Turn it Up: Turnkey Business Options

Kristine Shreve is the Director of Marketing for EnMart and parent company Ensign Emblem. She developed and writes two blogs—the EnMart Threaducuate blog and the SubliStuff blog. Shreve also maintains the EnMart Twitter account and Facebook page. She can be reached via email at kristine.shreve@myenmart.com

When starting a garment decoration business, or adding a new decoration technique to an existing business, there are generally two options. One option is to start from scratch, research equipment, set your own policies, do your marketing, and operate based only on how you see fit to run things. This is a good option for a lot of business owners, but it does entail starting at zero. All the decisions are yours, which means all the risk is yours as well. You have to do all the comparison shopping and figure out what is necessary when it comes to supplies and equipment and what isn't needed. There isn't necessarily any blueprint to be followed. The opportunities may be boundless, but so are the potential points of failure.

For those people who are a bit more risk averse, or who are looking for more guidance in how to start a business or get started with a new decoration discipline, a more palatable option may be a turnkey business or turnkey package.

For those looking for some guidance on how to start a business or a decoration discipline, a turnkey package may be a viable option. (All images courtesy AdobeStock.com)

Standalone businesses vs. franchises

A turnkey opportunity is one that provides the business owner with everything they need to get started. A turnkey business would include, if necessary, all permits, business models, business name, location, equipment, and inventory.  It typically includes everything that a business needs to open the doors and start making a profit, except, in most cases, employees. A subcategory of turnkey options is a franchise. Franchises will generally offer all the things listed above but may have a few additional requirements that a standalone turnkey business would not have. 

For one, a non-franchise turnkey opportunity will likely not require payments beyond the initial payment for the business. Franchises may require royalty fees. Another difference between an individual turnkey business and a franchise is the fact that a franchise will often have regulations about how to run the business, including rules about how the business can be marketed, how trade and wordmarks can be used, and, possibly, what supplies can be used and where they must be purchased.

While turnkey packages generally aren't franchised, they usually come with restrictions to get the package price and any benefits that are included with the package. Say, for instance, that you buy a turnkey embroidery machine package. The package will likely come with a machine, supplies to get you started, and a trainer to help get you up and running. Products such as thread, stabilizers, and bobbins sold by the company or contracted from partner suppliers are popular inclusions. This can be a good or a bad thing, particularly since many package suppliers will try to steer those who buy the packages toward certain suppliers with whom they have agreements when the package owners need to purchase more stock. While most package suppliers cannot enforce the requirement that specific supplies be used, they can put boilerplate language in their contracts which invalidates warranties if supplies other than those recommended are used. 

Regardless of discipline, you'll want to ensure tht ebusiness is soemthing you see yourself involved in for five years or longer.

Regardless of discipline, you'll want to ensure the business is something you see yourself involved in for five years or longer. 

Weighing the options

There are a few things to consider when deciding whether a turnkey opportunity is a good one and merits the cost of purchase. One is the cost itself.  Because a lot of work has gone into setting up the turnkey package, creating a business model, developing the marketing, and selecting equipment and supplies, the seller may feel justified in charging a high markup. The only way to know if the opportunity is worth the cost is to ask other people who've already purchased the deal if it was worth it to them. Don't be afraid to ask the seller for references, and avoid any turnkey deals that can't provide them. Another option is to use social media to investigate the company.  See if they have negative reviews, visit their social media accounts, and see how they respond to their customers. Companies that handle complaints rudely or don't answer questions in a timely manner are most likely companies with which you should avoid doing business. Don't be afraid to ask the seller for a complete breakdown of what is on offer, including an explanation of where and how you'll save money and time versus purchasing components separately. 

One big clue to whether a turnkey opportunity is a good one is if you could see yourself being satisfied with your choice in five years or longer. A turnkey opportunity is only as valuable as the desire and interest of the person who takes advantage of the opportunity. If you think watching thread stitch into fabric is mind-numbing, a turnkey embroidery machine package probably isn't the right choice. If you've never been a fan of promotional pens and keychains, a promotional products business most likely isn't something you'd want to run long term, no matter how attractive the franchise option and financial benefits might be.

Your goal should be to get a realistic picture of the benefits and downsides to the turnkey opportunity you're pursuing. 

The main thing to do when considering any turnkey opportunity is to be aware. Due diligence is key.  Turnkey opportunities are attractive because they seem to take the guesswork out of starting a business or embarking on a new decoration technique, and they do that to some degree, but there is still research and thinking to do before the new opportunity is pursued.

If considering a turnkey business that's a franchise, talk to other franchise owners. If buying an existing business that is not a franchise, check the company out on social media. You want to see what the existing reputation of the business is, particularly if you intend to keep the same name. The current business owner should also be willing to allow an independent valuation of equipment, buildings, and supplies to help determine a fair purchase price. When purchasing a turnkey package, investigate the company offering the package. What are their ratings? Talk to other decorators who purchased the same package and see if they have any complaints. Knowing what they know now, would they purchase the same package again. Investigate both the pros and cons of what's being offered and be thorough and skeptical.

The company or person selling the package is going to try to make the package look as attractive and easy to use as possible. Don't take that image at face value.  A good turnkey opportunity will be easy to use and will allow you to hit the ground running, but nothing comes without some obstacles and headaches. Your goal should be to get a realistic picture of both the benefits and the downsides to the turnkey opportunity you're pursuing. Only then can you know if a turnkey business or package is the right one for you. 

This article appears in Printwear's December issue. To ensure you can access this and other industry-focused pieces, subscribe today!