A big problem with a family owned business is when is it the best time to pass the torch. There are two problems one being is the founder ready to give it up. Or is it too early to give it up.
A goal with all entrepreneurs is to retire with a nice monthly retirement check and leave a legacy for the family Northwest Embroidery has this problem and we want to share some thoughts.
70% of all business do not survive the second generation. Passing the torch is not easy. The question looms as to who will get handed the torch. Is the person selected capable and will there be a fight in the family. Factually 70% of all businesses flame out with the next generation. The percentage is very scary when there is a big legacy involved.
Before these questions are answered there has to be estate planning regardless who takes over. The method of transfer has to be in place before the founder rides that mythical black camel into the desert.
The most important is to have a will. Without a will everything can be lost or divided by a stranger. No matter how bad the will is it must be done before exit time. Probate can be very ugly and messy.
Transferring assets before death
The easiest before decision time is to transfer assets either by gift or sale. This should be done and everyone knows who is getting what part of the business or estate.
Stock is the easiest to transfer because the value is subjective. Another easy move is to put everything possible into a joint account. The objective is to die broke. But just hope everybody involved can be trusted to wait for the moment of final distribution.
One technique is to set up a LLC corporation with family members as stock holders. This is a relatively easy method to transfer assets and minimize tax liability.
Northwest Embroidery has used some of the ideas listed above in our business planning. We do not want the business to end with a key man death. We pretty much have our legacy in place and now the owner can start to enjoy the fruits of his estate.
This is not legal advice but just putting my thoughts to paper so they can be shared with fellow entrepreneurs.
Decosource is the largest DTG (direct to garment ) printer in the pacific northwest. They have be in business since 1977 starting out with one embroidery machine. The now do screen printing, DTG printing, Embroidery, custom sewing and whatever you can put a needle into.
Because Decosource is a contract printer you can bring your own garments in for decoration. This is a convenient way to save money because you can buy the apparel from a distributor. (we recommend Sanmar located in Preston Wa. Sanmar will ship your order to Decosource free freight. This cash savings goes directly to the bottom line. Decosource does all the work and all our customer has to do is sell.
Small orders are very easy to do because the printing is digital. The process is such that our customer sends us their finished art work and we do the rest. All you have to do is go to Costco and save money.
Note: The art work must be clean and sharp. We ask for 300 dpi.jpg so it will print clear on the garment. We really like vector ready art because we can size it and make any changes if needed.
Deco has the state of the art equipment. We use only the Kornit printers which are made in Israel. Israel is known as the world center for printer R&D. This is why it was a natural to develope and manufacturer theprinters in Israel where the best talent is available. You might note Amazon and Fanatics use Kornit printers exclusively
Custom small orders means you can have multi-color designs and not have a screen set up. A small screen order which has 6 colors will cost at least $120.00 for set up. With digital the set up is$40.00 (one time only). This allows you to come back and order the single piece you forgot with the original orders. This is a big plus because we haven’t experienced too many perfect orders.
If you have to go back to your original screen printer you will be paying additional set u charges.
Embroidered patches are a economical way to decorate a item of apparel. The use of patches was very big during World War II. Each unit from a corps to a platoon used embroidered patches to promote comrade and a sense of belonging.
After the war the market for patches grew. Boy scouts used them as merit badges. Sport teams decorated their uniforms with patches. Companies provided patches to sports teams to promote and advertise their products or company.
1974 Patch caps are popular
Around 1974 patch caps started to become popular. Caps were now getting decorated with a simple patch on the front as a method to promote a message. Seed companies used this as their primary method of advertising. Think of all the Cat caps, John Deere caps, Coors beer caps that were sporting custom logos.
In 1977 recognizing the popularity of logo caps Northwest Embroidery was started in Tacoma, Wa.. The business model was to find a better way to manufacture emblems in the pacific northwest. At that time 90% of the embroidered patches were made in and around Union City New Jersey. This area was known as the embroidery capitol of America. The patches were made on giant Shiffli looms which produced quantities of 220 each.
The team at Northwest realized the real market was for small orders. The goal was to manufacture in groups of twenty four and attach these emblems to caps. The order size made sense because a customer could now purchase small quantities and not have to figure out what to do with 220 patches.
A solution to the problem
In order to make this plan work a machine was needed which could produce small quantities. This void was filled by a Japanese company who developed a multi-head embroidery machine which could produce in multiples of 12. The problem was solved.Off to the races
Northwest purchased two 12 head machines and started selling small orders. They have been doing this ever since. The company is now 42 years old.
There is a difference in tee shirt quality. Many manufacturers have introduced premium tee shirts which are a little finer, a little heavier and sized to fit. These are the styles that Northwest Custom Apparel offers its customers.
The norm is now customers are asking for a better grade of tee. A premium T-shirt is knitted using ring-spun rather than open end yarns. In ring spun goods the fibers are all aligned in the same direction. Open end spinning produces the cotton fibers run in random directions.
