Startup Advise...

[DancingBay]

I'm interested in starting up an embroidery business. My educational background is in computer programming. I've lost my job and am looking for a new direction to go. First, I tried an online store, but that has only yielded losses for the year I've had it.

Last summer, just after I purchased this website package, I had an opportunity to purchase an embroidery business that was up for sale due to health reasons. At the time, I passed it up, though I now believe that was a huge mistake.

I'm pretty sure the business is still for sale, but have not been able to contact the owners. I don't know what type of machines or software they have. This business included everything they had, website, inventory of shirts, caps, and patches, tread, backing, machines, and client list. They did a lot of shows, but mainly ham radio conventions (where I met them) and horse shows.

I've been researching online the last few weeks and believe a used Melco Amaya XT is what I need to look at.

I've found two possibilities.

One is an individual selling out her entire business with a 2007 Amaya XT with DesignShop software, a computer, and all her inventory of thread and backing, plus company name, logo, LLC registration, etc... I think her client list was all local to her area, though I think she had a pretty good client list. I don't think she has any other inventory like shirts or caps. I'd have to travel about 1.5 hours to pick it up and get over the phone training.

The other possibility is a 2004 Amaya XT from a certified Melco tech. It comes with DesignShop Pro+, set up with a computer, starter thread and backings, plus delivery, setup, and training.

The 2004 machine is almost half the price of the 2007 machine. The cost of the other business fall about in the middle of these two. I already have an LLC formed and a company logo.

In addition to my computer skills, I have a strong background in home sewing and am very interested in the digitizing side.

I'm thinking that the 2004 machine is the best deal since the software is the top of the latest and they will come to my home, set it up, make sure everything is working properly, and train me. But just wonder how much extra a new machine would be worth. If I find out that the business I almost bought last year has Amaya XT machines, then I think that is the one I will go for because they have a pretty good inventory that goes with it. I'll post back if I hear anything about that business.

What would you do?

[signman]

With the new XTS now out in the field, the 'big red' Amayas (originals) aren't worth more than $2-3k if that much. The XT's (gray instead of red) have dropped in price and with programming, up to date OS and Designshop 9, are going for $10-13k with supplies.
A warranty is going to cost you $80-$100 per month no matter what. Without a warranty, you could pay several thousand $$ for some of the repairs that come with age...so consider that in your equation.
If someone is selling you a complete setup 'with' customer base and files...think about it. IF they were making money on those customers, why are they selling out? Or didn't they make enough to cover the overhead, expenses, etc.? You don't want to be buying into a money losing deal.
Over the phone training isn't enough-you need a real person right there with you to teach the fine points of running these machines. There may still be training classes, other wise there ARE several great tech/trainers on the amaya board here that do 'one-on-one training for a reasonable fee. We're just starting to talk to a larger shop in town about buying out our XT and taking the customer files, etc. and the programs and he is interested-and HE brought up buying out my complete screenprint shop-since he wants to remove me as a competitor completely. And then he'll hire me back for training and running the machine. Something we are really looking into seriously...so go over your business plans carefully.

[Knehmer]

If you are looking at a USED XT--the sales price can be much lower than Signman quoted...

[DancingBay]

The company I looked at last year, the wife, who is the business owner has terminal cancer.

The lady who has the 2007 machine started homeschooling her children and has made the decision to invest her time in them instead of making money. Having homeschooled my kids, I can understand what an investment in time that is, expecially if one or more require a lot of 1 on 1 time like one of mine did. Though she didn't say, I got the impression that she was making a profit, but she didn't say for sure.

The guy with the 2004 machine is in the technician business, not the embroidery business. I think when he gets one in on trade he refurbs it and then sells it.

Prices are as follows:
Lady with cancer: $10k (at least that was last year's price)
2007 machine: $13,500
2004 machine: $6,500

The 2004 machine sounds most appealing to me because of the price and also it has the lastest software in the highest level and delivery/training.

It's hard to know about the first business because I don't know anything about equipment or software.

Since I'm interested in learning digitizing, do I need to be leaning towards the Pro+ software? Are there other brands softwares that work with Amaya that I should consider?

[DancingBay]

Oh, btw, these were both the gray chasis, not the red.

