The survey was printed in the January 2000 issue of Draperies & Window Coverings and readers could mail, fax or take the survey online and e-mail responses. We had a total of 180 responses, all received by March 1. Of the total, 65 percent were returned via e-mail, 21 percent were mailed and 14 percent were faxed. The large e-mail response could be a result of notices on various e-mail lists and forums on the Internet.
• Question 1 asked respondents to describe their businesses given three possibilities and allowing them to select all that applied. With all the variations that came in, we ended up with seven different categories. Needless to say, that made compilation of the results a bigger challenge.
In this issue, I'll start with the tallies for those selecting "Wholesale workroom to decorators/designers only," as that will present the purest numbers with the most dependable evaluation.
• Question 2: Business location
Home:65% On property:8% Off property:27%
Combining these results with Question 3, it was found that 92 percent of the one-person businesses worked in their homes. It became very obvious that businesses moved out of the home when they grew to three employees (including the owner).
• Question 3: Total number of employees
One employee:49% Two employees:16% Three employees:10% Four and more employees:24%
The majority of respondents ranged from 1 to 23 employees. One respondent answered with 262 employees. We extend a special thanks to that company for responding.
• Question 4: Number of years in business
The range was from one-half year to 34 years with 9.5 years being the average. There actually was a very nice cross-section of experience represented here, so breaking it down into percentages would not have been helpful.
• Question 5: Annual gross sales
No. of Sales % RespondentsNo. of EmployeesYears in Business To $15,000 16% 1 5-6 $15,000 to $20,000 6% 1 1-12 $20,000 to $25,000 4% 1-2 4-12 $25,000 to $30,000 8% 1 3-6 $30,000 to $40,000 10%1-2 5-20 $50,000 to $60,000 2% 1-33-15 $60,000 to $100,000 14% 1-4 1-27 $100,000 to $250,000 12%2-8 16-34 $250,000 to 500,000 12% 3-107-20 $500,000 to $1 million 4%12-23 4-16 $1 million to $3 million 0 More than $3 million 1 company 262 25
• Question 6: Average number of hours worked per week
The total ranged from six to 70 hours per week.
One-employee businesses ranged from 6 to 55 hours/week with an average of 31.2 hours/week. Forty percent of these companies worked full time (a minimum of 40 hours/week).
Two-employee businesses ranged from 38 to 70 hours/week, with an average of 43 hours/week. There was only one part-time response in this group.
Three-or-more-employee businesses ranged from 20 to 60 hours/week, averaging 44 hours/week. There was one part-time response in this group.
• Question 7: Percent net profit is of gross sales
No. of Employees Average Range 1 68.3% 20-93% 2 48 % 15-74% 3 43.5% 12-64% 4-23 24.8% 5-40%
Net profit was defined as owner's salary plus profit. The sad part here is that 20 percent of respondents didn't know this number and one response was 100 percent. I have to assume the latter person didn't understand the question, or else is not counting all the allowable deductions for the IRS. There also was one respondent who wrote down five percent, which didn't jive with the income he or she reported so I discounted it as a typo. I sincerely hope that was the case.
Notice in these numbers that as workrooms add employees, the profit margin percentage decreases. This is not necessarily bad depending upon gross sales.
The responses ranged from five to 93 percent profit margin. (In this case, the five percent included here made sense with the gross income this respondent reported in Question 5.)
The company with 262 employees averaged eight percent. (Note: a company this large has to be incorporated, so this number likely is the net profit not including the owner's salary.)
• Question 8: Are you satisfied with your income?
It would make sense that those who have been in business fewer than four years might not be happy with their incomes. Normally this is the period of the greatest monetary investment in a business and also the period of getting established with customers. These investments take away from the owner's income. Only 31 percent of the respondents were in this category and 56 percent of those were unhappy with their incomes.
What's really saddening is that 21 percent of respondents have been in business 10 to 34 years and still are not happy with their incomes. For any of you who have been in business longer than four years and are not happy with your incomes, it's time to make some changes. As long as you keep doing exactly the same thing you've been doing, your income is never going to change.
