Starting a new embroidery business today is much easier than it was in the past, but there are financial pitfalls that you need to be aware of and avoid at all cost. Many embroiderers start their business because they want to be able to work from home and have an income without the daily grind of the corporate world. Unfortunately many of these new embroiderers were not business majors in college or have never been exposed to the inner workings of a small business.
Many times a new business owner will not be aware of the pitfalls until they are in business for awhile or seem to slip into financial trouble with their business. The three most common pitfalls are:
- Not knowing what your true costs are for running your business!
- Trying to stay in line with the competition!
- Not keeping track of your time!
Not knowing what your true costs are for running your business!
There are many costs that are associated with running your small business and each and every one of them needs to be accounted for. You must know what all of your true costs are. You have to keep good records of everything that you spend on a daily basis and keep track of it in a spread sheet or an accounting program. This is a must in order to get a handle on all of your true costs. Some of the common ones that often slip by are:
- Keeping track of your mileage when you run to the post office
- Keeping track of your mileage when you go to the office supply store
- Cleaning and maintenance supplies
- The rent of the room or rooms in your home that you are using for your business
- The utilities that are used in your home for your business
All of these factors may seem small but they are part of your costs and without them, you cannot accurately create a pricing structure that is going to help you pay the bills.
Trying to stay in line with the competition!
This is a huge mistake! This is a big pitfall thinking that you have to be in line with the competition on your pricing. Everyone has different expenses and needs and it is impossible for them to charge the same thing that the competition is charging and be able to make any money if that competition has less expenses. This is a tough one for the new embroiderer to understand. You have to charge according to your expenses and what you need as a profit. You cannot work with someone else‚’s pricing.
Many new embroiderers will call all of the local embroiderers and collect their prices lists to find out what they are charging. They will then take all of them and average them out. This is what I did when I first started my business and it caused me to almost lose my business! Not a fun time!
Not keeping track of your time
One of the biggest pitfalls is not keeping track of their time. Many embroiderers do not keep accurate records of all of the time spent on each and every job. Each step of your job is costing you money. Keeping track of how long it takes to prepare your jobs for production, how long to set up your designs, how long it takes to unpack a box of goods that come in, and how long it takes to finish a garment after it comes off the embroidery machine are only a few of the time sucking steps in your business that are many times not accounted for. Most embroiderers charge by the stitch count and all of the other pieces of the job are done for FREE!
So many new embroiderers do not consider what their time is actually worth especially if they are a home-based business. You also need to know how to price your other decorating options and most new embroiderers do not charge enough for those to make a profit and sometimes not even enough to break even.
There are many hidden costs that new embroiderers are not aware when they are first starting their business and keeping a close eye on all of your financial data is the only way to avoid these common pitfalls that can totally ruin your business!
Remember, know what all of your true costs are, create a pricing structure that will pay the bills and create a profit for you and keep track of your time. Don‚’t forget that old saying you heard many years ago, Time is Money. It truly is!
If you are suffering from any of these issues, Learn how to create your own Pricing Structure that will help you increase your business and avoid all of these pitfalls.!