contractor,” Cox says. “There are so many talented digitizers available to you. Working with a digitizer is simple if you use the Internet. You can get great work quickly, and spend your time sewing and selling instead of trying to master the art of digitizing – as well as launching your embroidery business.”

Cox says to do the upfront work with a contract digitizer so you know what you’re getting:

1. When you’re selecting your digitizer, ask if he’ll provide a sew-out of the design before sending you the file.
2. Check to see if the digitizer includes any corrections or edits in the initial price he quoted.
3. Finally, find out what design formats the digitizer can create.

Tip 5 - JOIN A TRADE ORGANIZATION

Remember, you don’t have to rediscover the wheel every time you try something new. Trade organizations are an important vehicle for learning the ropes really quickly.

1. A key benefit of membership is the ability to tap into industry-specific expertise. If you need technique knowledge or technical assistance, you can call your association and speak with an experienced embroidery business owner. You can ask how to hoop something, or how to price an order or how to handle a sticky situation with a customer.
2. Another one of the primary benefits is higher profits for your business. Organizations are often able to negotiate better prices on behalf of their members because they represent a large collective buying power.
3. A key advantage of a membership organization is that you can learn from your fellow members. Between the other members and the leadership, there’s little that hasn’t yet been tried. As a member, you can tap a very large pool of common knowledge and move ahead with ideas that have been tested and found effective.

Donovan belongs to NNEP, and when ASI offered decorators membership two years ago, he immediately joined. He says ASI helps some with pricing, but primarily it allows him a way to find new customers and most importantly, it allows him a way to understand the marketplace better.

For Thomas, many of the functions of trade membership are fulfilled by her EmbroidMe franchise. Her franchisee designation gets her either premier or standard pricing from 40 or 50 manufacturers or suppliers, and many times, it helps her with freight.

Tapping other shop owners’ knowledge is important. Preston has seen what can happen when an embroidery firm implodes. A previous company she worked for expanded too quickly after starting profitably with a 12-head machine. The company rolled the dice on massive expansion, accumulating four 20-head machines, four 12-head machines, a four-head machine and a single head. Then came three shifts. And then, the shop went out of business.

“Those were expensive machines and the owners couldn’t keep all of them running all the time,” Preston says.