TSB
screen printing => General Screen Printing => Topic started by: Croft on January 27, 2014, 11:12:58 AM
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At what point did you decide to leave your garage/basement to lease or buy in a commercial area.
Myself I am very conservative/cautious but I have 1000sq' shop and were packed in. Lease building on average in my area start around $8+ per square foot for factory district type areas.
Were currently in the $200-$300K in sales which are mostly "contract" so my material costs are pretty low. I have 3 employees including myself. I seethe move into town as a plus to look more professional but there are higher overhead costs involved.
What advantages / dis-advantages did you realize in your move?
I feel I might be in a " S*!t or get off the pot" type situation
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Lease building on average in my area start around $8+ per square foot for factory district type areas.
Is that a typo $8.00 a sqft or did you mean $0.80 per?? IMO the first number would be a challenge but the latter is very doable especially if it is a gross lease with no additional fees. Go for it,moving forward with commitment is a good thing.
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My thought would be to have some numbers put together and some sort of a plan that you are implementing. If all of those are done, the question becomes "How reliable are my predictions?" rather than when should you move. . .
pierre
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Where I live you cannot run production out of your garage in residential areas. So when the other printers started seeing our work out and about they were looking hard to see who was doing it. One day I got a comment from someone that works for the city asking if I was the guy that is printing out of my garage. That was my green light to get into a industrial building.
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It's never an easy decision, and there will always be some "leap-of-faith" involved. I moved when lack of space was beyond silly. We'd sometimes have to walk all the way around the shop to get to a doorway 5' away, and were constantly shuffling product around to get at things.
From your sq. footage and sales numbers I suspect you are in a similar situation. We're in 3000sq' now, and it's starting to get crowded again, but throwing a 12/14 large auto in the mix eats up a lot of space. I'm not moving again if I can help it, the next step is to buy the building and build on an addition. I have no ambitions to get too much bigger, just better.
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Lease building on average in my area start around $8+ per square foot for factory district type areas.
Is that a typo $8.00 a sqft or did you mean $0.80 per?? IMO the first number would be a challenge but the latter is very doable especially if it is a gross lease with no additional fees. Go for it,moving forward with commitment is a good thing.
Leases are based on per year so $8.00 per sq' a year, so 2000sq' is going to cost $16k per year. There are only 2 available right now at $8 and are considered the cheapest .
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what's included in your rent? Are you responsible for building repairs?
How long is the lease?
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It's never an easy decision, and there will always be some "leap-of-faith" involved. I moved when lack of space was beyond silly. We'd sometimes have to walk all the way around the shop to get to a doorway 5' away, and were constantly shuffling product around to get at things.
From your sq. footage and sales numbers I suspect you are in a similar situation. We're in 3000sq' now, and it's starting to get crowded again, but throwing a 12/14 large auto in the mix eats up a lot of space. I'm not moving again if I can help it, the next step is to buy the building and build on an addition. I have no ambitions to get too much bigger, just better.
Exactly usually for june-Aug I borrow trailers from friends and have them lined up at the shop door, last year it was 1 car hauler, and a 7'x14 just with unprinted pieces. We have always run lean all jobs come and go within days but larger 2 or 3 side prints are killing us.
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what's included in your rent? Are you responsible for building repairs?
How long is the lease?
building repairs/ snowplowing are a portion and that portion can change , Like this winter I'm sure snowplowing cost will be way up.
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My thought would be to have some numbers put together and some sort of a plan that you are implementing. If all of those are done, the question becomes "How reliable are my predictions?" rather than when should you move. . .
pierre
As for my predictions I can only say I won't loose business and feel a $20 increase in sales probably won't be a problem. As it stands I usually have a pretty good bank balance by the new year that crosses over to the spring,
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We're a bit more per sf around here, $0.65 ain't bad for 2000sf, but depends on where you are and your local market.
BEWARE COMMERCIAL REAL ESTATE BROKERS!
Everyone around here is old buddy buddy, in our new spot we met my broker, the owner and his broker,
and come to find out both brokers are pals and work on deals together all the time. That doesn't exactly
spell out me getting the best deal, and indeed, their first offer was ridiculous at best. I had to counteroffer
several times until we came to something reasonable. And apparently all commercial real estate brokers
are like 7+ feet tall.
There are distinct benefits of both styles (home based or commercial based) but I would say if you are
angling towards a commercial spot go for it. For me it was a mere matter of not waking up at my workplace
every morning!
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It sounds like you have your figures all worked out, and just need that nudge. ;D
My advice is, if you do the jump be aware of how gross profit margin generally shrinks with growth, and how along the way there will be "steps" of growth that are hard to get through successfully. Keep a close eye on the bottom line and maintain efficiencies as you grow. If you've worked for shops that went through growth, you're likely aware of the pitfalls. Positions that don't really earn money can grow to become full time jobs, like Purchasing, HR, IT, Accounting, Reception etc. all can bite you in the a$$ and many people end up growing to a size where they are working twice as hard and doing twice as much Gross sales for less take-home.
