Why Your Shop Needs to Make a Buck a Minute

Making employees understand the value of time and materials can help you increase your shop's profitability. June 09, 2011
By Greg Kitson, Contributing Writer

It's crucial that your employees know how much the ink costs the company so that they realize their decisions on how much to use or when to throw it away impact the bottom line.

When it comes to time and money, efficiency is essential to running a profitable shop. You know that higher-grade products can be worth the extra money if they save you time in the long run. You also know that skilled workers often are more advantageous than “cheap labor.” But have you ever put a dollar amount on just how efficient your shop should be? Setting goals for your business and breaking down profits in an easy-to-understand model will help you determine where you’re losing money and how you can improve — ultimately increasing your profits.

As a shop owner, money is your most important tool because if you run out, you will go out of business. However, money is followed closely by time as your next most important asset because you can never get it back when it is lost. As a decorated apparel owner, it’s up to you to ensure your shop is making enough money to survive. And as counterintuitive as it sounds, sometimes you have to spend money to save money, especially if time directly impacts your bottom line. When I make decisions about acquiring new technology, staff, suppliers or consumables, my rule of thumb is that I must get a “buck a minute” of value out of anything my shop does.

Train to Troubleshoot
Situation: Imagine that a staff member, who is a good printer, unknowingly gets ink on one of his fingers as he is printing a $2 white T-shirt. When he unloads the shirt, that dab of ink creates a spot on the shoulder seam. As soon as he discovers the mistake, he walks the shirt over to the spot gun and uses an approved chemical to remove the ink spot. Even though he is a good printer, he’s not as skilled with the spot-removal gun, and he uses so much solvent that the spot grows bigger. Embarrassed, he steps out of the press foreman’s sight and spends another 15 minutes trying to save a $2 T-shirt.

Analysis: When I have an employee whom I feel makes a wrong decision, I explain the buck-a-minute concept. I remind him that, as an employee, the company has invested in him the same way it invests in the tools he uses. I tell him that, in addition to his $10 an hour wage, the company pays about $5 an hour in benefits. On top of that, the company pays roughly $15 in overhead costs to cover rent, insurance, interest, utilities and equipment. Apart from the cost of labor and overhead, the company needs to get a return on investment, which is considered profit.

So, $15 in direct employee costs and $15 in overhead costs equals $30 an hour, and I want $1 back for every $1 that we invest in the company. That $30 in profit goes toward bonuses, new equipment, growing the business in new markets and advertising. Therefore, the $30 in expenses plus the $30 in profit equals $60. Broken down, that shop rate averages out to $1 a minute. This concept is easy for staff to grasp, and it helps put into perspective the value of their time.

Next, I ask the employee who just spent 15 minutes trying to reclaim a $2 T-shirt if that was a good investment of his time. Suddenly, a light bulb goes off and he wonders what he should have done instead. At this point, I take the time to walk him through the process step by step. I show him how to use the spot-removal gun and how to make a judgment call as to whether the shirt is worth saving.

I tell him to try the gun, but if the spot doesn’t come out right away, grab another shirt out of inventory. If there isn’t one in the stockroom, check with the production manager or salesperson to determine if we can order another one by the next morning so we can still meet our customer’s timeline. If we can’t get it ordered, shipped and printed on time for the customer, then it is worth spending the 15 minutes. So now he knows that he’s expected to follow this procedure before pushing the issue upstairs.

Reuse Resources
Situation: Another employee has poured nearly an entire gallon-sized bucket of ink onto a screen so that it’s nearly empty. She looks at the bucket and decides that she doesn’t want to save the remaining ink, thinking it’s not worth it and fearing getting ink all over her. So she throws away the ink to reclaim the bucket.

Analysis: The employee doesn’t realize the company pays an average of $50 to $70 per gallon of ink, so if $10 to $15 of ink remains in the bucket, that’s a waste of resources. I ask the employee to grab a pair of latex gloves and a scraper. It should take her about 2 to 3 minutes to scrape out the ink. Get a new bucket from the ink room and scrape the residue into the new bucket, or at least stage the new and old gallons together so that when a new gallon is opened, we can reclaim that $10 to $15 worth of ink. It’s crucial that your employees know how much the ink costs the company so they can realize how their decisions impact the bottom line.

Be Efficient with Time
Situation: An employee is printing a batch of T-shirts and realizes the pallets need more spray tack so the shirts stick better. He reaches over to grab the can of spray tack, but discovers it’s not near his workstation. First, he wonders what could have happened to the spray tack, then he asks his nearby co-workers if they have seen the can. With no luck, he walks to the supply room to get a new can. At this point, he stops for a quick restroom break, then realizes he’s thirsty and grabs a soda from the refrigerator in the break room. Since no one is in the break room, he decides it’s a good time to check his cell phone and respond to a few text messages and e-mails. Before he knows it, a 15-second task has taken 15 minutes.

Analysis: Having tools near each workstation increases your employees’ efficiency, as well as your bottom line. I train employees on shop floor setup and the relation of specific tools to each workstation. We use Pellons for test prints, wipes to clean up messes, rolls of masking tape to tape up pinholes and remove lint from the middle of a screen, a can of solvent and spray tack in an atomizer bottle to spray adhesive on the pallets so the shirts stay put, a carpenter square to mark off the distance of the print in relation to the collar, documentation explaining the order, and pens, pencils and permanent markers.

If I aggressively train new employees about our tools, they almost always put them back in the right place when they’re done using them. As soon as someone reaches for a tool and it’s not there, they waste time.

So, I explain the buck-a-minute rule to this employee and ask him to consider how long it took him to complete a 15-second task. I tell him that if he runs out of a product, such as spray tack or masking tape, he should grab two when he goes to the supply room and come directly back to his workstation. I also remind him that if all the work for the day is not completed by closing time, he’ll have to work overtime. The employee may see this as a positive development, but as an owner, I see it as a negative because I am paying overtime for a job that should have been completed during normal working hours.

Pricing It Right
Situation: A potential customer asks you to price an order for 500 T-shirts.

Analysis:  I think of my $60 shop rate (computed in the first analysis) and my four employees working the floor. Off the top of my head, I compute how much income I have to generate. So I multiply $60 by four ($4 a minute for four employees), and realize that the press has to generate $240 an hour in real income. I think 500 shirts will take roughly 15 minutes to set up the job and 45 minutes to print. So, I divide $240 by 500, which comes out to 48 cents per shirt. This is known as inclusive or value meal pricing because it doesn’t include artwork and prep.

The buck-a-minute concept works whether your shop has one or 100 employees. You can teach the concept to ensure the staff realizes its worth to the company. You also can apply it to business decisions that you must make on a daily basis. Does it make sense for you to charge a set price for the personalization of names on the backs of T-shirts? Can you cut a customer a deal if he orders 100 large T-shirts since you save time checking them in?

Once you do the math, it’s not likely your shop will come out to exactly a buck a minute. Very economical shops may come in as low as 45 cents a minute, but non-efficient ones may top out at $3 or $4 a minute. Do the math, find your number and then set a goal to improve your efficiency and increase your profits.

Greg Kitson is the founder and president of Mind’s Eye Graphics, Decatur, Ind. For more information or to comment on this article, e-mail Greg at greg@mindseyeg.com or visit mindseyeg.com.



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