Many people think that if they have an embroidery machine, then they can start a side hustle and make a bit of extra money. However, due to the low cost of entry into embroidery (some people begin small with a Brother PE800 embroidery machine, which costs less than $1,000), this can mean that your local market is saturated or underpriced.
When starting a business, you first have to decide what type of business to start:
- Contract embroidery – Does large batch jobs at a greatly reduced price for other embroidery businesses. (Example: An embroidery business gets a job for 300 ball caps, but the business doesn’t have enough embroidery machines to do the job in a timely manner, so the business subcontracts the order to a contract embroidery shop.)
- Wholesale – Does batch embroidery jobs for businesses. (Example: An insurance corporation orders 100 shirts for its employees with the company logo at a discounted price due to the larger quantity.)
- Retail – Does single or smaller jobs for the general public. (Example 1: A customer wants a monogram on one shirt. Example 2: Selling on Etsy or Shopify.)
The type of business you have will determine what type of embroidery machine(s) you will need. Contract embroidery shops need multi-head machines that can efficiently stitch out large orders of the same item. A contract embroidery shop can’t be profitable running only one machine at a time, as it relies on efficiency to make a profit with its lower prices. Retail shops need individual multi-needle machines to stitch out different individual orders at the same time. A home-based business that sells lanyard covers may only need a less expensive single needle machine while a home-based business that does jacket backs or hats will need a multi-needle machine.
Determining the type of products that you will sell also helps determine the type of embroidery machine needed. Retail businesses can offer monograms, make stuffies (stuffed animals created using the embroidery machine), make lanyard covers, stitch up felt play food, or sell many other types of embroidered products. Retail shops can create items to sell or take orders for custom embroidery (such as monograms) that is made on demand. Thus, not every retail type of business needs a multi-needle embroidery machine. The type of product that you sell will determine what type of machine that you need. Creating lanyard covers using only one color of thread can be done as easily on a single needle embroidery machine as on a multi-needle embroidery machine.
Once you decide on the type of business, the type and number of embroidery machines, and the type of product, then it is time to make a plan to run the business. There are many factors that have to come together to create a profitable business. Being able to make a profit depends on several things, and not all of these things are under the business’ control. Times of recession (local or national) can make it a difficult time to find buyers. New competition can also reduce sales. Here are a few things to consider that will impact profitability.
- Location – How many other embroidery businesses are in your area? How popular is embroidery in your area? Is there a demand for embroidery in your area?
- Product desirability – Not everything sells. You have to have a product that people want to purchase. The product has to be produced at a price point that is desirable.
- Price – Not everything is worth selling, as some embroidery is too stitch intensive to sell at a price that most buyers won’t mind paying.
- Competition – How many other embroidery businesses or hobbyists are in your area?
- Type of business – Will you sell single items to individuals, or will you do batch jobs for businesses? Even retail businesses sell different types of products and offer different embroidery services.
- Business sense – Business sense is the ability to solve a wide variety of issues as they arise and to keep a business going through the early years. Most small businesses fail in the first five years. Many of these businesses are profitable, but they don’t produce enough income for the owner’s needs. Nurturing a business long enough to produce a livable income can reduce personal savings and credit.
There is a wide variety of skills that a business owner needs in order to start and maintain a business. The business owner must be able to find supplies at wholesale prices in order to produce a product at a reasonable price. There is also a whole gamut of paperwork required by local, state, and federal governments. Then there is the ability to stick with a project during the early years, when the business isn’t able to pay the owner a salary. The business should come first, with profits initially reinvested to keeping the business going.