Natural Fiber Extravaganza Seminar: Launching the next successful mill business

Overview: The rewards in business are always in direct proportion to the difficulty of the problems that they solve.  (rough paraphrase of a quote from Elon Musk) What are the problems currently unsolved in the niche artisan textile industry? Join us for a walk through the essential questions that need to be addressed in order to launch a successful startup, and the ideas behind why those questions are important.  Often times we don’t even know the right questions to ask, but that’s where we must start. Come and learn what resources & people are available to help you gain valuable insight into the answers to those questions.

Bio: JC owned and operated Morning Star Fiber for 13 years, which supported his family of 10 and served over 500 farms annually.  In October of 2018, he closed his mill and January of 2019 launched The Master Crafted, to focus on leading the industry boldly into the next decade of niche textile production with a focus on craftsmanship and artistry through training, research, and technology.

Introduction

If you’re here today it’s because you’re interested in starting a mill, or at least learning what starting a mill would involve. There is a huge need in the niche artisan textile industry for more mills. We currently average right around 3 per state here in the US, and we could easily support 5. The Master Crafted has a goal of inspiring the startup of 100 new mills by 2025. Now that’s a pretty aggressive goal but we believe the demand in the market far outweighs the current supply within our industry.

Can you already hear the naysayers saying that’s not possible?

Those folks always exist. Back in 2010, I’m sure there were plenty of people in my little town of a thousand who would have fell on the floor laughing at the idea of us being home to not one but three craft breweries. Not only were we a dry county back then, but our town was still reeling from the economic rug being pulled out from under our feet when NAFTA came through and shipped not one but four major industrial plants to other countries. People we’re struggling to pay for food, clothing and shelter – who had money for a $6 bottle of beer?

So if you’re seeing what we’re seeing welcome aboard! Let’s sail out where there is plenty of blue ocean because there’s no need to get caught up trying to figure out how to compete in the shark-infested waters of the current textile regime. The Master Crafted is passionate about continuing to raise the artistry and craftsmanship of the niche artisan textile industry and inspiring new mills startups to launch all across the country is not only good business its critical to meet the pent up demand. So we’ve postured ourselves to provide you with all the resources that you need to achieve just that.

Now you probably noticed that Niche Artisan Textiles wasn’t on Forbe’s list of the top 8 industries for new startups but if it was it might have sounded something like this…

Niche Artisan Textiles

No longer just the annoying little brother of the commercial textile family, the mini-mill revolution of the 90s has grown-up and matured and is beginning to realize that it is a legitimate force in the marketplace.  And now Ramella, an Italian company which has been involved in the textile industry since WW2, has brought to the market an even more technologically advanced small commercial equipment line which is sure to fuel this niche artisan textile industry into the foreseeable future.  With now, over 200 of these mills worldwide, this category of niche textiles is an opportunity to leverage the specialization, craftsmanship, and artistry that the market is obviously craving for.

Why it’s hot:

These mills can address the unmet processing needs across a wide range of fibers types including exotic fibers being raised in the US and abroad into a diverse range of end products. This is being done even though the quantity of these raw fibers is far too limited for any industrial application outside of blending. Several cooperative efforts have worked to pool fiber together to gain access to these large commercial-sized mills with varying results, but the work has been slow and difficult. Meanwhile, these “mini-mills” have continued to refine their skills, increase their quality, and improve their services. To date, there is still a large unmet demand for processing both on the farm and for the artisan.

Skills needed:

New startups will need to be able to manage the logistics of creating high-quality products ranging from loosely prepared fibers for the fiber enthusiast, single-strand and plied yarns for the handcraft market to finished goods for the high-end clothing and home decor markets. Because the volume harvested per farm is low and highly specialized it requires great administrative and organizational skills to effectively deliver the value the customer wants.

Barriers to entry:

A significant hurdle for startups is the initial equipment purchase and the learning curve of how to develop a high-quality product consistently and efficiently. This industry is also largely misunderstood and unknown to the regulating government and insurance agencies and so rates are based on the same categories as industrial companies in the larger textile industry. This keeps startup costs high and requires these new startups to focus on quantity over quality in the early years or have enough extra operating capital to weather the first few years of developing and honing their business processes. The upside: much research and collaboration have occurred to decrease that learning curve from where it was even a few years ago.

Competition:

As companies enter into the custom-processing market and become good at what they do, they are typically overwhelmed with work and find themselves 6-18 months out. There really is no competition in the marketplace as there is still an overwhelming supply and not enough mills to process it.

There is also the reality of already well-established brands in the handcraft market which current customers are using. Much of what is in the marketplace today is via off-shore production created by companies who are generating a half a million pounds per month or more of product for the market. These niche artisan textile companies typically cannot compete in price due to production rates that equal 500 pounds per month. Therefore they must focus on other values that the customer wants: quality, rare exotic blends, uniqueness, trace-ability, authenticity, and local/regional economic systems.

Major players:

One of the hardest things to do currently in this industry is to define who the major players are. There is no single mill that seems to have a commanding share of the niche textile market.  Mills seem to be more regional or fiber type-specific. There are roughly a couple dozen mills that have been in the business for a decade or more and have earned a high level of customer loyalty for their products and services.

