IN MY LAST COLUMN (see St, August 2021), we introduced Wendy Zaccagnini, the brand-new owner of Zucchini Ink (Clayton, NC), who was game to have her shop’s financials used in a discussion about learning the basics of profiting in the sign business. Her new signshop is off to a good start, but with some tweaks to her pricing and product, she can easily amplify her bottom line.
Like last time, I asked my friend and colleague, Greg Williams of Sign 4, an independent Louisville, KY signshop, to join me in reviewing Wendy’s 2021 P/L and balance sheets as a way to mentor Wendy as a team. This month, we are going to focus on cultivating the best clients for her business model, and packaging product and design to maximize her time invested.
Small Transactions and Building Client Transactions
Wendy is averaging about $210 per transaction, well below the industry guide of about $300-350 per transaction. As any signshop owner knows, a $100 transaction involves pretty much the same amount of work as a $1,000 transaction. Of course, building a new business means you often start small and grow, but keeping her eye on her average transaction size will help her do more business in fewer transactions.
Here were our recommendations:
- Hold a minimum transaction size to encourage clients to add to their order or take their business elsewhere. Doing transactions of $30 at a time makes for a lot of work and no real cash flow results.
- Business cards are one of Wendy’s staples — she calls them a “loss leader.” My advice was to attract the right kind of clients. Set a minimum business card order of 1,000 cards, or maybe package them with design fees. She is offering a very high level of care and service, and should find customers who are drawn to this!
- As Greg pointed out, you don’t always want to be the cheapest in the market! This means you are giving away gross profit opportunities. Be willing to hear “your price is too high” with some frequency. You will end up doing less work for more money!
Pay Attention to Where Your Clients Come From and Build the Pipeline!
Wendy’s clients are acquired primarily through word of mouth, and she also is a member of the paid network organization, Business Networking International. She doesn’t have much of a budget for paid marketing investments, so we urged her to lean into that model even more, but to be more consistent in asking clients for referrals. This practice can be uncomfortable at first, but with repetition, it gets easier. Find wording that works for you, such as, “Thanks for your business. It means a lot to me, particularly as I’m growing this business. I would welcome a referral to work for any of your friends or colleagues who may need my services.”
Again, Wendy embraced these suggestions and hopes to see improvement quickly. She will be aiming for growth in her average transaction, adding new clients from referral requests and adding income based on packaging design services. Big change starts with small behaviors.
We will be revisiting Wendy near her one-year anniversary in October, so join us then to see what results she gets — and maybe try some of these changes for your shop!