Episode 145: "The Time to Stand Out is Now," Tom Rector, Screenbroidery

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

There's some— there's just things that are out of your control, but it's like, I'm not going to pick up my ball and go home. I'm going to like, I'm okay, I'm ready to go. Let's, let's take what we, what we have and what, what we can work with. And then, and then let's, let's make the best of it. This isn't the time to give up. This is the time to work harder and step up to the plate. This is the time where you can stand out from the crowd. Like, the ones that are going to win today are the ones that are going to win for the next 5 years.

That's the voice of Tom Rector, CEO and founder of ScreenBroidery out of Indianapolis. Like many innovative startups, Tom founded ScreenBroidery in his living room in 2008. It has since grown into a multimillion-dollar enterprise with multiple locations and Fortune 500 customers from coast to coast. In 2012, the company was named Counselor Magazine's fastest growing company, and in 2018, one of the industry's best places to work. ScreenBroidery is now headquartered in a 15,000 square foot building designed to build teams through culture, collaboration, and creative thinking. Tom also manages a successful real estate investment company, a medical education company, and invests in several local startups. When the week of shutdowns occurred in his state, ScreenBroidery sales shot up 200%. Tom and his team have been busier than ever, and we wanted to discover how they have pivoted their business at this time. In today's SkewCast, we chat with Tom about some of the new initiatives and campaigns that he and his team are working on. And how to stay motivated and positive. Tom and his entire team, they're a dynamic organization, and you'll love his ideas and energy. I've mentioned this before, but we have several webinars we're hosting right now to answer the demand of the time. One of those is our weekly community social hour. Every Wednesday at 4:00 PM Eastern, we gather together as a community to talk about the current challenges in our business. It's not a webinar, but a community conversation where we join as one group and then break into smaller groups via video. The discussions have been relevant for these challenging times and rich in encouragement. It's free and open to everyone. You can register or check out all our webinars at commonskew.com/webinars. That's plural, webinars. commonskew.com/webinars. This episode is brought to you by CommonSkew, the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more, Or to begin your free trial now, visit commonskew.com. Now here's my conversation with Tom.

One of the things that you did early on was segment your client base. Can you tell us about that process and what type of clients are in which segments?

So once we knew we need to make some like slight pivots and adjustments within the organization and the world was starting to change, at that point. We took our customer base and started to really dive in to understand who's doing what, why are they doing what they're doing, and what role can we play to be able to, one, maintain the business that we're accustomed to, but also to be able to evolve to what the new need of the environment is. We took our customer base and looked at it in really two main components. So one, what businesses that we work with or that we could work with that have businesses that are sustainable. So places like healthcare and construction, landscaping, groups like that, that we knew that were still out there that were still functioning as normal or as the new normal. Then we looked at the opposite side of that, which businesses that we work with in our customer base that really need our service. They might have had to change or shut down or pause their operations. But we, I mean, we know this isn't going to last forever and things are going to eventually get back to some type of a normal. Process. So we went out on the front to those customers like, hey, this isn't going to last forever. We want you to be prepared to be able to move right back into operations once the tide changes. So to talk to those customers about, hey, let's get some orders in now because in 3 or 4 weeks from now, there's going to be this massive surge and it's still going to take another 2 or 3 weeks before we're able to get product back to you. So let's start looking at it now so that we can be prepared. And some of those customers too are having cash flow issues. So we're fortunate to be in a position where we have a sustainable reserve that we can tap into and we're pretty well protected. We're just fortunate to have that ability. So we're able to extend some terms and it's like, hey, you're normally on a net 30, let's extend it to a net 45 or a net 60 or even some cases a net 120. But we want to be able to help, but we also want to be able to help you when you do get back in the game and you're not caught trying to play catch up again.

Right, right. Tom, you and your team are actually quite busy right now. And as I'm asking this, it's Thursday, April 9th, and this is such a fluid situation. I don't know when certain community members are going to be listening to this podcast episode. It could be 2 or 3 weeks from now. That's why I kind of ask. We're in the thick of it now. A lot of us and some distributors are— might say that they've lost, you know, 80 or 90% of their business. You and your team, though, are quite busy. What kind of clients are keeping you busy?

