Embroidery Business Plan, With a Projection

An embroidery business plan turns on two choices: how many heads the machine has, and whether the shop supplies the garments. On one head, the operator waits out every design, so the minutes are the cost; on four, four pieces sew at once. And embroidering a customer's own shirt is an $8 job, while selling them the polo with the logo on it is a $28 sale, with a blank to stock and a spoiled piece to pay for. In the example below, an embroidery shop in Alabama with a used four-head machine sews logos on customers' garments, sells polos and caps with logos, and digitizes new designs, and ends its first year about $31,800 ahead on $85,100 of sales, with the operator's hours paid. Below is a description example, each part of the plan, the first year month by month, the startup budget, and a free template.

The short version

• Describe the shop in a paragraph: the machine, the work, the customers, the goals.
• Cost a piece from the machine minutes, the operator, thread and backing, and setup.
• A multi-head machine splits the minutes; on one head, the operator's time is the whole run.
• Supplying the blank turns an $8 job into a $28 sale, and puts the garment's risk on you.
• Charge digitizing once per design, separately.
• TaroStack keeps blanks by style, color and size, thread by color, and every order against stock. More below.

Part 1: the business description

Bayside Embroidery Co., a made-up embroidery shop in Mobile, Alabama, I use in these examples, writes:

Bayside Embroidery Co. embroiders logos for teams, schools, restaurants and companies on a four-head machine, on garments customers bring or on polos and caps the shop supplies, and digitizes customers' logos into stitch files.

Part 2: what a piece costs

An 8,000-stitch left-chest logo sews in about 13.4 machine minutes. On four heads, each piece's share is 3.4 minutes, so the operator's time, the machine's wear, thread and backing, and the setup spread over an order of 24 come to $2.02 a piece.

On one head the same logo costs $5.49, because the operator stands through all 13.4 minutes. Caps sew on a cap driver, more slowly, so a smaller logo costs a little more. How the quote is built, by the stitch count with a minimum, is the same method as in cost plus pricing example.

Part 3: customers and prices

The same logo leaves $5.74 on a customer's shirt and $13.81 on a polo the shop supplied, so the garments the shop sells bring about two thirds of the month's $7,200 of contribution. The price of that is stock: polos in a dozen colors and six sizes, caps in eight colors, and the cost of a logo sewn crooked on a garment the shop paid for. Digitizing is charged once, so a team's reorder next season doesn't pay it again. Selling to a business that resells, like a school's spirit shop, is priced the way how to price handmade items for wholesale shows.

Part 4: the first year, month by month

Fixed costs are $1,425 every month: shop rent ($900), the machine's service plan ($100), insurance ($80), the website and online designer ($50), samples for teams and schools ($200), digitizing software ($60), and software and card fees ($35). Sales start at 15% of full speed and reach it in month 11:

The year's sales are $85,062 and the profit $31,842, with the operator's time paid at $20 an hour in the variable costs. At full speed that's about 750 pieces a month, about 45 hours of machine time on four heads. Blanks for an order are bought before the order is paid for, so the plan keeps $5,000 of working cash, and takes a deposit on big orders. Team and school orders come in waves in late summer and before the holidays; plan the blanks for them.

Part 5: the startup budget

A single-head machine costs far less and fits a home, but every piece takes the operator's full run time; this plan's volume would need about four times the operator hours on one head. At $31,800 a year, the $18,600 spent before working cash is earned back by month 10. Buying blanks for each order from a distributor, and only the best sellers for stock, keeps the working cash down; the purchase orders behind that are covered in purchase order software for small business.

Get the template

Download the embroidery business plan workbook. Four sheets: your jobs and garments with price, variable cost and a month's volume at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Polos in twelve colors and six sizes, caps in eight colors, thread in fifty, backing by the roll, a team order of 24 in four sizes due Friday and three company orders behind it. A notebook can't say whether there are six navy mediums on the shelf, which thread colors are low, or what the last order earned after a spoiled polo.

How TaroStack does it

TaroStack keeps blanks by style, color and size, thread by color, and every order against stock.

Blanks as stock. Each style, color and size is an item with its own SKU, counted on a phone or with a scanner, so six navy mediums is a number. Thread is an item by color, bought by the cone, with a reorder list in days of cover.

Orders against stock. A team's order is a sales order that shows whether the blanks are on the shelf while you're typing it, and what it's short of goes on a purchase order to the distributor.

What an order earned. Each polo is a recipe of its blank, thread and backing, so a run takes them off stock at what they cost, and a spoiled piece is an adjustment with its reason, so the order's margin is what really happened.

Counting, sales orders, purchase orders and recipes are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Is an embroidery business profitable?

It can be. In the example, a shop with a used four-head machine ends its first year about $31,800 ahead on $85,100 of sales, with its operator paid at $20 an hour, and most of the money made on polos and caps it supplies.

How much does it cost to start an embroidery business?

In the example, $23,600: a used four-head machine, hoops and a cap driver, thread and backing, samples, racks, a website, and $5,000 of working cash for blanks bought ahead of orders.

Is a single-head or multi-head embroidery machine better for a business?

It depends on the orders. On one head, the operator's time is the whole run, so a logo costs $5.49 to sew in the example; on four heads, the same logo costs $2.02 a piece.

How much should I charge for digitizing a logo?

Charge it once per design. In the example, digitizing costs $16.20 in time and fees and is charged at $40, so a reorder doesn't pay it again.