Today we’re going to discuss everything you need to know about how an embroidery company is run and how much money they make. This industry has been a part of my life for almost 13 years now! It is my pleasure to pass down my expertise in the industry.
Welcome to Franknez.com – the blog where we write about personal finance, side hustle ideas, entrepreneurship, and update you on trending investing news. Lets get started!
What is Embroidery?
Embroidery is the craft of decorating fabric and materials using a needle to apply thread or yarn.
Embroidery is used today to customize apparel of all sorts with designs. Most common items are baseball caps, professional polo shirts, and backpacks.
Other customizable items that can be embroidered include:
- Sweatbands / wristbands
- Tote bags / duffel bags / suite cases / golf bags
- Button ups
- Hoodies / sweatshirts
- Gloves / scarfs
How did the embroidery industry begin?
Origins of embroidery
The origin of embroidery is well known to have come from China. This decorating process has actually existed in various forms since the production of fabric.
Archeologists have traced the remains of heavily hand-stitched and decorating clothing dating back to 30,000 B.C.
In Sweden, the earliest discoveries of embroidery were found during the Viking age between 3rd and 5th century B.C.
Status of wealth
Decorated garments became a status of power and wealth around the year 1,000 with the growth of the Christian church and royalty gaining power.
Embroidery was very important during Medieval times. Society divided its wealthy through adorned handkerchiefs, flags, uniforms, robes, horse trappings, pouches, and covers.
The development of the embroidery machine came about during the Industrial Revolution. One of the earliest embroidery machines was actually found in the mid-1800s in France that used a combination of machine looms and hand embroidery.
Marketing and promotional
Today, embroidery is used as a way to market and promote ones business. Companies are decorating apparel to bring brand awareness to a specific niche or market.
Decorated apparel is the #1 top pick of all promotional products. Embroidery is a labor focused industry worth more than $700 million dollars! It’s an industry that continues to boom as more and more businesses are created.
How much money does an embroidery company make?
How much money an embroidery company makes is going to vary on the companies target audience. In short, starting companies can make anywhere from $100k its second year in business to $750k it’s tenth year in business.
There are embroidery companies that make well over one million in gross revenue.
How much money does an embroidery machine cost?
Embroidery machines aren’t cheap. They can cost you an arm and a leg however, some sellers off payment options.
A four-head embroidery machine can cost you about $20,000 while an eight-head machine can cost you double that.
What embroidery machine brand has the best quality?
Here’s a list of embroidery machine brands:
- Texmac Direct
The best quality machines are Tajima and Barudan.
Tajima is the leading brand in the industry. Developed in 1964, this Japanese brand delivers a unique skill that never fails to impress when it comes to the quality of product.
Barudan is an American company based in Solon, Ohio. Since 1959, Barudan has been providing some of the best built and most reliable embroidery machines in the industry.
Both of these machines deliver exceptional quality of work. If you get a chance to see both in person make sure you’re demonstrated a presentation.
How many embroidery heads are good for big production?
An 8-head, 12-head, or even 15-head are ideal for pumping bigger production. My recommendation? Go with a 12-head. It will get four more additional units out per run than an 8-head machine.
Go with a 15-head if you have a contract with a company that’s constantly giving you the same repeat order. This will allow you to pump production out quickly for your customer.
What is maintenance like on an embroidery machine?
Maintenance on an embroidery machine is pretty simple. The recommended amount of time to maintenance your machines is about every two weeks or so.
Maintenance routines include:
- Greasing the main gear located behind the power plant
- Applying dabs of oil in the painted inserts to lube the crank shafts
- Using a power air pump to clean out any ‘birds nest’ or thread caught where the bobbin rests
- Clearing space in your interfaces memory
- Wiping down parts of the machine so that white fabrics aren’t marked by dust
These are just some of the most common things to do when giving maintenance to your embroidery machine.
You can find your essential oils and grease on Marathon along with other inventory such as bobbins, backing, and thread.
What is the best thread brand for embroidery?
Marathon and Madeira are by far the best thread brands for embroidery.
Marathon carries high quality thread ranging from polyester being the top choice, as well as metallic, cotton, rayon, and sewing.
Madeira’s thread has more contrast, more options including glow in the dark and fire resistant thread, but is more expensive.
