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Dangers Lurk for the Ambitious Screen Shop

Growth is great, but if you haven’t planned accordingly, it can cause problems for you.

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AHHHH. THE NEW YEAR. You can smell the freshness and sense of enthusiastic opportunity. Two months ago, you were probably saying, “I can’t wait until 2023. That’s when we’ll kick things up a notch.”

Everyone always talks about what they’ll do when the business reaches that ultimate “next-level goal.” But there isn’t much discussion about the other side of growth. The dangerous side.

What happens if all your business and sales dreams do come true? There are things lurking in the shadows you need to consider. This article is about shedding light on them.

Cash Flow

One of the biggest dangers in business is growing so fast that the money you need to outlay to keep the growth accelerating outstrips the money coming in. Over the years, I’ve spoken to dozens of shop owners who were frantic and on the verge of losing their businesses because they were too busy. That’s right. Huge order after huge order landed. It’s like hauling in record-size fish, one right after the other. Then, without realizing it, the boat is about to capsize.

Now you have to buy the inventory and supplies. Pay your people overtime. Consider contracting work out to other decorators. These activities are all putting an enormous financial strain on your company. With each order you take without getting paid upfront, you essentially loan your customers money.

I know more than one shop owner constantly flirts with this disaster by maximizing their credit cards to help fund everything. Unfortunately, bringing down this house of cards doesn’t take much. If you remember, this came to a public head when the COVID crisis began, and suddenly, the cash spigot was turned off. Shops with large accounts receivable situations didn’t survive. You can be careful about what you wish for or be prepared. Your choice.

This is why you must be adamant about receiving 100 percent of the funds for orders before you begin the work. As they say, “Cash is king.” When the money is in the bank, your business can operate from a position of financial stability.

Speaking of cash, there’s a massive problem in this industry with shop owners needing to understand the difference between profit and cash flow. Profit is the amount after all expenses are deducted from the revenue. Cash flow indicates the net flow of cash into and out of the business.

Keeping a close eye on the financial end of things should be a mandatory activity for any shop owner. It is conceivable for a business to be both profitable and possess a negative cash flow that limits its ability to pay bills, expand, and grow. Also, a shop with positive cash flow and ever-increasing sales can fail to be profitable. This is why working with a financial professional can help the business owner make better decisions regarding the future of the business. Be careful.

Overselling the Capacity

Do you know your operational and production limitations? Specifically, how many orders and units can be produced on any given day?

I’m asking because one of the most frequently encountered challenges in this industry is when sales and customer service keeps adding orders to an already backed-up schedule. Of course, it takes time to produce all orders sold, but adding “just one more” is effortless. This usually doesn’t end well.

Production time frames bulge, and before anyone can do anything about it, your shop is 57 orders behind and three weeks off schedule. Customers get frustrated. Your error rate expands as your staff takes “shortcuts” to handle everything. Expedited freight becomes commonplace.

Establishing your production KPIs is crucial to running a successful shop in this industry. Suppose you know how long the production end of each order will take. In that case, you can build a schedule for projects in advance that shows available capacity.

Instead of having frustration-laden conversations about what orders can go out today, the work can be planned ahead of time. This includes expanding the shop’s capacity with overtime, a second shift, buying more equipment, or contracting orders to a third party to produce. Before getting into a pickle and having to wonder how you will complete everything, look to build your process and decisions.

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Dangers Lurk for the Ambitious Screen Shop

Operation Nightmare

Once more orders than usual start coming in, your challenges will expand in the shop like a “whack-a-mole” game.

What happens in the receiving department when your staff usually processes about 15 to 20 boxes a day, and now they’re suddenly exploding to 35 to 50? Or you typically process about 20 screens a day, and now you’re up to 60?

This is a common problem with shops that have added a few more automatic presses. They’ve added to the print crew, but they are trying to make do with the same headcount for support people. So, when the press crews are often waiting on screens or receiving inventory, it’s because the receiving and screen room staff are overwhelmed.

When thinking about growth, consider the production infrastructure needed to handle the increased volumes in all departments, not just in printing. What will you need by the end of the year if you are 20 to 30 percent busier in all departments? Adding people is not always the answer. Solutions can be found in better processes, software, or equipment.

