Linda and Steve Wachal can do anything – except, it seems, turn a profit.
The husband-and-wife team offers screen printing, embroidery, laser engraving, trophies, sublimation, direct-to-garment printing, business cards, wedding invitations, signs, banners and more at their small shop, Creative Impact Co. (asi/170792) in Evansdale, IA. Plus, Linda has been publishing bimonthly advertising-supported town newsletters since the early 1990s.
But the $200,000 shop operated at a slight loss last year, and the Wachals don’t draw salaries, subsisting instead on Steve’s retirement income. “Every time I think we are going to get ahead, an unexpected expense comes up, and we start all over again,” Linda says.
Another big issue for the shop has been organization. Creative Impact has no system for tracking orders, and the Wachals and their three part-time employees often lose time hunting down misplaced paperwork. Though the shop has always met its deadlines, the behind-the-scenes scrambling can be draining: “It scares me sometimes to think that we might really pick up business,” Linda says, “and then I couldn’t function.”
The Wachals knew they needed help. Wearables paired them up with Marshall Atkinson, chief operating officer of Visual Impressions in Milwaukee and a consultant with a quarter-century of experience in the industry and the management of several large shops under his belt. Through conference calls and online correspondence, Atkinson helped the Wachals to identify the problem areas in their shop and put together a plan to fix them. “This is going to be a long process,” he says during their initial conversation. “It’s going to be really hard, and I’m really going to challenge you. … [but] I think I can really help you guys.”
Sharpen the Focus
One of the first areas Atkinson zeroes in on is the lack of focus at Creative Impact, stemming partly from the way the business has grown through the years. “We’re kind of a one-stop shop,” Linda says. “We kind of backed into all these different things.”It all started in the Wachals’ garage in 1992, when Linda bought an offset printer and launched an informational newsletter for their small town. “I was sick and tired of not knowing what was going on,” she says of her motivation.
Around the same time, Steve and Linda, longtime board members of the Iowa Wrestling Federation, began facilitating the apparel needs of the organization. At the time, Steve says, they outsourced the decoration, but a string of shady deals led them to move the operation in-house in 2001, buying a heat press to apply lettering to the wrestlers’ singlets. “The first order paid for the heat press,” Steve says. The couple then purchased an embroidery machine, and soon discovered they were running out of space for all their equipment. “I was tired of moving this to get to that,” Steve says. “I said, ’I’m going to find a building.’ [Linda] didn’t want to, but we did anyway.”
In 2005, the Wachals opened their Evansdale location, adding laser engraving, vinyl cutting and screen printing, among other things. The automatic press in the shop is another hotly contested purchase. “Buying this wasn’t what I wanted to do,” Linda says. “I’m the one that looks at the books, and he doesn’t. … We don’t see eye to eye.”
Atkinson suggests the Wachals take a long, hard look at each service they offer. The Wachals should run timing studies and cost analyses to determine which aspects of the business are making money, and which are not. “Take what you’re good at and scale it up and do that more and other things less,” he says. “It could be a good way to focus your energy into something that’s more profitable. You can’t do two things at once. You can’t do everything for everyone.”
Make a Plan
Atkinson also challenged the Wachals to write a formal business plan. “It makes you think about who you are as a company and who your customers are,” he says. Maybe that means drawing a circle on the map to indicate everyone who is within one-day ground shipping of Creative Impact; or maybe that means taking their wrestling experience and branching out to other states, he says.
The Wachals also need to figure out who their main competitors are, whether it’s an online decoration outfit like CustomInk or the local screen printer the next block over. Parsing out a business plan will help the Wachals define their value proposition – those features that set Creative Impact apart from the competition. “Your value is your knowledge, the fact that you’re real people who are right there and can hold the customer’s hand,” Atkinson says. “That is something that we really need to scream from the mountaintop.”
Price for Profit
The arena where Steve and Linda butt heads most frequently is pricing. Linda calls it their “biggest bugaboo.” Like many decorators, the Wachals have made the mistake of basing their pricing only on the competition, rather than factoring in their actual overhead to determine whether they could afford to sustain those rates. Atkinson advises the Wachals to mark up every part of a job, from creating artwork and burning screens to packaging and delivery. Even if those charges are not itemized on the customer’s final bill, they should be accounted for. “You want to put together pricing for every task you do, and you want to make sure that the money that you want to make is included in that,” Atkinson says. “Everything you do, there should be some money for you guys. That’s how you get paid at the end of the month.” Once that is in place, then it makes sense to compare pricing against the competition. Perhaps they have built-in hidden fees that are inflating their prices. Or conversely, too-high prices in your own shop indicate a need to become more efficient to lower overhead.
That means accurately tracking costs. Steve says he did try to figure out how much it was costing the shop to burn a screen. He kept a chart, recording things like how much emulsion and screen cleaner he went through. Steve starts to explain that they then tacked those costs onto the final price, but Linda quickly cuts in: “We don’t know if it’s really in the price. We kind of guesstimated. We don’t know how we’re coming out on that.”
Not one to mince words, Atkinson describes areas of Creative Impact, especially Linda’s desk, as a “crazy mess.” He recommends viewing the shop as real estate, and taking advantage of all the prime spots, with productivity in mind. For example, the Wachals could shrink their large showroom, since the storefront doesn’t get a lot of foot traffic, and use some of that reclaimed space for production instead.
One of the most important aspects of getting organized, however, is keeping track of every order, during every stage of production, without letting mounds of paperwork pile up. Atkinson introduced the Wachals to Bruce Ackerman, a screen printer who created subscription shop management program Printavo. Ackerman agreed to let Creative Impact try out his streamlined software free for a whole year. “I think it’s really going to help you guys get organized and allow you to see what’s going on,” Atkinson says. “It’s a way to consolidate a lot of information.” The software will help the Wachals with scheduling production, invoicing and other aspects of running the shop. Because it’s cloud-based, the Wachals will be able to access it from different work stations, their smartphones or from home.
Another area Atkinson focuses on is sustainability. Its easy for small businesses to overlook environmental factors when considering ways to save money and grow profits, but going green and reducing energy consumption can bring owners substantial savings. For example, Atkinson says, a constantly running air compressor with a leak is wasting about $600 in electricity each year.
He recommends the Wachals sign up for a free assessment from their local utility company. Usually, an auditor will do a walkthrough of the building, and then send a report with a list of everything that can be done to reduce energy consumption. “Saving on utilities is probably the number-one thing you can do to save money at your company,” Atkinson says.
After an initial two-hour conference call with Atkinson, the Wachals say they feel encouraged and are cautiously excited about making some changes at their shop. In the weeks that followed, Linda has already gotten to work, starting by tackling her “crazy mess” of a desk. She also figured out the shop’s cost of operation, breaking it down by the hour. She then shared the information with her husband. “I think it surprised him to see how much our expenses are each month,” she says.
With a better idea of their costs, Linda is working on setting up a profit-driven price list, using worksheets Atkinson shared with her as a reference point. The Wachals have also started having some of the tough conversations about scaling back on in-house services, but have not come to a decision about where they might benefit from outsourcing.
Linda has been in touch with Ackerman from Printavo and is ready to implement the shop management program in the new year. Though the Wachals were bogged down with 12-hour days during a busy holiday season, Linda says she expects to go “full-steam ahead” with revamping her shop in 2015. “I’m really looking forward to making good positive progress,” she says.