What's really awesome about our team is that we're just hustlers. And I mean, we're looking at the recession or the downturn in the marketplace as a major opportunity. Like in March, our revenue was up over 30%. That one week where we're out of Indianapolis, Indiana. So that one week when Indiana went on a stay-at-home mandate from the governor, our sales went up 200%. It was really because we saw this as an opportunity. It's like, this is the time where we have to start working harder. If we just sit back and accept this and give up, it's just not going to work. You really need to be doing the complete opposite of that. So, I mean, we had to make changes and we had to pivot and we had to refocus some efforts, but we went after one, those low-hanging fruit. So that we're in an environment where hand sanitizer and toilet paper and all these things become in super demand. So like, okay, let's push that. Let's push those items now. Those are easy sells. We can get in front of our customers and we can start some conversation. So we started selling the simple stuff that we all assumed that we would sell, and we sold it until it sells out. And it sold out fairly— especially hand sanitizer sold out fairly quickly. But then we get creative knowing where our resources are and knowing what opportunities we have. So then we start partnering with other deals. So we're still selling hand sanitizers even though a lot of the big guys and the normal sources that you go to are on like a 2 or 3-month backlog. We're selling it and we're turning it within 5 days. So being creative and being able to work our partnerships that we've been building up for so long, now is the time that we cash in. So our team is just working harder than ever. We're up at 6:30 in the morning and we're working till 6:30 at night and just all day long, just nonstop. Honestly, I feel like I'm busier now than I was when this is just a normal, like a normal workday.

Well, you mentioned that you're, that you're trying to launch a new initiative or a new product every week. I thought that was a great idea. Can you share with us a few of those initiatives?

Yeah, it's because we're in a world right now where the environment has just changed and the way that we're accustomed to doing business and calling on clients and knocking on doors and going to lunch meetings and playing golf and having golf meetings and things like that are just not happening. So we have to switch in order to meet with just what the market is presenting us at this point. Right. So, so we shifted heavily to the sales and marketing side. So we're doing a lot of outreach within our sales process. So we're, we're talking to our customers daily and we really boosted up our email blasts and our social media posts. We have a lot more blog posts that are going out and we're trying to be resources at some levels. And then we're trying to, to, to spotlight some innovative ways of thinking from from our side and from our customer side, things that are just cool that we think that should be stories that are being told. As part of that outreach, we're presenting new and innovative ways that we're pushing product. We're doing things like care packages for healthcare workers. We have kitting capabilities in our operations. We have our own fulfillment operation and warehouse, and we can kit stuff within our facility. So we're packaging care packages that are specific for healthcare workers, but we have some customers that— and even customers that our potential customers that want to support initiatives like that, where we can allow them to not have to buy 200 care packages to hit the minimums of the things that we're putting in them, but we can just have them sponsor 1 to 5 to 20, or if they want to do 500, we can, but just have them sponsor those. So we'll present those to the hospitals on behalf of our customers.

That's the Do Your Part campaign.

No, that one's a little different. So then the Do Your Part campaign was a t-shirt fundraiser that we did through one of our online systems. So with that fundraiser, which was another one of our product pushes, it was a fundraiser where we had our creative team came up with some cool shirts, but that we're kind of all experiencing now, sayings that we're all experiencing now. So quarantine and chill and united by isolation. But we did it with a bigger purpose in mind. So we wanted to help small businesses that got mandated to shut down by the government, which from a small business owner has to be the most defeating news that you could ever get. I could never imagine what they were faced with. I mean, it wasn't a choice of theirs. It was just like, you're shutting down and you're going to like it. And it just drives me crazy to even think that that is a possibility. The things that were going through those business owners' minds is just blows me away. Not only are they ceasing to have any revenue for an undetermined amount of time, but then also have to lay off your staff. I just can't believe it. So we want to do our part to kind of help as best that we can. We can make t-shirts pretty well, so we did this t-shirt fundraising campaign where the proceeds were then buying gift cards to some of those businesses. We're taking the gift cards and we're partnering with the United Way, and then United Way is going to get those into the hands of those families that were laid off unexpectedly or now having trouble making ends meet in the short term. As one of those programs that gets to have a couple different legs to it that can help at multiple levels.

Well, I just like the idea of challenging, you know, you and your team challenging yourselves to come up with one, a new product or a new initiative every week. I just love the energy behind that. What's been the response so far from the community and your clients?

It's really awesome, actually. Like, we're getting picked up from news media. And matter of fact, just this morning I had an email that I sent out to all of those that participated in that Do Your Part campaign t-shirt fundraiser, and my inbox is overloaded with gratitude and folks that are just— that's great— just excited to be able to, to help, because I think everyone wants to be a part of a solution. This is just a scenario, unless you're a healthcare worker or you're like on the front lines of a police and fire and EMT that you're— it's not a whole lot of stuff that you can do. Yeah, right. So they're looking for some sense of hope and ability to be able to connect and provide some part of the solution. And this was an easy way monetarily that folks could help participate.

I love it. It's taking the best of our medium, which is inspiring and encouraging people, creating a gifting type moment, and then just, you know, the emotional connection. I just love that. How— what has this done to your team? I'm sure this has also been a boost to your team as where whereas some folks might be scrambling to think of anything to do, you and your team are just galvanizing themselves around these different initiatives.

