Today, I spoke with a lovely lady from Africa. She is an interior designer and so displeased with the workroom she has been using that she wants to purchase an existing workroom. She has no knowledge of sewing. Does this sound familiar?
Over the last few years, I have talked with more and more people
who want to purchase an existing workroom. This group includes frustrated
designers, retail decorators/workrooms and workroom owners who want
to expand. In most cases, it’s a situation of going from a
one-person business to one with many employees.
While you may not be thinking of buying a workroom, you might some
day be thinking of selling one. In reality, we all should be running
our businesses as if we were planning to sell them so they would
be complete turnkey operations—businesses to turnover to someone
else when we are ready to move on or to retire.
The questions I am asking here are presented from a buyer’s
point of view. However, these questions also will enable a seller
to better prepare a sales presentation.
TWO MAJOR QUESTIONS
BIG QUESTION #1: Do you know how to sew? The answer could make
you or break you.
Those who don’t know how to sew or do know but don’t enjoy
it, and therefore plan not to sew, are headed for a major “blip
in the chart.” As owner of your business, you must know how
to do everything within that business. Many say they already have
someone lined up to supervise the workroom. Suppose that person
leaves one day and never comes back? You must be able to do what
that person did—as well as do what everyone else does!
BIG QUESTION #2: Do you love managing more than sewing or selling?
Anywhere from three to four employees will turn you into a full-time
FROM WHENCE YOU COME
1. Do you like training? What about retraining?
2. Are you diplomatic? Can you keep the peace among employees?
3. Can you effectively convince employees to take their jobs seriously
and stay focused on work and not on socializing?
4. Can you easily delegate?
5. What is the value of this purchase to your existing company?
To get to a point of retiring but with money still coming in, or
to sell the business when you have a retirement nest egg to support
6. Do you have a clear picture of where you want this company to
go in five years?
7. Do you have a road map, i.e. a business plan, to achieve what
8. How much salary do you plan or need to make?
9. How much profit do you need?
10. Are you willing to start over as if you were a new business
that requires the same personal attention and working hours as a
11. Besides sweat equity, what are you bringing to the business?
12. Will you need additional equipment or staff?
13. Do you have working capital?
EMPLOYEE MANAGEMENT QUESTIONS
1. Are you ready to manage more employees? Envision yourself managing
the number of employees you will inherit with the purchase of an
2. Will all the employees stay with the business?
3. Can you work with the existing employees?
4. Do you even want them all to stay?
5. How will you handle firing the dead wood?
6. Are you a good enough people-person to easily win their trust?
7. Do you speak their language? The largest minority group in our
country and the largest pool of sewers speak Spanish. Do you?
8. Will employees be willing to learn new methods?
9. What employee benefits will you offer, and can you afford them?
Once employees have been given something, it is difficult to take
10. What has been the employee turnover? Why have they stayed? Why
have they left?
Spend a day or two in the workroom to evaluate what is happening.
1. Are the workers producing a quality product?
2. Are their techniques efficient?
3. Evaluate the equipment. Is it in good working order? Will you
need to add equipment?
4. Are the techniques and equipment set up to obtain good ergonomic
working conditions, i.e. are they using an electric rotary knife
like the Eastman Chickadee B?
5. Is the working environment safe?
6. Can this workroom pass an inspection by the Occupational Safety
and Health Administration (OSHA)?
7. Will retraining be absolutely necessary, and can it be done slowly?
Bad habits are hard to break. The longer one has a habit, the harder
it is to change even if one wants to.
QUESTIONS TO ASK THE SELLER
1. If the building is not for sale, will you have to move? If so,
2. If the building is part of the sale, how soon can you have a
building inspector go over it?
3. Have a trusted accountant go over all the books for the past
few years. How profitable is the business now? What has been the
profit margin in the recent past years?
4. Ask your accountant to appraise the value of the business now
and with the plans you have for the future.
5. Why is the business being sold?
6. Are all systems and procedures documented, e.g. are there written
directions for the fabrication of all products? Is there a company
policy manual? Are all job descriptions written down? Are the procedures
for all operations documented: ordering, receiving orders, billing,
7. Does the current owner use standardized and customized paperwork,
e.g. forms such as “Order in the Workroom?”
8. Has computer technology and software been put into place? Are
the hardware and software current?
9. How often have the labor prices been raised?
10. What made the current owner successful?
11. What caused her or him to lose money?
12. Who are the business’s clients? Can you work with them?
Are they the market you plan to reach?
13. How has she or he marketed and advertised the business? What
was successful and what wasn’t?
14. What is the current owner’s management style? Is it similar
to yours? If not, new owners may bring additional anxiety to the
15. What is the management/employee relationship?
16. What insurance does the current owner have on the company? Is
INCREASING VALUE NO MATTER WHAT YOUR PLANS ARE
After you have gone through all the above questions and you still
plan to go forward with the purchase, hire a business consultant
as a totally objective evaluation tool to also review the business
practices. Such a professional is likely to turn up many areas that
someone close to the industry may not see, potential problem areas
such as management practices and efficiency, marketing efforts and
employees’ attitudes. This person also would outline a business
plan and objective and make suggestions that should be more profitable
for you as the new owner.
You might have noticed that this entire article assumes you will
be getting employees included with the purchase. There is a reason
for that. A one-person business has assets in inventory, equipment,
samples and personal relationships. The latter cannot convey to
the new owner. Yes, the seller could stay on for a period of time
to help in the transition and introduce the new owner to existing
clients. However, the new owner must sell herself to the clients.
Only in a larger business with less personal client relationships
might the personal relationships have value.
Have you realized the hidden value of what you have just read? Most
of you have no plans to buy a business, but how many questions could
you answer if you were going to sell your business? Wouldn’t
it make sense to start working on the answers now? You have the
opportunity to make your business not only more valuable in resale
terms, but much more streamlined and profitable.
Turn on that computer and start writing out your company procedures
and policies. You can start with your job description: 1. President
. . .
Kitty Stein, CWP, WCAA past board member, is a 26-year veteran
of the drapery workroom industry. Having owned drapery workrooms as
one person and as a company of nine, she is now president of Workroom
Concepts a consulting firm offering educational resources to the industry
on its Web site (www.workroomconcepts.com).
Her experience in both the retail and wholesale window covering arenas
has contributed to her success as a business consultant. A professional
speaker and writer, she has authored several industry products including
Order in the Workroom, The Price List, Workroom Specifications and
Price Your Work with Confidence, available through D&WC