Images_Digital_Edition_November_2019

www.images-magazine.com KB BUSINESS DEVELOPMENT NOVEMBER 2019 images 43 H istorically, shops in the decorated apparel industry have faced a challenge with managing money. Your business absolutely needs it to survive; cash is always king. Without it, you can’t pay your staff, your bills, and most of all, yourself as profit. Yet we give away a lot of financial power by routinely going into debt at the request of our customers. That’s right: when you invoice at Net30 or go the 50% upfront route, or any other payment method, you are essentially the bank for your customer. You take on all the work, create the art, order the shirts, get it set up, and run the order. Even ship it! All with the hope that the customer will pay up. Most do. But some don’t. Some types of client are the absolute worst at paying you. You may even have orders that are sitting in your customer pick area from a few weeks or even months. Those customers ordered stuff and yet they never returned to claim it. The chances are that they didn’t pay for it completely, either. Rethink how you structure your payments Let’s make things simple. When someone places an order, before you do anything, they pay 100% of the bill. Think how easily your business could run if it had all of the financial fuel in the tank on a constant basis. Remember this: a customer that doesn’t pay you isn’t really a good customer. When you have to fight tooth and nail for every pound, it makes the struggle to stay in business all that much harder. Now imagine that you had money sitting in the bank before you started work. That seems almost dreamlike, doesn’t it? You might think that your customers won’t stand for that. But are you sure? Mega-giant Custom Ink doesn’t have a problem with this. Their sales are tops in our industry at over $300 million dollars in 2018. They are 100% upfront on payments. Amazon, who everyone in any industry is absolutely terrified of, runs the same way. 100% upfront on payments. $232 billion dollars in sales for 2018. “Yeah, that’s great,” you say, “but we’re not Custom Ink or Amazon.” I know. But I’ll bet they employ some pretty smart people. Sometime, somewhere, one of those geniuses declared that all orders needed to be cash upfront. No purchase orders. Don’t take Net30. We aren’t going to do 50% down, 50% when it ships. They drew a line in the sand and stuck to it. The breakdown Here’s why cash in the bank matters to your business more than anything: it’s all about timing. Money in the bank is the lifeblood of your business. You can have hundreds of orders in your system, but without the cash on hand to produce them your shop may be financially starving while you are waiting for the money to come in. Are you experiencing that stress right now? On paper, your shop P&L may even look great. Except when you start paying out to the groups with their hands Money in the bank is the lifeblood of your business out. Debt repayment, equipment payments, inventory purchases, consumable purchases, employee salaries, and expenses, plus taxes to the government. All of that is flowing out on a constant basis, while you are squeaking by, staring forlornly at the letterbox for cheques, or bank account statements for electronic payments. I’ve talked to plenty of shop owners with over six figures of outstanding money owed to them past 30 days. Some are almost numb to it. The struggle is real. Why not change? So, what are you waiting for? Why not make the change to 100% upfront for payments? Sure, I’ll admit it might be scary. Change is difficult. However, let me tell you about my friend and coaching client Bobby. A few months ago he attended one of our Shirt Lab events. At that event, he met another friend and coaching client, Darryl. Bobby runs a contract decorator shop in Texas, and Darryl runs a direct-to-consumer shop in California. Even though they both screen print shirts, they have completely different business models. During a few of the networking slots at Shirt Lab, Darryl told Bobby the merits of going 100% upfront on payments. That’s how he runs his shop, and he’s seen tremendous financial stability since he implemented that platform. This has allowed him to scale and be more financially independent than ever before. Driving home from Shirt Lab that’s all Bobby could think about. On Monday morning, he changed his policy. He had