Screen Printing - June/July 2019 - 12

THE MARSHALL PLAN

COLD, HARD TRUTHS

Marshall Atkinson is the owner of
Atkinson Consulting, LLC, based
in Mesa, Arizona. He coaches apparel decoration companies on
operational efficiency, continuous
improvement, workflow strategy,
business planning, employee
motivation, management, and
sustainability. He is a frequent
tradeshow speaker, author, and
host of two podcasts, as well as cofounder of the Shirt Lab educational
company. He can be reached at
marshall@marshallatkinson.com.

Being a business owner isn't always smooth sailing.
But facing obstacles head-on can lead to success.
MARSHALL ATKINSON

H

ow many screen-printing shop owners are unsatisfied,
not making the kind of money they deserve? You know the
ones. They got into this business because they stumbled upon
the opportunity, or they wanted to monetize their creativity.
But fast forward a little bit, and there's a lot of pressure.
Payroll is due. Bills need to be paid. There is a funky morale
problem, and a lot of sleepless nights.
Does it mean you're doomed if this hits a little too close to
home? No, but it could mean you need to work on correcting
these problems. Let's get to the root of some of the issues
keeping you up at night and see what we can untangle.

KNOW YOUR NUMBERS
Let's begin with some math. OK, maybe not a fun place to start,
but totally necessary for a struggling screen-printing operation.
I've encountered many shops that absolutely do not know
the basic numbers for their business. You may not be the
head accountant, but you should be familiar with these terms
and what they mean for your shop.
n Break-Even Amount This is the dollar amount you
must bring in to break even each month. How much
merchandise do you need to sell to hit this number?
Then, how quickly can you get to it?
n Pricing How did you construct your shop's pricing model?
Did you use the "average of all nearby shops" method? That
technique doesn't actually work because your costs and
your efficiencies are different than your competitors.
n Profit It's good to know your top line sales numbers. It's
even better to know your bottom line profit. How much
money are you actually making? Do you even know?
n Head Count As any business owner knows, labor is the
largest monthly expense. Do you have too many people?
A good rule-of-thumb ratio is $100,000 in sales for every
employee. The closer to $200,000 per employee, the better.
n Downtime Percentage In production, this is the
percentage of time spent not decorating anything. You
only make money when something is being decorated.
Minimizing downtime can have a profound impact.
This brings us to the first cold, hard truth: You need to
measure and keep track of your numbers. When something
looks off, take a closer look and make changes.

measuring their efficiency, and taking a hard look at their
numbers, they're shocked at what it really costs to be in business.
Yet, a common refrain I hear is they "can't charge more
around here." I'm telling you, you can. There are shops just
like yours charging more money for the same type of work.
There are a few things you need to think about. First, are
you serving the correct market(s)? Are you articulating your
value and why you are worth more?
Even worse is filling up your schedule with work that
isn't making you money. Ponder this: What defines a "good"
customer? Is it the total amount of sales as the top-line
number, or the profitability of the work you're doing?
Sometimes your number-one customer may be slowly
strangling your business because they're taking up space on
the schedule that could be used for more profitable orders.
Here's the second cold, hard truth: You need to charge
more for your work.

CASH IS (STILL) KING
Cash flow is a crucial part of any business. How healthy is yours?
Cash-flow problems generally begin when the business gets
busier. More jobs are booked, more garments and supplies
are purchased, and labor costs go up. If these companies are
working on net 30 or worse trade credit, there could be a huge
chunk of money that needs to boomerang back to the shop to
meet financial obligations.
This puts a strain on the business. In fact, it's why many
shops are now adopting a "100-percent upfront payment"
method instead. You've heard the expression "Like money in
the bank?" Shouldn't that be your goal?
With cash up front, your shop can strengthen the financial
end of the business for more stability. Amazon works this way.
Custom Ink works this way. You can too.
How crazy is your accounts receivable right now? Does that
impact your financial decisions? What if your A/R was zero?
Here's the third cold, hard truth: You need to be paid in full
before starting the job.

PRICING MYTHS
You may not be charging enough for your work. When many of
the shop owners I work with start digging into their costs,
12

SCREENPRINTING

RAISE YOUR MINIMUMS
Right now, your schedule has some turkey jobs in the queue
Screen Printing - June/July 2019

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