The data from Questions 5 through 8 were real eye-openers. In a future article, I will analyze those responses in more depth.
• Question 9: How often do you raise prices?
Once a year32% Twice a year2% More than twice a year2% Every two years40% Every three years14% More than three years10%
What surprised me is that only 23 percent of those companies with employees raised prices once a year. If they are giving those employees annual raises, then their net profit margin is dropping in the years they don't raise prices. Those employee raises literally come out of the owner's salary.
• Question 10: What equipment do you use?
Industrial sewing machines92% Computer84% Fax65% Accounting software61% Other industrial equipment47% Gravity feed (bottle) or boiler irons41% Estimating software 8%
I was very pleased to see how automated and computerized workrooms are. However, I suspect there are many workrooms that didn't respond that are not quite up to date with technology. Only one workroom with more than one employee wasn't using a computer, according to the responses.
• Question 11: How often do you attend a trade show or seminar?
Less than once a year31% Once a year39% Twice a year20% More than twice a year0% Never 10%
• Question 12: Are you a member of a trade group?
None 75% Local group with no national affiliation14% WCAA 12% Other (Internet e-mail lists) 4%
These total to more than 100 percent because some respondents reported belonging to two or more groups.
• Question 13: Where do you obtain industry knowledge?
Trade publications (magazines, directories) 78% Books/shelter magazines 75% Trade show seminars 43% Trade show exhibits 41% Internet (Web sites) 41% Internet (chat rooms/e-mail lists) 41% Local networking 41% Local sales Reps 26% Supplier seminars 20%
Here, too, the respondents could check more than one answer. Readers were not asked to rank their responses in order of importance.
• Question 14a: What percentage of annual gross sales comes from:
% Workrooms offering this service % Range
Fabrication of draperies 5-40%84%
Fabrication of accessories:
(pillows, Tablecloths, etc.) 5-100%82% Fabrication of bed coverings 1-40% 67% Fabrication of Soft shades 1-100%49% Fabrication of roller shades 1-4% 6% Fabrication of top treatments 5-8084% Fabrication of slipcovers 5-2514% Fabrication of upholstery 1-80 10% Installation 1-35% 37% Measuring fee 1-5% 16% Estimating fee 2% 2% Fabric, rods, hard
treatments, etc. 2-20% 35% Consultation 1-5% 6%
• Question 14b: What products do you sub-contract?
Fabrication of draperies 10%*
Fabrication of accessories:
(pillows, tablecloths, etc.) 4% Fabrication of bed coverings18% Fabrication of soft shades4% Fabrication of roller shades6% Fabrication of top treatments4% Fabrication of slipcovers4% Fabrication of upholstery4% Installation 24% Measuring fee6% Fabric, rods, hard
treatments, etc. 10%
*Percentage of workrooms that subcontract these products.
• Question 15: Three most effective means of advertising
Word of mouth67% Referrals51% Don't do any43% Direct mail6% Trade magazines2% Trade directory2% Yellow pages2% Newspaper2% Brochures2% Cold calls2%
Many respondents did not rank their answers, so I've presented only the percentage of each reply. In most cases, "Don't do any" wasn't marked at all, so I assume many of these respondents were getting business from referrals and word of mouth and I suspect this percentage is much greater.
Those respondents who indicated they used a paid advertising method only used one method and rated it as second or third in effectiveness. Some of the answers written in under "Other" included designers, sales rep referrals, newsletters, presenting seminars and networking with local design groups.
Next month I will present the results of another category of workroom business. I hope these results are helpful and give you some food for thought about your workroom business.
Kitty Stein, WCAA, is a 20-year veteran of the drapery workroom field, having owned and operated her own business for 18 years and having taught classes on window treatment construction. Until 1990, Stein and a partner owned a workroom with nine employees. She since has opened her own smaller workroom, Workroom Concepts, that has just one employee. She also does workroom consulting, seminar speaking and is the author of Order in the Workroom available through Draperies & Window Coverings.