Manufacturing regular cotton is less expensive than ring spun and does offer breathability the softness is just not there. However they are great for promotions like a race, a company picnic, fund raiser or when price is the determining factor in purchasing.
Ring spun definitely gives you a much nicer yarn says Jim Mickelson CEO of Northwest Custom Apparel. Being ring-spun makes it stronger and makes the fiber more uniform. This is where you get the softer hand which takes the stiffness out of a finished tee.
The other fundamental distinctions between a premium and a mid-range Tee consists of the amount of fabric. We see more and more oversized tees being asked for along with a heavier tee and a larger size.
There is also a belief that taped seams make for a better shirt. All this does is add to the cost. The stitches used in making the shirt are so good that taping is not necessary and just adds to the cost.
Double stitching on the sleeves and at the waist adds to the strength of the garment.
As with any purchase, you must determine what’s most important to you, what you’ll be using your shirts for, and how much you want to spend. Though ring spun cotton is generally a bit more expensive, the added cost is minimal and will not break the bank. As the old adage goes, buy nice or buy twice.
I am going to try and summarize some of the problems which do occur with DTG printing.
Purchasing a DTG Printer
One big problem is purchasing a machine which is designed for hobbyists. I won’t name them but you can figure out who they are by the price. There are distributors and manufacturers who are trying to crash the DTG market by offering a machine which looks competitive because of the low price.
One thing never believe is the amount of production you can get from a lower priced machine. It just isn’t there. When you see the demo the trick is for the sales rep to print a simple left chest design on a white tee. It looks great and you are sucked in by the productivity.
Not included in the demo is that fact that there is a pre treatment process which has to be done before printing the garment. The pre-treatment consists of spraying a pre-treatment on the shirt and then heat pressing it to prepare it for printing. Generally the demo will have all the shirts pretreated before to evade the fact that there is a process which takes time before actual printing. you should contact NWCustom Apparel if you have any serious questions.
Curing and finishing
Once the shirt is printed the design has to be cured. You can do this with a heat press machine or a dryer used for curing screen printed tees. This is all a part of the production cycle.
When you are told 50 pieces per hour don’t believe it. It just won’t happen for the lower priced machines.
You must pay for production
If you want production you must consider spending around $500,000.00 for two top of the line DTG printers. (never buy one) This will get you a machine which pre-treats and prints in one cycle. All that’s left to do is run the shirt through a dryer. Productivity with this machine will give you a 40-60 production for left chest white tees. This is a license to print money.
I will continue to update my thoughts on DTG and this is just a brief summary of my feelings.
Direct to garment printing is not exactly new to the decorated apparel industry. However it is starting to get recognized as a decoration of choice. The benefits for DTG need to be incorporated into any marketing program a decorator choosing.
The best way if you are a newbie is to start printing sample shirts. Taking advantage of easy production should let you do at least two shirts a day and present Saleto your client.
At Northwest Custom Apparel we have a program called the WOW program. We print sample shirts on the fly and send them to our customer data base. The results are really good. We let our customer know it is easier for us to send a free sample and stay away from a time consuming sales call.
Sales calls are expensive
Our customers who are business owners see our logic. They agree that the days of making sales calls are expensive and time consuming. In the Seattle area we are rated number 5 in bad traffic. Going to Seattle is a half day event for us. Why should we go when we can get UPS to do the driving?
Another marketing tool we like to use is direct mail. There are so many companies offering printing and mailing services that it would be crazy not to take advantage of this bargain.
We like to design a nice post card and then send to our targeted customer data base. On average a 1,000 piece print and mailing will run about $800.00. This is a bargain when you can stay in front of your customers on a regular basis.
E Mail marketing
E-mail marketing will work if you have a strong customer base who will open your e mails. One thing to be aware of is the fact that you might get a lot of spam bounces. This can hinder your whole direct mail program if start getting a lot of rejection.
In summary we recommend first actual samples, the direct mail and finally e-mail.
The question always asked is what process is better for decorating tee shirt?
Quality of the print
One feature of digital to garment printing is the quality of the print. The detail on DTG printing is far superior to screen printing With dtg you can choose as many colors as you want and not have to set up a separate screen for each color. This allows DTG to print small orders.
High cost for multicolor small orders
The cost for multicolor screen printing on small orders is very high. This is why a DTG print will knock your socks off.
However if the order is large lets say over a 144 pieces the screen print method becomes cost reasonable. You can amortize the cost of the set up over the price of the large order.
Fill in orders are killers
But one disadvantage is when the customer wants you to do a fill in order. A fill in order is a post order when the customer realizes they need an additional three pieces. The set up gets quite expensive.
One problem with screen printing inks is that they have carcinogenic compounds in the ink. This never was a problem until someone discovered that these inks can be harmful to kids. Government regulations dictate that only water based ink should be used for youth. The cutoff age is generally 12 years. This is a hard one to enforce but the day will come when enforcement will become mandatory.
