June 24, 2024

You’re the Boss: Was Big D Wise to Pursue Small Customers?

At first, Darren Robbins routinely turned away small screen printing orders.Peter Wynn Thompson for The New York Times At first, Darren Robbins routinely turned away small screen printing orders.
Case Study

Last week, we published a case study that explored whether Big D Custom Screen Printing could become profitable by specializing in small T-shirt orders. After a year in business, the company had sales of $325,000 on which it suffered a nominal loss. Big D’s co-founder, Darren Robbins, and his partner disagreed as to the best way to turn things around. His partner wanted to focus on large corporate accounts. Mr. Robbins believed Big D could thrive by targeting customers with small orders — as small as one T-shirt. The partners split (amicably) over the issue.

The April 2008 decision to take smaller orders, Mr. Robbins said, paid off almost immediately: “My phone started ringing off the hook.” In 2009, Big D’s sales were $675,000, he said, and they hit $900,000 the following year. He also said the company, which has 12 employees in Austin, Tex., is now profitable. And about a year ago, it opened two-employee branches in Los Angeles, Chicago, and southwest Michigan. More recently, Big D expanded to Las Vegas as well. Meanwhile, Mr. Robbins said the economy forced many of his competitors to go out of business — and to sell their equipment at a loss on Craigslist.

Reader comments were generally supportive of Big D’s strategy. However, a few expressed doubts about the company’s chances for success. In a brief interview, Mr. Robbins responded to the concerns.

Q. John Olson, chief executive of Graystone Industries, a pond and fountain supply business, said Big D’s niche focus would result in inefficiencies. Does that concern you?

A. I don’t know that we ever set out to run the most efficient shop in town. But we have managed to stay busy, profitable, and grow at a comfortable pace.

Q. A commenter speculated that your decision to post your prices on Big D’s Web site could spark a price war that would eliminate your competitive edge? Has that been an issue?

A. No, though my partner worried about that. At worst, some of our competitors sent us nasty e-mails about our methods. Some of them later went out of business — and sold us their equipment.

Q. Another reader suggested you needed to better understand your material and labor costs and noted that getting the colors right on a one-shirt order could result in enormous waste.

A. Figuring our labor and material costs is quite simple, and something I do regularly to make sure our profit margin and future projections stay on-target. Based on that, I was confident we could maintain our large clients while working proactively to procure a greater number of small-to-medium ones. Additionally, with a seasoned staff and well-maintained equipment, our spoilage is minimal. Besides, we don’t begin printing on client stock until we achieve 100 percent print quality on low-cost test sheets.

Q. Reader Joe Kelly wondered whether your smaller customers give you repeat business, or eventually increase the size of their orders? Do you track that?

A. Yes. Small-order customers account for roughly 60 percent of our return business. Just as important — if not more — their positive word-of-mouth accounts for 75 percent of our new customers, including some of our largest.

Article source: http://feeds.nytimes.com/click.phdo?i=643d3ad796ccc8707d1fd2b38d7846c8

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