Learn the advantages of contract printing and the challenges screen shops face in satisfying customers.
By Terry Combs
Advertising-specialty distributors offer the quickest route to building a customer base. I worked with a screen-printing company not long ago that was inundated with business after it simply cold called all the ad-specialty listings in the local Yellow Pages. Despite the number of screen printers in the metropolitan area, these customers were hungry for more available production time.
Outside of the ad-specialty market, you may earn new business by networking and making direct contact with retailers to see if they contract or have ever considered contracting out their garment-decorating needs. You can either make direct calls or send a simple mailing to make initial contact by explaining the services you offer and your strategy as a confidential behind-the-scenes printer.
A good example of a retail business that used contract printing was one of my first customers. I contracted with a campus bookstore whose owner brought in all her products blank, then contracted out the printing on an as-needed basis. Contract printing gave this customer the flexibility to react to sales fluctuations and top-selling events, such as football weekends, with just the right mix of products and graphics. If graphic 27A sold out and graphic 44B sat on the shelf last weekend, the first could be pumped up for the next weekend, and the latter could be liquidated without taking a loss on a huge quantity of already decorated goods sitting on a warehouse shelf.
Challenges of remaining successful
While price is the primary factor that initially influences customers to buy contract printing from you, quality is the factor that keeps those orders coming back. No amount of discounting will bring a dissatisfied contract customer back your way. And without repeat business, you may as well be another custom printer.
One of the major necessities in contract printing is to build your portfolio of repeat customers who contribute orders regularly and allow you to maintain a smooth and continual flow of production. Profit margins in this market do not lend themselves to the high expense of constantly replacing your customer base with new accounts. The very nature of contract printing almost requires reoccurring orders from a fairly fixed group of customers.
Cash flow is one of the keys to success in the contract world. In this business, you don't have the option of creative financing or floating your business cash flow by including the price and profit from the garment itself in your invoices. You must pay the bills with much lower gross revenue from each order you process. This means you have to keep a close eye on timely payments from your customers, and you may need to adopt a shorter credit window, such as "net 10" terms.
Spoilage is another issue to keep in mind. No printer is ever happy with spoilage on the production floor, but it's a whole different ball game when that spoiled product belongs to somebody else. This is an issue you need to address right up front with your customer. It is essential that you and the customer agree on some allowable spoilage level (usually a percentage of the order size) that will not be charged back to you. A safe number to agree upon is 3%, but as a printer, you should strive to keep it under 1%. If you consistently hold spoilage below the agreed level, your customer is likely to be more understanding when other production problems come up.
Choosing to be a contract printer
Over the years, I spent a great deal of my professional life proudly selling my garments, graphics, and printing expertise to the general public under a colorful company logo with a catchy name and slogan. But thanks to my experiences in contract printing, I now prefer to focus on the basics of screen printing: creating quality work, concentrating on efficiencies, and dealing with educated buyers who are the lifeblood of a successful contract-printing operation. If selling direct to end users has lost its luster, contract garment printing may be a solution for your business, too.
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