Starting a new embroidery business is an exciting adventure. There are many factors to consider and decisions to make as you create the framework for your business. Putting a solid foundation in place increases the chances of achieving your goals more rapidly and with fewer unnecessary and potentially costly missteps. Here are some of the key factors to consider as you establish and launch your business, broken down into categories.
Business model
Decide how you will establish your business as a legal entity. Options include sole proprietorship, LLC, partnership, and corporation. Meet with a legal advisor as well as a tax advisor to determine the benefits, tax benefits, and differences between these types of business structures to select the one that best suits your needs.
Location
Determine where you will establish your business. More than 75% of the embroidery businesses in the U.S. are started at home. Nearly 50% of them remain as home-based businesses. Other options include but are not limited to a retail shop, a mobile business model, a commercial or industrial location, or a shared location with another business. There is no right or wrong choice, and no two businesses are the same. Define the environment that best suits your ideal business hours and supports your personal life and family needs all while making it possible for you to earn an income.
Target markets
Consider whether you will focus on business-to-business (B2B) customers or business-to-consumer (B2C) customers. Identifying your ideal customers will influence many of the decisions you make. A business created to serve the local schools, community organizations, and businesses will work well with a considerably more casual vibe than a business launched to serve corporate customers.
Business name & brand
Choosing a company name and designing a logo for it is challenging. Factors to consider as you evaluate your favorite options include: if the name is easy to say and to spell, if the name is memorable, if the domain name is available, and if the social media handles are available. Your company name creates a pivotal first impression of your business. Consider “Sadie’s Stitches” and “Corporate Apparel Pros.” Both are good potential names, yet they will attract very different kinds of customers based on the company name alone. Design a logo for your company, and make sure it looks excellent when created with embroidery!
Business registration
Apply for the business permits and licenses required to operate the business in your chosen location. File the paperwork with the proper agencies for collecting and submitting sales tax in your location, if applicable. Check with your insurance professional to add coverage for the business. Note that a homeowner’s policy offers little to no protection for your business, even if it is located in your home. Open a business bank account.
Business plan
Create a business plan to define your goals, budget, and operational strategy. This becomes your road map, helping you determine where you are with the business and what you need to do to get where you want to go. Review and update it annually, using this tool to guide as well as measure your business as it grows and evolves.
Embroidery machine & software
Invest in a commercial-grade embroidery machine. These machines are designed to run hour after hour, day after day, creating top-quality embroidery. Research the brands that are available in your area, and that can support your need for parts and servicing the machine over time. Most commercial machines are paired with a specific digitizing software, or the machine company will recommend one that works well with their equipment.
One of the questions I am asked frequently is, “Which brand of embroidery machine should I get?” Here’s the thing: all the machines from an embroidery company stitch the exact same way. What you are deciding is which company you want to have a long-term relationship with, as that is what you are about to embark upon. Trust your gut, and choose the partner that best fits your needs.
The next question I often hear is, “What kind of machine; a single-head or a multihead machine?” Every embroidery operation will be able to use a single-head machine. It is ideal for running sewouts, small runs, and filling in around larger orders. If you are unsure of your average order size, start with the single-head. Once you know what your average order quantities are, you can then add multihead equipment or even more single-heads to increase your production capacity.
Supplies
Select a high-quality embroidery thread, a variety of stabilizers, and a basic needle selection. Start with a basic range of thread colors and add more colors as you need them. Pick up good fabric shears and multiple sets of nippers. Consider getting a hooping aid to ensure that you place designs on garments accurately and consistently.
Workspace design
Establish a dedicated, well-lit workspace for your business. You will need space for your machine, a flat surface for hooping, and room to manage the products you will embroider. Many successful businesses are started in a closet, a bedroom, a dining room, a basement, or a garage. Many of them never expand past their original footprint. Others evolve and ooze throughout the building, taking over more and more of the space.
Organize your embroidery threads, stabilizers, hoops, tools, and inventory so that all these things are easy to find, easy to use, and easy to manage. Look at vertical surfaces for thread storage and hoops storage. Consider boxes or laundry baskets on shelving to sort products into their respective orders.
Training
There is a learning curve to becoming proficient with your embroidery machine and digitizing software. Experience is indeed the best teacher; there are few effective shortcuts. Consider attending industry training events and trade shows to learn all you can about operating your machine and taking online classes to master your digitizing software.
Design skills
If you cannot design good graphics and create good digitizing, leave it to the professionals. You can farm out design development and digitizing indefinitely without any negative impact on your business.
Product inventory
“Just in time” inventory is the model followed by most apparel decoration professionals. There is rarely a need to have inventory on hand because you can purchase exactly what your customer needs when they order it from you, and it will arrive at your business within a few days.
Copyrights
If you are unsure if a design is copyrighted, you should avoid creating it in embroidery. A good rule of thumb is to consider if a company that owns a particular name, image, or brand and sells products with that name or image on it, that design is off-limits. For example, Disney makes considerable amounts of income from selling Disney apparel and merchandise. Anything Disney is 100% off limits.
Website
Create a basic website showcasing your services, work you have done, and your contact information. If your business cannot be found online, you may as well not open the business.
Social media
The adage, “Be where your customers are,” applies to embroidery business owners. Nearly every adult is on social media at some point daily. Sharing photos and short videos about the orders you are creating and the designs you are putting on products may attract your next best customer.
Networking
Establish yourself in the fabric of your community. Join the local chamber of commerce, and get involved in setting up and running the local community showcase. Work the concession stand at the high school during sporting events. You will have a better chance of doing business within your community the more you connect within your community.
Pricing strategy
Establish your pricing in one of these ways: cost-based, value-based, or market-based. Track the numbers in your business so you know your costs. Unless you charge more than your costs, you will not make a profit. Your price should be the sum of your costs + the product + the cost to decorate the product + profit. If you do not cover all of these, you will find it very challenging to pay yourself, much less add profits to your bank account.
Decoration services
Explore creating embroidery on more challenging products as your business evolves to help your business stand out. Some businesses excel at doing hats, applique, varsity jackets, horse blankets, karate belts, or Carhartt jackets. They win customers from many surrounding communities because they’ve developed these specific skills.
Deadlines
When your customer says they need their order by a specific date, that should be set in stone. You will quickly distinguish yourself from the competition, as this is one flaw many embroidery businesses have.
Communication
Connect with your customers to effectively meet their expectations. If the products are back-ordered, let the customer know. If the shirts arrived damaged, let the customer know. If you cannot make a deadline, let the customer know before that deadline. Failing to clarify design details, timelines, or costs with customers can lead to misunderstandings and complaints.
Feedback
When your customers provide feedback, reviews, or criticism, pay attention. By adapting your business, you can shore up the relationship with that customer and possibly earn more customers when they share their experience with others.
With intentional attention to detail, you can create a solid foundation that will stand the test of time, serving your business well into the future. Succeeding in business is a marathon, not a sprint. It does not happen by accident. Plan for the long haul and you will end up a winner with a successful business. If you have specific questions about launching your new embroidery business, let’s connect. You can reach me at jennifer@nnep.com.