Yeah, it really blows me away how well our team has stepped up to this challenge. I mean, we've been presented with some signs that there's going to be a downturn in the marketplace for a while, and really for the last 2 years, we've been fortunate that we've been able to build up our reserves and we've been able to strengthen our supplier partnerships and streamline our processes. Just really clean, pay off— I mean, we have no debt now. We're in just a really good shape. But when we had to switch from being in the office and doing our day-to-day stuff that we were just accustomed to and having to do a remote workforce, we were very upfront and transparent with our team. It's like, hey, this isn't going to be the same. We have to Working from home sounds like it is a great opportunity, but it's really not. I just want to let you know, like, this is not great. Like, you have to be disciplined. You have to be, you have to be really, really good at communicating and using our technology and our communication channels. And you have to over-communicate and you have to work harder at what you're doing. And they've all stepped up to the challenge and it's fantastic. They're fantastic at working in collaborative type environments. So they're inviting folks into meetings where we can share information and then continue to brainstorm some of these new ideas that we're coming up with. Just yesterday, this hand sanitizer thing is just on fire right now. So we partnered with a local distillery and able to help them, one, keep their people employed, but it's also keeping some of our production people employed. And we're able to provide a resource that's in demand right now. But we're keeping them at capacity. So now we're looking at other solutions of, okay, what else can we do to continue to, to capitalize on this need? So I had 3 of our guys yesterday calling me separately, not knowing that the others were also trying to find solutions to our problem with ideas and connections that they've stumbled upon or research that they've done on possibilities of ways that we can can continue to expand what we were working on. Like, they're, they're just taking it and running with it. I love it.

I love it too. It epitomizes what this industry is really good at. It was pivoting towards solutions. I see the blog post— we'll link to this in the show notes— about ScreenBroidery partnering with Hotel Tango, the distillery. Oh yeah, I love that. So we'll link to that. What a great story. I'm sure common SKU has actually been beneficial. You know, you had to suddenly—

oh yeah.

Go offsite and just having that connect, those connection points had probably been helpful.

Oh yeah, absolutely. And I mean, we're using Slack and Zoom and text and all that stuff, but having a centralized ordering system. So our team really works in pods and units. And I'm upfront with all of our people. It's like, there's not one person on this entire team that's more important than another, because if one of them is taken out of the picture, Things start to break down because they all play an important role at some point within any order that comes through our process. Even in, in the office, having that centralized ordering solution is very beneficial. But then when you take people and you spread them out over a 100-mile radius, now being able to access information and communicate sales order numbers and presentation numbers and copy products from one order to another and know that that information is, is accurate and accessible is— it makes our job so much easier.

Yeah.

Yeah.

You know, Tom, you said, you know, obviously you're in a stronger financial position than some people are right now, but you're also incredibly positive and your team is this way too. I know I've talked with you and your team for a while now. You said something to me I thought was poignant, and that was that the advertising world is really depressing right now. Can you elaborate? And how does that— how do we maintain our positivity and how does that create fatalistic thinking?

Yes, it drives me crazy. I started screenbroidery in 2008 in the first recession. And so this is my world. Like, this is what I know. Right.

Right.

And but it really drives me crazy when people— I don't want to say this the wrong way, but that when we feel like we're a victim or that there's no hope and I'm just going to have to give up. Because the rules are just not in my favor, so I'm just not going to play the game. That just drives me crazy. So all of the uncertainty that's in the market right now and in the economy and in the world, it sucks just not knowing how long pandemic is going to go on. It sucks not knowing when businesses will be able to open back up. It sucks not knowing when consumers are going to be willing to start spending again. Yeah, that sucks. But I don't have any control over that anyway. So I want to know what I have control over and I want to know what I'm able to do within those parameters. So just tell me what the rules are and then let me play the game. And there's just things that are out of your control, but it's like, I'm not going to pick up my ball and go home. I'm going to like, okay, I'm ready to go. Let's pick what we have and what we can work with and then let's make the best of it. Like, this isn't the time to give up. This is the time to, to, to work harder and step up to the plate. Like, this is the time where you can stand out from the crowd. Like, the ones that are going to win today are the ones that are going to win for the next 5 years because they're going to keep winning because they're standing out. And your customers are not going to forget that. I'll, I'll tell you that right now. Just as a, as a business owner, I sit in on a lot of like networking groups and marketing groups and It's so depressing to be like, everyone's just like, I can't believe it. I'm not making any money. Like no one's buying anything, but they're not doing anything different. They're just expecting things to continue to do what you've always done and expecting people to respond the same way. It's like, this is a different world we're working in right now. You have to be able to change. You can't just accept it that The world is different and I don't have to change anything that I do in order to still compete. Like, it doesn't work that way. It drives me crazy. I'm like, man, you guys are bumming me out. Like, come on, like, let's go.

