Your profit is different for each job you deliver. The key to being more profitable, and living a better life, is identifying the more profitable work to solicit as a sale.

Profit Expectation The average screen printer can print 100 light colored shirts with dark ink per hour. Selling prices vary around the country and for a variety of reasons, but if the shirt sells for $6 and costs $3, the profit margin is $3. This average screen printer expects to earn gross profit of $300 per hour.

If the same average printer is now printing dark shirts with white ink, flash cures, and prints again to produce a nice bright white image, the profit is quite different. Many screen printers who print, flash, print one color report production of 30 shirts per hour. That is profit of $90 per hour. So the choices are: (1) figure out how to print white ink without flash curing so that production will be 100 shirts per hour, or (2) sell only light colored shirts with dark ink.

This one color, dark vs. white, ink example is only one of many ways to understand how to increase the profitability of your business. Certainly, any screen printer who wants to be more profitable needs to count and record how many shirts per hour are printed. The key variables of the order like ink and shirt color must be recorded also.

More Colors = Less Profit Counting will reveal in most shops with manual presses that more colors on a shirt produces less profit per hour. Shops with automatic presses that put all colors at one time on different shirts may not be less profitable with more colors.

When manual printing four colors on a light colored shirt the average screen printer should expect to produce 50 shirts per hour. If four color work is to be as profitable as one color work, then the selling price per shirt must be at least $9 per shirt, and probably more. A profit of $300 per hour divided by 50 shirts is $6, plus a shirt cost of $3.

More time will be required on multi-colored jobs making screens, setting up the job, and cleaning up afterwards. With these production numbers, each additional color costs the customer $1 to maintain the profit expectation. Many screen printing shops charge $ .25 to $ .75 for each additional color. Contract printers process large volumes of shirts at even lower prices, and then wonder why they are working so hard and making so little money.

Cost per Hour If you take the total dollars spent last month by the business, except the garments to be printed, and divide that total cost of your operations by the number of hours worked, then you have the cost per hour worked. This cost includes payroll, rent, taxes, freight, ink, emulsion, advertising, stationary and more, but not the item delivered to the customer.

This cost per hour subtracted from the gross profit per hour will probably reveal that many of your current jobs lose money. Either prices must be raised, the shop needs to be more productive, or the jobs need to be refused. More interesting will be the most profitable jobs, because that is what the sales effort should be focused on.

Such analysis will reveal high priced jacket jobs to be less desirable than one color shirt jobs for contractors and landscapers. One color Little League jobs are less profitable work, and the League must accept one color ink for all teams for the screen printer to be able to make money. The names of players on shirts will be very expensive, if the screen printer’s profit expectation is to be achieved.

Per Hour is the Key To improve profitability, and your standard of living, activities must be measured on a per hour basis. Then you will know which jobs are attractive, which are mediocre, and which are bleeding your company. Jobs that are refused or lost due to price provide opportunity to fill that productive time with more profitable work.

Life Cycle of an Order Producing an order is more than printing a number per hour. Screens have to be made and registered. Supplies have to be ordered to produce the job. Artwork needs to be prepared or modified. There will be several conversations with a customer and maybe some time–consuming meetings. Time is spent promoting the business and finding customers, such as by preparing ads or attending trade shows of some kind. There can be a lot of "extra" costs in the life cycle of an order.

Some orders do not have these "extra" costs, or the costs are substantially less. Here are some examples of actual shops we work with. Customer #1 has a pre-print line that is sold through 200 retail stores. His profit is $3 per garment and on average he prints 175 pieces of two color work per day in 2.5 hours. The business is in the garage, and orders come by fax and telephone. He never meets with a customer. Gross revenue is $131,000 per year. His "extra" costs are 2.5 cents per shirt for ink and emulsion. Screens in this pre-print operation are used over and over again. After the initial direct mail expense years ago, no money has been spent on advertising or sales promotion. His "extra" costs are minimum.

Customer #2 prints paper bags at 25 cents per bag, but prints 300-400 per hour on a one-color manual machine. He has one customer who provides the artwork and bags to be printed. Printing is in the garage after dinner for two hours on average. Gross revenues: $38,000 per year with almost no "extra costs."

In each of these cases, the screen printer operates alone in space where there is no rent expense. There are no pre-production costs, such as sales expenses that are significant enough to discuss. Almost all time devoted to the business is spent printing and making screens. Compare that to a typical screen printing shop that has substantial contact with customers and vendors, plus spends time on generating sales, art and screens. The impact on profitability is clear. The market channels pursued at the direction of the C.E.O. are critical to profitability.