[Knehmer]

Write to me privately, [email protected]

[Greenwing]

For less then $13000.00 you can buy a refurbished machine from Melco and software.
which would include warranty and training.

that price is too high

[DancingBay]

I'm finding that out. All the fees for buying used from an individual seems pretty pricey and looks like it would really eat up profits.

[Steve]

I would go for the 2004 machine. $6500 isnt a bad price at all.
Greenwing, Melco is sold out of all used machines right now.
I got a great deal a 2000 machine with 400 hours on it in 2004 and it was paid off within 2 years and I do embroidery part-time as I have a full-time job.
I would concentrate on sewing and selling before jumping into digitizing. There is a lot to learn in this business and you don't want to take on to much at once.

[signman]

Several on-line equipment houses and repo places are selling used Amayas for less than $3500...one has warranty I noticed. $6500 is a LOT for a 6 year old machine that is going to be hard to get parts for. A new machine from Melco WITH current up to date program, training, and 5 year warranty isn't going to cost you much more than buying out that shop. The newer the machine, the easier to get parts and the less chance it is going to start wearing out and breaking...they do have a short life expectancy...weren't built to last forever just to run hard and efficient for a couple years before trade up. You also want to check on availablity and COST of getting a service warranty on any used one...without a warranty FROM MELCO you could be financially wiped out when the mother board or needle head or something expensive breaks down!

[Rod or Sharon]

I believe that Melco's current policy is that "warranties" are not transferable.

As far as parts, I have not found parts availability for either the Reds or the XT to be a problem. In fact I have not found any parts that cannot be upgraded or that are not interchangeable.

As techs, we were told that Melco is required to have parts available for a period of 15 years. We were also told that life expectancy for the machine was somewhere around the twenty year mark. BUT, life expectancy is a relative term to how well the machine is taken care of. If it is not lubed properly, well then, I guess all bets are off.

$6500 for a 2004 machine and being a god deal, would depend on the level of software that comes with it. Not just the latest, but what level? DS/OS lite, DS/OS, DS/OS Pro, DS/OS Pro Plus????

I would not buy any of them unless you personally have a certified Amaya tech go through it first and check it out, software included.

Warranty or no warranty......IF a major part breaks down AND is DEFECTIVE, then the warranty can be of value. Operator error is NOT covered under any part of said warranty....failure to lube properly, being an example of operator error. That and travel expenses are not covered for the most part by the warranty. Melco charges travel by zones and is different for different parts of the country depending on distance and the availability of techs.

Rod Springer
Amaya Tech & Trainer

[signman]

Warranties are not transferable, even on a new machine a year old...but Melco will SELL a warranty on the machine to the new owner. I called them a couple weeks ago to clarify. Even though my 09 XT has a 5 year warranty, that is to the 'original owner' only. If I sell it, the new owner pays $100 per month to get the same warranty (or close to it).
Roland

[DancingBay]

Worked the ham radio show this weekend. The embroider who took the lady with cancer's place was less than encouraging. He had an old Brother that had a software problem, so sat unused all weekend, an Amaya XT, and a 10-needle Melco. He told me that he went to school to become a technician so he could service his own machines because Melco's service call fees were so outrageously high. All in all, he was very discouraging. Don't know if he was trying to keep me from becoming competition or what. He really didn't look like he loved what he was doing, but he might have just been really tired because he had traveled about 14 hours to get there. However, he was very busy and, from what I understand had an above average number of sales, and asked to come back next year. But, he did make it sound like Melco's were very finicky and needed lots of service calls. He made me feel like being an embroiderer was very complicated and kept saying it was really expensive. Not sure what he meant, but made it sound like you spend more than you make. If that's the case, why would anyone want to do it?

[levelbest]

Treat the machines right and they will treat you right. We've had ours for 6-7 years now. Only a handful of problems all of which were solved. They aren't any more finiky than other brands out there.

As far as spending more than you make - if you don't have an eye for business, you can do that in almose any business - not just embroidery.

Know what you are getting yourself into, be prepared to put in the time to learn and maintain your investments, gather clients and build a business. Nothing worth doing ever seems to come easy.

[Wishes]

Dear Alisa,
Sounds to me like he is afraid of the competition. I don't travel to shows but don't have any of the problems he was describing. This business if fun but you have to want to do it, learn to processes and as John says take care of the equipment. There is a learning curve that requires time. You need to be willing to learn continually as new fabrics and techniques become available.
Margaret