Dangers Lurk for the Ambitious Screen Shop

Headcount Missteps

These days, finding good people to work in your business can be troublesome. The available pool of potential employees is lower, which means that sometimes the wrong people are added to the payroll.

Sure, your shop is growing, and you need more staff to do the work. However, adding anyone who can fog a mirror may be a bad decision. Raise your hand if you’ve hired an employee who was entirely wrong for the job. I know I have. As they say, “Hire slow and fire fast.”

One of the biggest dangers of growth is adding someone to the team who doesn’t belong. But, unfortunately, no one is answering your ad, so you took a risk on the one person who did. And now you’re regretting it.

Be pickier. When you bring on a new employee, you will spend a lot of time and money getting them trained and conditioned into their new role in your shop. Then, three weeks to a month from now, you’ll have to start the process again when you’re incredibly frustrated and angry enough to fire them. It’s better to be patient.

If you have time, start the hiring process earlier in the season. Try to be better prepared.

Customer Service

One of the most-used attributes of shops in our industry is “excellent customer service.” While everyone professes to have the best, and this idea is largely undefined and ethereal, it essentially is one of the first things to go when shops get busier.

As your company scales, are you building touchpoints for customer service into your process? This could be with software that automates portions of the interaction with customers. Or it could be by hiring people with friendly attitudes.

As your sales expand and orders increase, so do the number of potential challenges. By the sheer increase in volume, daily tasks that took you 45 minutes to handle are now taking more than three hours. This is how customer attention can drop off a cliff.

Beware of the dangers of rapid growth. They can kill the sterling reputation you’ve worked hard to build. There usually aren’t many metrics that show how your team is doing with customer service. So again, ensure your processes and habits are installed and working as they should.

Make sure you talk to your customers and verify they’re receiving the level of service they have come to expect.

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Adding people is not always the answer. solutions can be found in better processes, software, or equipment.

Ownership of Tasks

In the screen printing industry, it’s too common for the owner to be the company’s sole leader for quite a long time. However, once the business grows and the departments expand, that owner can’t be in all places at all times.

Sooner or later, department heads and managers must be hired to run things. This might seem like an easy and obvious choice to make. However, many business owners have a difficult time giving up control.

“Nobody does it like I do” is a phrase I hear constantly. While that may be true, it’s the number one roadblock to success. At the end of the day, does it matter if they do it the same way you do? What if three or four things were simultaneously completed without your involvement, but the people doing them did it their way?

You can work on process improvement, speed, and other factors with training and education.

As your business grows, everyone may have to give up parts of their current jobs to other people, technology, or elimination. This includes the management of
departments and leading teams of people.

You grow by anticipating tomorrow. If you want to promote someone to be the production manager, but they’re the only press operator, that’s an issue. One of the biggest dangers of growth is not being prepared to make these changes in your business.

To grow, your current staff may need to learn new skills or have higher-level experiences. Are you preparing them for that now?

Dangers Lurk for the Ambitious Screen Shop

What You Can Do Today

“Your preparation determines your outcome.” While you may or may not be ready for growth, it’s a good idea to plan for it optimistically.

Here are some things you can do now:

  • Get a good handle on your finances. Don’t simply look at your total sales revenue – dig in on your gross and net profit numbers. Understand what drives more cash to the bottom line. Also, be sure to have enough operating capital to function. Having at least six months’ worth of funds in the bank is a good idea.
  • Expanding your sales is fantastic. However, all parts of your business must scale simultaneously. A nightmare scenario is to have outstanding sales, but you can’t deliver because you don’t have production capacity. Or, you have sales and production lined up and can’t afford to buy the garments and supplies to produce the orders because of cash flow problems.
  • Invest in your people. Get them the education they need to handle the next higher-level job in your company. Today is the best day to start.
  • Talk with your customers regularly. Are they happy with your work? How can you help? Will they increase the frequency or size of their orders with you this year?
  • Think ahead. Where should your business be by the end of 2023? What about three years from now? What will you need to build to hit your growth goals?

Want more from The Marshall Plan? Read all of Marshall Atkinson’s columns at here.

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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 co-founder of the Shirt Lab educational company. He can be reached at [email protected]

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