I'd also keep in mind a goal for how big you want to get. Having that vision can help you make the right decisions along the way. A goal of unlimited growth would lead to much different decisions that a set size. An end-game exit strategy is a good thing to have also, as it helps put things in focus as you take steps like the one it sounds you're about to take.
good luck! It's fun doing something you love for a job and it's great being the boss as long as you don't let growth kill the passion.
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I bought an auto used and put it in storage for over a year because I was not ready to move into a shop. My goal was to make enough in my garage to cover the rent and expenses. I needed to make an extra $1500 a month for 6 months before I would even think about it. I was already making enough to pay for a shop. That means I needed to increase sales in my garage about $1500 more. This way I new I was making enough. I have heard many guys say you will increase sales from exposure with your shop to cover the costs. I even had a guy tell me that you will get business from other suites in your complex to cover rent. This was not true for me. You also need money set a side for unexpected costs. It cost me over $10,000 to more into this shop. everything for the auto being installed and fixed to wire being run and a darkroom being built to code. I also had a week and a half of down time. You need to put that into your costs also.
One thing I want to point out here is going from a garage into a shop is more than the rent and expenses. Since your not working from home now you can't deduct your home on taxes. You will also be driving to the shop, so gas and miles on your car that can't deduct on your taxes either. Yes you can but technically you are not suppose to.
For me being a one man shop having a location is good. I get away, I can be as loud as I want at all hours of the night. I can also print discharge and stink up the entire shop. Customers do take you more serious but they still are cheap.
Like Pierre said you need to figure out if you need a shop then figure out the real costs. Only then can you see if the move is worth it.
I hope this helps...
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Once you have figured out the move cost all you need to do is double it! Trust me.
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Once you have figured out the move cost all you need to do is double it! Trust me.
Yes exactly, so far costs I have started to tally up.
-Machinery mover for auto/dryer/manual/ exposure unit $2000
-hydro New account $500 security deposit
-alarm system $800 plus monitoring (no contract)
-internet $80
-phone not sure I think I may go with voip $40 month
-electrical ??????? Guessing $2000, shop i think I'm going with has lost of hydro 3phase 600V 200amp , luckily it had a couple of CNC machines in and they left all the electrical intact
-Heating not sure ? current shop propane and smaller so maybe only $700 a season , new shop bigger, gas , electric office
-signage can do myself have sign stuff
-has been painted but will probably seal floor so maybe another $400
-Can't more than a week in setup because once march comes well be busy
Any other surprises you had?
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oh yea different / more insurance
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Once you have figured out the move cost all you need to do is double it! Trust me.
Yes exactly, so far costs I have started to tally up.
-Machinery mover for auto/dryer/manual/ exposure unit $2000
-hydro New account $500 security deposit
-alarm system $800 plus monitoring (no contract)
-internet $80
-phone not sure I think I may go with voip $40 month
-electrical ??????? Guessing $2000, shop i think I'm going with has lost of hydro 3phase 600V 200amp , luckily it had a couple of CNC machines in and they left all the electrical intact
-Heating not sure ? current shop propane and smaller so maybe only $700 a season , new shop bigger, gas , electric office
-signage can do myself have sign stuff
-has been painted but will probably seal floor so maybe another $400
-Can't more than a week in setup because once march comes well be busy
Any other surprises you had?
Yes. Hate to be Debbie Downer but double the time. Or at least plan that way.
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I'm with Tony; figure that you're way low, and act accordingly. I helped move the company I started with from 1500 to 10,000, then to 18,000. There are a million things that just happen. Also, fear is healthy and makes you do your homework, which apparently you've been working on, but don't let it hold you back. Just remember that you'll need more sales, and more people to make production and the office work. It's completely doable, even I can do it...
Steve
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I would ask how much are you losing by NOT moving. we recently moved and we are now able to do more production faster thus making more money in a shorter period of time and being able to take on more work!
so please add that into the equation of moving.
sam
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I would ask how much are you losing by NOT moving. we recently moved and we are now able to do more production faster thus making more money in a shorter period of time and being able to take on more work!
so please add that into the equation of moving.
sam
Losses come before gains. You need to make sure you can get all the losses paid for before you can get to the gains from a move. The things your talking about are the reasons for the move. They don't immediately start making you money. Those numbers that are based off your hopes and dreams are unreliable and can't be put into any real world profit and loss sheet.
A move is not going to make you money right away. It may even cost you clients. Like Tony said double or even triple your on hand cash. (credit cards are not on hand cash)
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Jon
I disagree. can he handle a job of 10k shirts? will he have to move stuff around? we had to expand in order to get more machinery and thus making us more money. yes it does cost money, but is he losing money by not moving. that is the question. Maybe he is happy staying where he is at. maybe not!
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Jon
I disagree. can he handle a job of 10k shirts? will he have to move stuff around? we had to expand in order to get more machinery and thus making us more money. yes it does cost money, but is he losing money by not moving. that is the question. Maybe he is happy staying where he is at. maybe not!