Tom, another thing that you like to study, sort of the macroeconomic impact and trends. We're hearing projections about a V-shaped return where business will dramatically spike upward, an L-shaped return, U-shaped return. What are your thoughts?

I do nerd out on that, that big picture stuff. Right. So what's interesting to watch is what's going to happen when folks start receiving their stimulus check money. It's going to be interesting to see what happens when businesses receive their SBA PPP, the Paycheck Protection Loans, and what they do with those. Out of anything that happens with the economy, in my personal opinion, the unemployment rate is the the major figure to watch. So it's obviously spiked with these temporary layoffs and the furloughs. But the question is going to be what happens when the economy starts to rebound and businesses start opening and they need employees and that unemployment rate starts to drop back down? Okay. How are people going to become consumers again? I think it's going to be more of the V-shaped, especially in the promotional product world. Is that businesses are going to get back into operation and they're going to need to get in front of customers. They're going to need to tell their story. If their operations have had to change in the new world that we're going to be living in a month from now, they're going to have to be able to communicate that to their customer base. So they're going to have a need for what we do. And I think it's going to come all at once. I'm comparing it a lot to hair salons right now because No one's getting their haircut and everyone's hair is just going crazy. But as soon as those barbershops open again, they're just going to be flooded with business. And I think the same way is going to be true in our world is that as soon as we open back up, that demand is just going to skyrocket again. And one thing that I was thinking about the other day that might be something to pay attention to is that the inventory levels for a lot of our major suppliers. There was a fear that once— so they all received their inventory for the year prior to the Chinese New Year. Then Chinese New Year hit, and then the coronavirus hit, which then basically extended the Chinese New Year. So there was no production in China for almost 2 months. So there was a fear that Inventory levels are going to get sold out and we're not going to be able to replace inventory from our bigger suppliers are not going to be able to replace their inventory. So the projection was it was going to be about April or so they were going to start running out of inventory and not knowing when that was going to get replaced. Well, I think since there is a downturn in the United States market, I think that's going to extend that timeline. So it might actually protect the inventory supply to extend that out, at least because China's starting to get back into production. Their challenge right now is shipping product out of the country. The United States is just limiting the amount of shipments that they're allowing to come in. Product is being made, not just getting it here, which I think 30-day time from now is going to be fine.

Yeah, great thoughts. I love your perspective, Tom. Since we're talking about perspective, how do you think we're going to emerge different through this?

I love that question because, you know, after 9/11 happened, the airports were different. Like, the way that you travel is different. The way that we, we look at security becomes different. I think we're going to have one of those moments in, in the world that we're going to— the consumer behavior is going to change. So Now that people have basically hunkered down and they stopped spending money, they stopped becoming consumers. Well, one, because there's not a whole lot of places that they can go, but two, they have to change the way that they are buying goods. So a lot more is shifting online right now. So I think that trend is going to continue. I think there might be, at least for the United States, I think there might be a move for consumers to really want to know where their products are getting made. We push made in the United States and made in China. I think people are going to be a lot more concerned with where their products are being manufactured, make buying decisions based off of that information.

Yeah, more so than ever before. Yeah, you're right. It brings it to the forefront for sure.

I think our country is going to have a healthcare debate for sure, because in the next few months, I mean, our healthcare system is being overloaded and there's going to be a lot of healthcare bills that are going to be coming due. And so we're going to have to figure that part out. In the advertising world, I think we're going to have to look at how how we market and what trends we're going to start seeing. So there was a trend in our world that things were going more to brand-focused. People are wanting the retail-type products within our industry. So I'm questioning, will that shift? Will they still want to have an Under Armour or a Patagonia jacket, or would they— are they not going to be as concerned with that, and are they going to be more price sensitive?

Yeah, great concern. Tom, this has been a great conversation. Thank you for just being such a positive force in the community and, and, you know, and being so insightful and sharing your wisdom and your time with us. I know today you did not have time for this, so thanks for making the time for it. Any final thoughts before we close?

No, I appreciate all this stuff you guys are doing, and I appreciate I promise you, continuing to keep the social aspect of keeping us all together, like, I think that's so powerful.

Thanks for that, Tom. Well, man, let me know if I can do anything for you. We're here, and you guys are such an inspiration to us. Thanks for being a great example, and hope to talk to you again soon.

Okay, thanks, Bobby.

Thanks so much for tuning in to this episode of SkewCast. Be sure to keep up with our latest content by subscribing to SkewCast on iTunes or to our blog at community.commskew.com. Until next time, friends, thanks so much for listening.