Soft hand to the touch
DTG printing using water based inks is very soft to the touch. Screen prints inks generally are plastisol and hard to the touch. It’s a crime to screen print a soft cotton top with plastisol inks. The feel is horrible.
DTG gives the garment a very soft and comfortable feel when it is worn. Women especially like the soft feel on a cotton garment on their chest.
At Decosource all our inks and materials are environmentally safe.
Our investment in a Kornit printer was a wise move. We purchased the unit with some reluctance because of the price.
You can expect to spend close to $300,000.00 for a new machine. We bit the bullet and purchased three. We never looked back.
Some say we could get more production if we purchased the less expensive DTG printers available. This argument sounds good if you are shopping price.
Bargin Priced DTG printers are suspect
We found that the lesser priced printers are not fit for production. These machines work real well if your market is geared to single shirt printing. The margins are great for one off printing.
If you are going to use a lesser priced model you have to be aware of the time to print a shirt. They just do not perform as advertised.
DTG Production time
We found that the printing process is slowed down due to the application of the pretreatment. Each shirt has to be pretreated before printing. The process is to first spray the pretreatment on the garment and heat press to lay the fibers of the garment down for printing. With the Kornit the pretreatment is included in the printing cycle. This is a important time saver to consider if you are going to do production. The pretreatment process generally takes about 2 minutes vs no time using a Kornit.
The next step after pretreatment is to print the garment. Time in a Kornit is around 2 minutes or less in the new machines. In a mall style printer the time is about 4 minutes.
Finishing the shirt
After printing the garment has to be heat pressed again to finish. Using a Kornit we run the garment though a dryer and the project is complete. The dryer does take a little longer but it does not eat up labor time like a heat press machine does.
In summary we make tees, tees and more tees than a lower priced DTG printer.
Direct to garment apparel printing is still a nascent industry. Right now it is so new that we have a hard time understanding of what DTG printing is.
Essentially it is printing apparel using water based inks which contain no chemicals or toxic substances. The process is 100% environmentally compatible.
A few tips
A few tips to remember about DTG printing is that a quality printer is approximately the size of a small car. But this small car is actually a ink jet printer that can print on apparel.
The most popular item to print on is 100% cotton tees. Preferably a ring spun cotton with a tight knit. A 50/05 cotton poly garment will work but the results will not be as vibrant as a 100% cotton tee.
Computer does all the work
Because the designs are processed using a computer the art work should be clean and camera ready. We prefer a 300 dpi jpg or a higher resolution the better. Drawing programs which are great for designing are Corel Draw, Adobe Illustrator and photo shop. The soft ware can process these programs very easily.
The nice part of having a computer do the processing is that you don’t have to work with messy screens. This allows the design to contain as many colors as needed in the design. Screen printing requires a separate screen for each color in the design. The set up process is much longer than a Direct to Garment set up. DTG set up is just enter design into the computer, press the start/stop button and commence printing.
End result is beautiful
The end result of DTG printing is a thing of beauty. The shirt is so soft to the touch. The soft hand does not rub on your skin. A DTG garment will also survive at least 50 or more washing. We have been testing tees in our plant for over 6 years and the shirts are as vibrant as ever.
To summarize direct to garment printing is eventually going to be the decorator’s choice. It is so easy to do. Mistakes will be reduced when pre-approval is done on a computer. The actual design can be shared with the customer prior to production.
The last trade show I attended the big promotion was companies selling direct to garment printers (AKA DTG printers).
The traditional screen print equipment companies were well represented but their booths were not as crowded as the DTG manufacturers. This new process draws a crowd.
An interesting story I want to share with you:
A friend of mine owned a very successful photo finishing company in the Midwest. His company would process the pictures for professional photographers. He had 3 facilities for developing film. He was very successful and all his competitors were chomping at the bit to buy him out. This was about 20 years ago.
Then one day he happened across a very elementary digital camera. He bought it to try out. It was at that moment he saw the future. He had a real epiphany. He put his photo labs for sale. One of his competitors bought him out.
Today that competitor is out of business. My friend had the foresight to see the future of photography. Digital cameras ruined the photo processing business.
The digital print era is coming
We are now in the beginning of digital printing where anybody can have ease of entry. Basic DTG printers can be purchased for less than $10,000.00. Every one of these printers entering into the decorated apparel market takes a little bite out of the pie. Right now it seems they are not a threat. Just wait.
Our company has always contracted out our screen printing. We did this because we didn’t want the hassle of smelly inks, solvents, and crap in our embroidery factory.
We took a big step and purchased Kornit DTG printers. (3 to be exact). Since we got them on line it has been all uphill. We print on lights and darks. As many colors as the customer wants. We can do small orders. (Even one at a time). The set up costs are minimum.
The process is so simple.
We have transferred most of our screen printed work in house. We have all but left our screen printer. Our business is up. We made a wise decision and we see the future in DTG.
This is why I feel screen printers are on the demise.