Market Growth:

The Niche Artisan Textiles market generates an estimated at $15.75 million/year in 2018 based on annual production of goods at the mill level and if it would keep pace with the previous decade it is projected to reach $26.2 million by 2030 – 166% growth.  It’s hard to estimate at this time the retail value of the goods that these mills produce because not all customers are selling the goods produced as retail – there is also a wholesale market, personal use, and additional value-add models in this equation. In 2000 there were less than 50 mills in the US if you included medium-sized mills like Yolo, Frankenmuth, Zeilingers, Taos Valley, and the like, but by 2018 there were 150+ mills in the US and another 60+ outside the US.  Based on the amount of backlog currently experienced by mills involved in the niche artisan textile industry, there is no reason why there couldn’t be 5 mills per state instead of the 3 mills per state average we have now.

What does the future look like?

This overview of the industry creates enough data to begin developing a SWOT analysis of your potential involvement. While there are many things in the market today that make starting a mill simpler, it’s still not easy.  The capacity for quality with the current equipment across a wide range of fiber types is available, should the owner demonstrate a propensity for artistry and craftsmanship. And while the learning curve is still steep and long to achieve this resources are now becoming available that were not present for the early adopters. The entry costs are still high enough to deter most small investors. And the typical profit margin is low enough that high-quality production is a very critical factor in the equation (given current capacity of most equipment on the market) this is not an easy hurdle to get around. So does it even make sense to entertain the idea of starting a new mill?

What follows is a list of slides used to present some key areas that need to be addressed in order to lay out a roadmap for success, one that embraces the journey along the way, not just the destination. During my presentation at the Natural Fiber Extravaganza, I explained these slides a little more in-depth but they easily speak for themselves.

I want to close with 10 questions that I wish someone would have told me about and encouraged me to seek out solid answers for when I was just starting out in the mill business. I hope you find them helpful.

  1. What is the market that you’re targeting exactly?
    • Aim small miss small, and then if you aimed at the right target and hit it in the center, you will achieve great results
    • We aimed at serving Icelandic sheep farmers who wanted lopi yarn for the glory of God and the joy of all peoples.
  2. What are you striving to become best at and how can you eliminate all other distractions?
    • Marie Condo – Does it spark joy?
    • Be an essentialist and learn to say no to what’s non-essential
    • The first seven years of our business we continued to say yes to more and more things, and it became increasingly frustrating to find our niche. In the last seven years, we found the true value of saying no was that it allowed you to say yes to the niche which represented us best.
  3. What’s your plan for safety and ergonomics?
    • 25,000 hours later I wish I would have thought about this from the start
    • In the 14 years that we were in business, our industry had over 15 injuries that rendered people’s lives forever changed that I personally know of. Movements and capabilities that they will never get back.
    • For lack of understanding ergonomics, my career in production was cut short and I had to develop an exit strategy from day to day operations.
  4. Do you really want to offer all these possible options?
    • Giving your customer access to all the options that the niche artisan textile equipment has at its disposal is so complex that it becomes confusing to the customer, and it’s very difficult to keep it all organized, let alone properly educating your customer.
    • It’s very important to keep your ordering process simple and straightforward – less is more.
    • We let our customers know that we were craftsmen and artisans and that we were committed to making all things beautiful. We kept detailed recipes that allowed us to repeat any product that we had made for them in the past, as long as they had provided us with the same raw materials.
  5. How well does that process or product scale?
    • Just because you can make something doesn’t mean you should offer it as a product to others.
    • Some things don’t scale well, and you must develop it and let the process mature before it’s brought to market – this allows for the process to become simple and efficient so that you can deliver the shortest turn around time to your customers.
  6. What does your customer actually want?
    • The voice of the customer is invaluable. Take time surveying your customers to know what do they expect? What they prefer? What are their aversions?
    • When we first started out we surveyed the entire ISBONA member list asking questions that would better help us understand our market. We used this data in developing our business plan.
  7. What is the creative process, and how experienced are you with it?
    • Your customers need to rely on your creative expertise, which requires that you continue to master the craft of textile. The machines and tools cannot be your enemy but an intimate friend.
    • While your customer is very concerned with the value you are able to create with their raw materials, you should never assume that the customer knows or understands what’s best to do with their fiber or what that requires.
  8. Do you have the patience and discipline to become a craftsman?
    • Who will teach you skill development/insights,
    • Are you a good student? Niche artisan textiles require a lot of hands-on research and application always keep reading and studying in your field – expanding your expertise.
    • The lack of artistry and craftsmanship are very easily recognizable in the marketplace. Your job is to know the how and why of making all things beautiful.
  9. How mechanically minded are you?
    • How comfortable are you at turning a wrench and wiring electrical circuits if it was a requirement of your job?
    • Sure you can hire someone to do it for you tomorrow, or in a week if they have time, but being able to fix it now and get things back online is so much handier and way more profitable.
  10. How good are you at the problem-solving process?
    • Every day is similar to a story problem, but none of the variables are ever the same, different fiber, different environment, different product

Resources for further research:

I hope you’ve found this presentation helpful. If you have more questions about starting a mill please don’t hesitate to ask a question in the comments, or schedule a meeting time when we can talk on the phone. It never hurts to ask, but it often costs way more than you would have expected when you don’t know the answer and you try to forge ahead without knowing.

Until next time,
JC Christensen

1 thought on “Natural Fiber Extravaganza Seminar: Launching the next successful mill business

  1. […] those considering a new mill startup entrepreneurship must be part of your DNA. Do you have an ah-ha idea? Do you see something that is […]

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