Sam I am not disagreeing with you. I am only disagreeing with the "so please add that into the equation of moving." part.
Just moving into a larger space does not get you 10,000 shirt orders or the ability of doing them. Did he say anything about adding an auto? I am sure with time that will come and the move will make that possible but that does not have an immediate effect on his bottom line.
Is he losing money by not moving? That is something to consider. Can he handle all his work in his current situation? Is he ready to buy more equipment to up his production? If he can handle the work that he is getting and is not going to buy an auto then why would anyone move.? All your doing is increasing overhead. Yes you will have more room to move shirts around. Maybe you can use that time to get more sales. I know I wold not of moved just for more space. I only moved to add an auto and a larger dryer that would not of fit.
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Ah, the chicken or the egg...always a good one.
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Alan your right. I always lean on the side of what you know verses what could happen.
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Man, some days I wish I could take a step backward. Before I moved I had a 10c sportsman, 4 color manual, and 11 ft. dryer stuffed in a 25x25 garage in my backyard. Just did b2b almost all out of state or big clients nobody noticed except my neighbors when the big rigs rolled down my street.
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Man, some days I wish I could take a step backward. Before I moved I had a 10c sportsman, 4 color manual, and 11 ft. dryer stuffed in a 25x25 garage in my backyard. Just did b2b almost all out of state or big clients nobody noticed except my neighbors when the big rigs rolled down my street.
You sound like my twin with your original shop, Same B2B customers as well , Ive had them all for 10+ years in most cases , there aware of my situation and have no problem with it. But saying that I have lost the say 20k+ orders to other shops not to price or quality because tell me flat out they like my work , but to sheer logistics and time.
In my thinking I see my self basically having a $20k overhead in the building and feel that really I can overcome that with a few new marketing company type clients. This is embarrasing to admit but I literally did one day of sales 9+ years ago and it has been word of mouth or new customers from splits within companies. I have no interest in off the street small orders and have only ever done the ones that have found me or know one of my customers. I also have not looked for buildings with street exposure.
I do have some experience moving a shop, I did it 3 times with my first employer but I never truly saw the costs, but have never taken more than a week to get the presses up and running, I'm pretty hands on.
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I did a ton of shop moves as an employee too, moving and setting a big shop of my own was an eye opener, months of hemorrhaging $500 - $2000 every time I turned around, mind you it was pretty major equipment expansion at the same time. I was lucky enough to have a good electrician buddy who let me do most of the work there or it would have been many more thousands.
.... Still I'm glad I did it, I'd do it all over again and we've never looked back. Our slow months are now busier than our busy months used to be.
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we just moved in Sept to 7k sq ft from 3k production sqft. it costs about 10k to do the move. that is moving the presses, dryer, 4 emb machines dts having a tech here, getting electric and gas done. plumbing the washout booth ect. hell you guys know what it you have to do to move.
so for us we were moving stuff to get to stuff to complete it then move it again due to space. now we are just getting it done and out the door. so we know we made the right decision and now we have gotten that money back just in production output.
sam
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We are in the process of setting up a move in june, where we are now is hurting us production wise. Just the time to move crap around to get to other crap, we are losing money doing that. If we were more efficient we would be making more money.
We are prob going to move 12 miles away from or current location. We have taken in account of some really local business loss. But i see the potential over at the new location as greater! Yes it is potential, but i know its there! LOL
We will be about 1 mile if that from where we live at the new place. So we figured in the gas savings of my vehicle and my wifes (together $340 per month). Also 40 minutes in our car each day for each of us. We are not making money driving our car. We did just do a 10,000 shirt order. Fornt/back..we could do 8 cases at a time then had to box up and move out of shop and move 8 cases in..Then when fronts were done, we had to do same thing for backs. The press was stopped for 20-25 minutes fiddling around with shirts..everytime we did that we lost money because the press was not moving.
I started the business in the basement of my rented apartment. When it was time to move out i considered it a big risk. All of a sudden i had rent. But i found a small space with low rent. Now for the new place i found a larger shop and the rent is a good deal.
I do have a family that i have to think about. SO i can not take a risk and fail..LOL...but sometimes i think well i can do this for one more year...then i may say it again...sometimes its hard to leave the comfort zone.. and it may never happen. You have no idea what will happen when you move..but if youve made it far enough to think about moving you are going in the right direction...
Just do it.
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we moved from 2k to 8k sq almost two years ago. I just got heat in my building last week. had to upgrade the lighting, cost me 12k... heat cost me 4k... 2k for the techs and that's not even moving anything yet..., all the small stuff adds up faster than you can imagine. one trip to home depot and bang, 500.00 gone....make two or three trips a week and that adds up fast....
TP is right, whatever you think it's going to be- DOUBLE it.....
I'm still cleaning the spot on the carpet where I pissed myself from getting my electric bill... ;D