You could argue that success in this industry is as much about avoiding mistakes as it is about doing all the right things. Here are some common mistakes that other sign and print shop owners have made (myself included).
1. Don’t take every job that comes into the print shop
When you’re just starting, any job is a good job. As you grow, you add employees, equipment, rent for a bigger building, and other things you need to scale your operations.
But when you’re talking to customers, it’s easy to forget about the increased overhead that comes with increased capabilities. For example, that same $75 happy birthday banner that was profitable two years ago could be a loss of $25 now once you factor in your overhead.
To continue your growth and maintain profit margins, you have to stop taking those unprofitable jobs. Try pricing yourself out of those small jobs that are no longer profitable for you. If they decide to move forward, you’ll have covered your profit margin. If not, you don’t have to sweat it.
It also helps if you have some other shop you can refer people to. Years ago, we had friendly relationships with other shops that were quite a bit smaller than us, and they were happy to have the small jobs we couldn’t produce profitably.
2. Don’t add friction to the payment process
You just looked at your income statement and saw $30,000 in credit card fees for the previous year. Ouch! That’s a lot of money going out. So you decide to start pushing customers to pay via check or ACH.
ACH payments take 2-3 days to clear, and checks typically take even longer. To save $30, you’re tying up an entire $1,000 in cash flow for twice as long as before. Does that make sense? Cash flow is king, and I’ve seen poor cash flow sink more shops than lack of sales.
So what about customers who would rather pay with a credit card? You decide to start charging a 3% fee to cover your credit card fees.
OK, that seems like a solid idea. But here’s the problem with that — you’re adding friction where there shouldn’t be any. Customers really like using credit cards, and they hate getting charged extra fees. Think about the last time you were charged an unexpected fee for anything. Did you enjoy that transaction?
If your customer is ready to pay you today with a credit card, then let them. Consider the credit card fees as the cost of doing business. In most cases, you can even write it off on your taxes. But please, for the sake of your shop, don’t charge someone who’s trying to get you paid right now a 3% fee to do so.
Instead, just raise your prices by 3%. It’s probably been a while since you’ve done that anyway, and unless your customer is placing many repeat orders for the same products, they likely won’t notice the difference.
3. Don’t buy equipment before you need it
Interested in that new flatbed printer? Me too. Having a shop full of cool toys to “work” with is definitely one perk of our industry. But before you pull the trigger on that purchase, make sure you have the demand for the work from that piece of equipment before you buy.
Don’t fall into the “buy it and they will come” mindset. I’m totally guilty of this myself. I’ve made some questionable equipment purchases at year’s end for “tax purposes.” Try outsourcing first. There’s no shortage of trade printers or suppliers who do great work.
Yes, it’s nice to have that new toy, and it will expand your capabilities, but don’t overextend yourself or your credit by taking on new equipment before you’ve got work lined up to make some payments on it.