How To Start A Sewing Or Embroidery Business Debt Free
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It is very important to start a sewing or embroidery business debt free. I’ve listed a few things you can do in order to get started without owing a lot of money.
Why do business debt free?
As I’m writing this blog many are loosing their jobs. They are loosing employment and having difficulty finding new positions because of many different factors, which I discuss in the YT video listed below.
While traditional jobs are harder to obtain than in years past, a small business is something anyone can start. It is very important to start debt free because the borrower is always a slave to the lender (Proverbs 22.7).
#1 Buy what you can afford.
It is critical to only spend half of what you have left after paying for necessities. For some people, that balance is zero. When you don’t have anything saved, its hard to start a sewing or embroidery business. But, it isn’t impossible! We will discuss this a bit more later. But for now, this is all you need to know.
#2 Be credit conscious.
Never use credit cards for sewing or embroidery purchases beyond what you have in cash. If you don’t have $1500 in cash, don’t spend $1500 for a sewing or embroidery machine on a credit card. I say this because the overwhelming majority of businesses run for 1 or 2 years before they reach profitability.
With $1500 in the bank, you can afford to use a credit card to buy a $750 machine at ZERO interest for one year. This will allow you to pay off the machine over a couple months and use the other capitol towards other things needed in the business. It will also ensure you don’t wind up paying interests.
#4 Prove the concept before starting the business.
Inspiring entrepreneurs come up with business ideas without testing them first. These ideas turn into failed businesses and wasted money. Take pre-orders to test your business idea. When sales don’t happen after marketing and working hard, shift to doing something else until you find a path with higher success rates.
Once you find the correct items to sell or services to offer, invest your money into official equipment. This will avoid unnecessary costs and and allow you to start business debt free.
#5 Don’t cast your net too wide.
The more business offerings you have, the more work you have to do and the more money in overhead costs you incur. To keep costs low, only provide enough services to keep customers returning for more. For example, a t shirt seller can offer sweatshirts and/or hoodies for fall in limited color ways to avoid excessive inventory costs.
#6 Beware of hidden costs!
Hidden costs often cause business to run into debt. So, it is important to recognize some of these money pits.
Embroidery is one of the specific businesses with lots of hidden costs. For embroidery, you need:
- Stabilizer
- Additional hoops
- Needles
- Spray adhesive/glue
- Likewise, you must expect to have a few blanks to be eaten by the embroidery machine. So, this has to be factored into your cost of doing business.
Taxes are a hidden costs that can be a problem if you don’t plan ahead.
There are tax write offs for businesses. But for the most parts, these write offs are minimal unless you are bringing in substantial funds. Certain non-profits are tax exempt, but others have to pay sales taxes. In addition to paying regular sales taxes, business owners (in most states) are required to pay yearly business property taxes on their equipment. More expensive equipment means you’ll have to pay more business property taxes. So, this is one reason why it’s a good idea to make economical purchases.
#7 Think before incorporating.
Do you have lots of assets or run a business with lots of liabilities? The answer to this question will determine whether or not it makes sense to go with a sole proprietorship, LLC, or S corp. I’m no lawyer. But, I do know an incorrect choice will cost you in the long run.
The second problem small businesses often run into is with the state they choose for incorporating their business. Businesses are encouraged to incorporate in Delaware, Wyoming, or Nevada because of more favorable laws. This practice makes sense for some companies, but it isn’t right for all.
Delaware, Wyoming, or Nevada incorporation isn’t a fit for all businesses because it costs additional money (usually a couple hundred dollars extra per year). For example, a Virginia resident with a business incorporated in Delaware needs to pay:
Delaware : Certificate of formation filing fee (one time fee), Annual report (Yearly), Registered agent (Yearly)
Virginia: Annual report registration fee (Yearly) + Registered agent for Virginia (they must have a Virginia address)
#8 Start somewhere!
When your broke, it isn’t about what machine you need for the sewing or embroidery tasks you would like to complete. It’s about what machine you can find for cheap or free. Free machines are available on road sides, FB marketplace, shopgoodwillonline.com, yard sales, and Craigslist. In a broke situation, vintage machines with all metal gears are your best bet because they are easiest to repair. Once you find a machine, figure out what it’s capabilities are and tailor your business offerings to accommodate what the machine can do. This isn’t a forever sewing machine. It’s just enough to get you started.
Free machines aren’t always working. So, I’ve provided a few tips below to get them back in shape.
1) Light comes on but motor doesn’t work
Typically, the only problem with the motor is that the motor brushes need to be changed! It’s funny how many people throw away good tools simply because they don’t know anything about a part that costs less than a McDonald’s meal.
2) Speed is out of control
9 times out of 10, the speed cannot be regulated because of a faulty foot control. A person with basic knowledge of electronics can fix a foot control. However, I recommend for sewing machine beginners to just buy a brand new one.
3) Timing is off
Sewing shops charge high dollars for timing problem fixes. 80% of machines have an easy timing fix with a screwdriver and a little bit of your time. YouTube is a wonderful resource for DIY timing fixes.
#9 Buy with purpose
When you have money to spend, get the right tools for the job. Otherwise, you’ll waste a lot of money. The kind of projects you plan on completing will determine what kind of sewing or embroidery machine you need. Do your research. Then, save enough money to purchase the correct tools.
#10 There’s no need to compare yourself to everyone else.
Some business owners have big fancy machines and large studios. But, have you ever stopped to wonder how many of those folks are still making payments? You may not have the very best equipment. But if you stay within your budget, you’ll take home a lot more profit with your debt free business.
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