Scrutinize Costs Many of the activities of a business are not necessary to generate revenue, or can be reduced. Some have been suggested above, but here are some others. Postage, collection calls and bad debts can be eliminated by requiring payment by credit card at time of shipment. That is what I do in my business, and I avoid a lot of headaches with accounting and administrative work so that I am free for the important work of the business.

Ordering, receiving and accounts payable can be simplified and reduced by using standard purchase orders or a computer program where only the quantity has to be filled in. Ordering only once a week cuts down on receiving labor and accounting work. Accounting can be reduced by payment with credit cards rather than checks. By freeing yourself from the mundane you will have more time to create profitable opportunities.

Set-up costs to a job can be reduced by making a Screen Registration Guide (Exhibit 1) so images are exposed in exactly the right spot so that screens do not have to be made a second time. Using a pin system where the pins are in the press avoids the time spent registering screens.

Critically analyzing how time is spent will produce many opportunities to reduce costs, and therefore improve profits. That may change decision making about which market channels are most profitable. A shop that learns to print white ink on black shirts without flash curing may be able to get a higher selling price for black shirts than white shirts. Black shirts might produce profit per hour higher than the profit expectation. Factors like the diameter and weight of rotating parts on a press affect the number of pieces produced per hour. The production rate certainly is an important factor when evaluating the profit by market channel.

Searching for Market Channels After analyzing the business to determine which orders are the most profitable per hour after deducting the costs per hour, the challenge will be to find more profitable areas. Here are some to jog your creative thinking.

Paper bags are used by retails stores. The big chain stores centrally buy printed bags, but the independent operator with one store or a few stores that does not use a lot of bags cannot afford custom printed bags. The bag manufacturers have large minimum order requirements. Stores selling higher value added products like specialty shops are a target market for your custom printing on their blank bags. Once you get the initial order, you will get re-orders without any sales expense and almost no administrative expense.

Paper bags are used to ship agricultural products like apples, onions, wood ships, animal feed and many more items. The shipper can expand his business by offering custom packaging for small orders with bags you print.

Real estate signs, political signs, and signs for many other purposes like house painters can be simple, fast and even high volume printing. Hockey pucks can be gang printed for teams and tournaments. Once you connect with the person with the purchasing authority, repeat orders should be received without the "extra" costs.

Lawyers’ offices are populated primarily with women, and they carry high heels to work to match their outfit. The ladies also carry a hand bag, and other "stuff." A tote bag is the perfect item for law firms. The selling price of a printed bag even at $25 each with a cost of $3-5 is very reasonable to a lawyer. The printing is one color, and the image is photocopied or scanned from the letterhead of the law firm. Actually, any business that employs people in an office, and particularly women, is a good candidate for this program.

Static cling can be gang printed as parking permits. The sticker inside a car’s windshield telling when and at what mileage a car should be brought back for an oil change is static cling and the product that makes your business more profitable with fewer rush orders. Car windows can be decorated with static cling American flags, Support Our Troops, the name of the local school or organization and lots more. Children can decorate their homes with Easter bunnies, Christmas trees, and other significant symbols on the windows with static cling.

There is no end to the ideas for new business you can generate, especially when several people work together to generate ideas that reflect the community and opportunities there that exist. Initially, each of these ideas typically requires learning new technology, such as how to print white ink without flash curing or how to print on non-textile items. The best way to avoid costly mistakes or wasting time learning by trial and mostly error is to network in the industry to align yourself with someone who has learned how to do what you want to do. Developing your resources is critical to developing your profitability.

Conclusion I almost never in the many phone calls I receive daily find a shop owner who goes through the planning process to understand how to develop a profitable business. They are just so happy to have any business that they accept any business that comes their way. After reading this article, I hope this not you – any longer.

Start immediately to record what was accomplished per hour. Immediately sit down with the check book and credit card records to calculate your cost per hour as you start the process of becoming more profitable. Then cut costs where you can. Get together with others who can help you generate sales ideas, and develop network resources to increase gross profit and reduce the "extra" costs of business.

Your business will be more profitable after you direct your resources into the market channels with greater opportunity.

Copy for exhibit:

Avoid wasting time and materials making a screen a 2^nd time because the image was exposed too high, too low, or crooked in the screen. Screw two wood strips 2" x 2" 90 degrees apart on plywood. Push a screen up against the 2 x 2’s and align the vertical and horizontal center lines drawn on both the screen mesh and graph paper. The lines on the mesh are used to register the paper under the screen. Then cover the graph paper with a plastic sheet and tape down.