Some embroidery companies are loyal to only one brand of thread. I personally believe you’re a better partner if you carry more than one brand of inventory even if it’s costly.
At some point you’ll be bound to purchase thread from somewhere else due to a demand or request for it.
What’s the difference between embroidery and screen printing?
While embroidery decorates apparel using needle and thread, screen printing applies a copy and paste process using ink.
How do embroidery companies make money in the industry?
Companies in this industry can either operate as B2B or B2C.
Business to Business:
In this industry, embroidery companies can offer contract or wholesale pricing to marketing companies. In this scenario embroidery companies only sell their decorating services. Marketing companies are businesses who go after corporate America and offer these companies decorated apparel. They then buy the merchandise and outsource the decorating process to contract vendors whether it be embroidery or screen printing.
Pros of B2B:
- You can generate a lot of money in a short period of time
- Volume can scale your business to 300k – 1MM+ in yearly revenue
- Clients provide you with all the goods to decorate
- Volume can keep your machines running all year
Cons of B2B:
- Long hours
- Contract/wholesale pricing can be competitive
- Damaging items can result in costly replacement
- Losing clients is easy, they can use any embroiderer they chose
Although you can generate a lot of money in a short period of time with B2B, you will need volume to keep this momentum up and have your machines running year-round. Your QC department also has to be on top of every order to ensure they can communicate effectively with your operator if there are any concerns with the quality of your work.
Because marketing clients can be easy to lose, be sure you accommodate to their every need. If they need samples, sew outs, pictures, or edits; do them. Just make sure you charge for any extra service. You should also keep a client data base to fall on should a client leave your portfolio. Keep the sales pipeline full.
Business to Consumer:
In this scenario, your embroidery company sells both your product and service directly to a consumer. This consumer can be walk-ins, sports teams, schools, or corporate America; though corporate America is harder to do business with. B2C allows you to sell decorated garments at retail price.
Pros of B2C:
- Retail profit margins are much larger, like really good
- Direct consumers seem to be friendlier and more understanding
- You don’t need a lot of volume to generate awesome revenue
- You can save your customers money by going direct and also save them time
Cons of B2C:
- Building a solid clientele takes much longer than B2B
- You require more skills such as: marketing, graphic designing, and communication
Although profit margins are amazing with B2C, it takes quite some time to really establish a solid clientele for your business. This side of business isn’t as labor intensive as B2B either.
If you’re not familiar with marketing or graphic designing, then you’ll have to outsource it. This unfortunately creates more overhead. In B2B, your clients will almost always provide you with mockups and renders that were already approved by their clients.
What is the busiest time of the year for embroidery companies?
Whether you are a B2B or B2C embroidery company, the busiest time of the year for your business is during the Christmas holiday season. Business tends to boom here for everyone.
This is the time where you better be prepared. This time of the season will determine whether you start the new year with more clients or fewer ones.
People and businesses alike all want to personalize just about anything. Popular items to embroider during the holiday season include:
Most people are doing corporate gifts for the holidays, giveaways, and Christmas presents.
The Christmas holiday season is nice when you see a spike in revenue but can be chaotic and hectic when you embroidery company is overflowing with business.
5 things to expect during the heavy holiday season:
- Tight deadlines: Expect customers to want everything right away during this time.
- Rush orders: Clients will be willing to pay insane amounts of rush fees to cut in line.
- Missed deadlines: It happens and the only thing you can do is be honest and real about your situation, I mean blessing.
- Business comes to you: During this time, business seems to find you.
- Surge in sales revenue: Your revenue will skyrocket, there’s no doubt.
What is the best way for an embroidery company to stay organized?
Most embroidery businesses are quite unorganized with the exception of a few. The best way an embroidery company can stay organized is by creating procedures that break down the process from start to finish.
Starting with the quote
When you quote a client, be sure to keep all emails relating to that subject in one chain email. This will allow you to pull up the email from your mailbox when you need it at your disposal right away.
The PO submission
Apply the same concept when you receive an email with a purchase order (or if you create the purchase order). Keep all information related to the project in once chain email and be sure to display the PO# on the subject of the email for easy access.
