Six months before COVID-19 hit, shop owner Howard Potter was planning to invest a cool $240,000 on new equipment and a building addition. However, as the lockdowns started, luckily he was still in the “thinking phase” and hadn’t made final purchases. This gave him time to replan A&P Master Images’ next moves to stay profitable during the pandemic.
In 2020, Potter instead made some smaller strategic purchases to the tune of $20,000, like moving his shop’s server room into the office to offer more file protection and create more production work space (that cost $5,000). He also bought cameras and monitors to have a full view of production; digital phones, so staff can answer customer calls from any computer; software upgrades; new LED lighting in the screen-print room; and extra screen-printing press attachments.
Now that Potter pivoted his Utica, NY shop in 2020 and is even more profitable, next year he plans to invest in an $87,000 eight-head embroidery machine. He made this equipment investment decision after carefully reviewing his shop’s needs and where he wants to grow the most. “We produce more than $500,000 in embroidery every year with four heads in 350 square feet,” he says. “This one new machine will allow us to run everything three times faster, book three times more work, and still hold our high-quality standards.”
As we head into a new year, yes, it’s usual for decorators to review their business plans and consider adding new decorating equipment like embroidery machines, screen-printing presses, DTG printers, heat presses and more. But with a global pandemic still at large, investing in new equipment might look a little different, so here’s what you need to know.
Should You Invest in New Equipment Right Now?
Potter advises shop owners to take a realistic view of their shop status before jumping in. “In 2020, did you take a loss, break even or gain market share?” he says. “Is your P&L statement strong to where you have the cash flow to make the investment? If another lockdown happens, can you still carry the loan payment on the investment?”
If you’re thinking about investing in new equipment, there are lots of factors to consider:
- Your older equipment isn’t cutting it anymore, so you need to upgrade it to become more production-efficient.
- You need to increase your production capacity to keep up with your current business demand, as Potter did with embroidery.
- You want to bring your production in-house, instead of contracting it out.
- You’re a screen printer and want to offer a new service like embroidery. (Or you’re an embroiderer and want to offer screen printing or direct-to-garment printing.)
- You want to reduce your tax burden. Older machines are often fully depreciated, whereas new equipment can open the doors for new tax programs and savings for your business. Always check with your accountant to be sure.
Once you feel new equipment is necessary for your shop’s growth, think about these questions:
- Will you have to spend on advertising to help grow your business or hire an operator to keep the equipment running?
- Do you have the capital for the investment? Have you talked to a bank or leasing company to apply for a loan to purchase the equipment? “Try to get the furthest terms possible, with the lowest interest rate, to create the lowest payment as a safety net,” Potter says. “You can always apply extra principal payments later.”
The Rise of Print on Demand
POD and direct-to-consumer fulfillment is a shift that many decorators have had to make in 2020, and might influence what equipment you purchase. “We see a lot of printers investing in POD decoration and fulfillment automation as more and more brands, retailers and groups need fulfillment services alongside printing,” says Ryan Moor, CEO of Ryonet and ROQ.us.
So, what types of equipment investments make sense here? First up, direct-to-garment printers. “DTG technology allows for on-demand printing and minimizes inventory, while folding and shipping automation allows for minimal touches and overhead during the fulfilment process,” Moor says.
S&S Activewear Account Manager, Frank Good, has talked to many decorators looking for easy ways to fulfill short-quantity runs. They usually choose DTG printers, sublimation printers and heat presses to fit that need. “If you aren’t quite ready to purchase a machine, there are many decorators able to offer reasonably priced heat-transfer services with a fast turnaround and all you need is a heat press,” Good says. “Heat presses come in at budget-friendly price points.”
Heat-transfer services include: custom screen-print transfers, cut or print-and-cut heat-applied vinyl, heat-applied rhinestones, faux applique, leather patches, sublimation transfers, and heat-applied embroidery.
Selecting the Right Equipment Vendor
When it’s time to buy your equipment, you need to choose the right vendor that will be a partner to you long after the machine arrives in your shop. Here’s what to look for in that ideal supplier:
1. A big footprint. Shortlist established companies that have a nationwide sales and support network. That way, you’re in a better position to get help exactly when you need it, from a real, live human. Read online reviews and see what people say in online forums. And don’t hesitate to ask other decorators for their feedback on different vendors. “Most people will jump at the chance to tell you a horror story or explain how happy they are with the company,” Potter says.
2. Extraordinary support. After you’ve taken delivery of your new machine, what happens? Does a rep come to your shop to train your staff? Can you reach someone 24/7 if you have a problem or question? Do they offer an online learning center where you can learn to use their equipment and troubleshoot issues? Can they send techs out to your shop fast to troubleshoot issues? What does the warranty cover and for how long?
“Service and warranty is big, especially as the labor force tightens up,” Moor says. “You need a vendor that offers a good warranty and has the resources and reputation to support it. If your equipment goes down and you no longer have the team in place to fix it manually, you want to ensure it gets up and functioning right away.”
3. Ability to help you grow. As your business grows and changes, can this vendor be there for the long haul to help you? “Remember, expandability is everything right now, so can the equipment you invest in today expand to a new world of tomorrow’s customer needs?” Moor says. “You’ll want to ask your vendor, and find out what else this equipment can, or cannot do, in the future.”
A New Age of Automation
In 2020, many shops reduced their staff due to COVID-19. That means shop owners like you might be searching for automation solutions related to garment decorating, to help offset a smaller team.
Moor has seen a lot of decorators looking for newer, more efficient machines that run faster with fewer people, especially in the pre-and post-press screen printing areas. “An equipment payment is typically 30% to 50% of the equivalent human overhead to do the same job on less efficient equipment,” he says, “so not only is this a cost savings, it’s also adding an asset to your business books.”
Let’s look at a few examples. If you have a manual screen-printing press, you might turn out 40 to 60 pieces an hour. Investing in an automated screen-printing press can increase your production to 60 to 120 prints every 60 minutes. “This keeps your crew fresh, by putting the bulk of the work on the machine,” Potter says.
“By adding automated computer-to-screen equipment, automatic screen-coating machines or automated screen reclaiming machines, you’ll also save considerable labor costs,” Good says. “Automated folding and packaging machines reduce the amount of staff required to prepare goods for shipping or pickup.”
Similarly, if you purchase a better-quality sublimation printer that can handle larger prints and more prints in the feed tray, buying a heat press that runs off an air compressor allows an operator to do other tasks, while also controlling the press.
On the embroidery side, Potter cites this example: Say you have two single heads and one two-head machine. If you have a large run, you need to load a design three times with three setups. If you invest in a six or eight head, you can save time by setting up a design once and running more pieces at the same time. “Your runs get done faster and you improve profit margins,” he says. “If the machine takes the workload, your staff can work on other tasks.”
Another thing to consider? Here’s an alternative to investing in new equipment: contract decorating. “Working with multiple contract decorators gives you many options without the overhead of equipment or additional staff,” Good says. ”It’s a good option for a any small or growing business.”
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