Covid Survival: Seen through the Eyes of Velociterra's Founder
by Cory Dean
2020 was quite a test to our flexibility and perseverance! January began with our yearly hope to help more customers with more artwork projects than any previous year.
Things look great... until a hint of pain starts presenting Feb 1.
Our considerable Chinese operation is always stretched to the max during China's New Year Holiday, but this year we got hit with unexpected and forced closures. At the time, it seemed like an over-reaction to a virus in the far-off city of Wuhan in Central China. I felt that the US market was going to be inconvenienced with supply chain issues, since such a huge percentage of our industry relies on Made-in-China products. My underestimate turned out to be massive.
Anxiety hits Ignition Drawing.
By mid-March, new orders at Ignition Drawing had declined 51%. Though this was a disappointment, it was 41% more than our previous worst-ever week during the 2009 recession. Fear and panic hit. Survival was at stake for the first time in our business history. In comparison, 2009 felt so trivial. We had to make massive overhead cuts. We immediately lowered staff members' working hours by 20% and had to furlough a few. By April 10, our sales at Ignition Drawing had declined by 74% for the week. It was just bleak with no idea what the future held.
PPP loan gives us a helping hand.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by the US government at the end of March. We immediately started the application for a lifeline through the Payment Protection Plan (PPE). This turned out to be quite a paperwork challenge—with more questions than answers. After a few rejections, our lender approved our loan and sent it to the Small Business Administration. One day later, I received a call from our banker that the program had run out of money. I almost cried since our only lifeline was at the mercy of a barely reliable government to issue more money. About two weeks later, we got our check and moved our staff back to 100%.
Working from home and barely leaving the house, I experienced a week of sniffles then a spiking fever of 103°. I had a really sore throat, dry cough, and odd rashes all over. It was scary because it was so early, and no one knew much about the virus yet. I was lucky mine was a mild case and I only missed one day where I was really too tired to work.
Arrow Emblems introduces custom facemasks.
The PPP loan covered only 8 weeks of labor. Since it didn’t look like this virus was going to be under control in that window, we had to act fast—to think of a way to pay our bills. The only thing selling was Personal Protective Equipment or PPE. We looked into masks, explored N95s and KN95s, but couldn’t find any competitive advantage that would be reason for our customers to buy from us vs. the thousands of others also selling masks.
We felt custom-logo masks could bring in a few orders, so we found some China suppliers who promised to supply masks. Our marketing team whipped up a few flyers and we blasted our custom-printed mask offer out to the email lists, through our fully owned patch manufacturer, Arrow Emblems. Our distributor customers placed orders, and Ignition Drawing artists turned so many company logos into mask proofs.
Anxiety Part 2: Dealing with China Factories
Our mask order backlog was growing at hundreds of orders per week. Amid the pandemic, our suppliers were disorganized and operating in total chaos. Our business model has always been to manufacture most of our own products and try to squeeze out as much efficiency as possible with software that connects our customers and our trained teams. So, our buying team was so stressed trying to communicate with companies in China that offered no consistent processes or online systems.
Arrow Emblems pivots—from patches to masks.
As deadlines for masks loomed, our stress swung from no orders to too many, which was only slightly better. We gave up on the Chinese suppliers and instead purchased 10 sewing and edging machines. We had decided to try and make masks ourselves using the new machines, our sublimated patch machines, and twill cutting lasers.
Several of our patch team members, having worked in apparel, were quick studies and quickly trained the rest of our idled team. Within 3 weeks, we were pumping out 8,000 masks a day. We continued to buy new machines and in another few weeks, we were up to 30,000 masks per day, working 24/7. Every available open space in our building was turned into a mask factory.
SEE OUR ARTISANS AT WORK:
Our entire top floor was turned into a very productive factory in less than a month.
(watch the video)
Sales numbers mixed but showing progress.
After those first depressing months of April and May, our pivot to manufacturing custom face masks and the Paycheck Protection Program really helped us. But things are still depressed, and we have a long time to go before the newly released vaccines become widespread. In October, Ignition Drawing sales were down 25%, and have recovered to -7% in November, with December looking a little better. We updated our website this year and innovated by making our ordering system mobile-compatible for users of smartphones.
So far, we’ve almost exactly tracked the industry (as reported by ASI), so our recent numbers speak to big improvements across the Promotional Products and Custom Apparel markets. Arrow Emblems is up about 24% for the year and our non-mask products are growing again, with several new product offers we’ve launched including stickers, heat-seal leather patches, and custom patches on trendy beanies. Emerald City Decoration is about 28% down for the year, but December is actually up over 10% with another week of hard work to go (and a brand new website).
We also changed HQ locations this year and moved to Kent, Washington into a nicer 2x bigger, 30,000 square foot building to handle growth. Internally, we utilized any down time due to Covid to streamline processes and enhance employee training. We reached out to customers to get to know their needs better, and we continued to innovate using our technology to improve our marketing, outreach efforts, order processing, and fulfillment.
What we learned from a year of Covid: When sales start to fall, we are reminded more than ever that we love our customers and depend on every one of them for survival. In tough times, we need to double down on our commitment to our long-time strategies.
- VALUE: We need to keep working harder and smarter to bring the best value for the price, so customers continue to have a compelling reason to use our services.
- INNOVATION: We need to keep innovating in our systems and online presence and website, so we’re easier to work with—as more people are working from home and via cell phones.
- QUALITY: We need to keep innovating on our training and craftsmanship, to continue to impress and retain customers by delivering top-quality work on every order.
It’s been a tough year for everyone. We look forward to continuing to offer our customers value, innovation, and quality in the year to come. Here’s to doing business in new ways, and to constantly adjusting and improving to meet the needs of those we serve. Thank you, Ignition Drawing Customers... and Goodbye 2020!
Thanks for your continued business,
PS: We'd love to hear your stories and feedback about our business. Please message me directly at email@example.com.