Once you’ve received or generated a PO for the project, save it in organized files you create for your customers on your desktop or laptop.
- Create an excel spreadsheet that will allow you to enter data each time you receive or generate a PO.
- Include the PO#, ship date, in-hands date, project name, customer name, etc.
- Highlight areas to identify and differentiate whether a project has been processed, completed, or in production.
Create work orders for your machine operators
Work orders will be created from administration and handed to an operator when a project has been approved for production.
These work orders should include the following:
- The sequence of the design
- Mockups and placement
- Short description
- Picture of the sew out approved
- Ship date
- Customer name
- Size breakdown
- Additional project notes (fold/bag, type of backing, etc.)
Work orders are a great way to keep track of how a specific project was run and can be proved useful when asked for a reorder.
Print a copy out for your machine operator and save a copy in a folder via your desktop for safe record keeping.
I created a professional template that’s going to allow your embroidery business to run more efficiently and stay organized.
I’ve noticed that the companies that tend to experience more growth in the industry are the ones that are organized and stay organized.
Your company needs to count every item
As UPS or FedEx delivers to your facility, make a log of everything that comes in. Note down the following:
- Name of customer (often times found in packing slip)
- PO# or reference
- Description of item
- Color of item
- Quantity of items
- If a delivery does not have a packing slip with the breakdown of the contents inside the box, create one from scratch.
- You will use these packing slips to match the size breakdown vs your customers project size breakdown. This will ensure all the items delivered with no discrepancies.
- If a size is off or the color of the item is incorrect, contact your customer and relay the message if they’re the ones who provided the garments. If you’re the one selling the garments, contact your vendor to correct the shipment.
Failure to count merchandise can result in short-shipped projects, shipping incorrect merchandise, and the possibility of losing an important account.
Color code what you receive
Keep your warehouse organized by color coding what you receive throughout the week. Use a different color for each day of the week and organize your shelves or racks by color.
- Apply these color code stickers on the packing slips so you can locate the merchandise in your warehouse quickly.
- Insert your color coded packing slip inside your work order sleeve to keep record of the project all in one place
- Once you move the merchandise to the production floor, keep the work order close to the box(es) so your machine operators know what merchandise pertains to what order.
Ensure quality control is engaging
Quality control should be able to identify when the product is not up to expectations. If they come across any discrepancies or concerns, they should confidently communicate this to the operators and the head of the embroidery business.
Benefits of an engaging QC department will allow you to catch issues early and address them properly.
Packaging done right
Once your customers product is complete and ready to ship out or deliver, be sure to include either a breakdown of the items written outside the boxes, or a packing slip.
Your lead packer should also be noting what’s being packed in a separate log or notebook for the company’s record.
If you customer or client advise that they are missing an item, your records can prove otherwise. You can then make a decision to serve them accordingly.
Billing my customers
Your customer should receive an invoice either a day before delivery, day of delivery, or the day after shipping.
If you have trouble getting your customers to pay check out a post I wrote on how to get clients to pay you when they’re past due here.
What program can I use to invoice my customers?
You can use Quickbooks or invoice generator tools to create invoices. Also, you can create your own using a Word template. It’s very easy
An invoice will require the following:
- The customer’s PO#
- Project description including quantity, logo/design, and placement
- Rate per piece and total price
- Terms (COD, NET15, NET30, Etc.)
Your invoice basically needs to match the PO submitted from the start. Your invoice is the final and closing step of the process.
What is business like for an embroidery company year-round?
Now you know business is booming during the Christmas holiday season. But what is like year-round?
Well, business tends to slow down in January and February unless January is filled with overflow from December’s orders. January and February are the perfect times to follow up with your customers and even reach out to new business.
When does it pick back up?
Work usually begins to pick up by March and April and slows back down sometime around June and July during the summer. This is primarily because schools are out for summer vacation and the demand for school promotional products goes down during this season.
However, events like shows and outdoor festivals are still occurring during the summer so business doesn’t totally die out. It really just depends on who your customers are no matter if you’re a B2B or B2C business.
I’ve personally noticed business begin climbing around August leading to a spike in December.
Business year-round for embroidery companies for the most part is relatively good. Embroidery has been booming for decades now and with more businesses emerging we can only expect the industry to continue doing well.