Two friends partnered to design and produce custom hats to earn extra cash, but the business exploded and threw the entrepreneurs into a full-time manufacturing career.
Custom Patch Hats, LLC in Raleigh, North Carolina, was co-founded by Brian Cox, Head of Brand and Product, and Scott Alexander, Head of Strategy and Operations. Custom Patch Hats produces custom hats and apparel and until recently, marketed its products exclusively online. Two friends, a creative designer and a math teacher, had an idea to earn extra money, but within 7 years, they were thrown full-time into the world of manufacturing.
As the friends established their business, they prioritized the human connection. As orders were placed, they spent extra time getting to know their customers. They built a booming business on relationships. Alexander shared, “That human connection and a real guided experience, that’s what makes us unique. We’re human beings, and we aim to serve human beings. We focus on and never sacrifice quality, and we handhold and personally walk our customers through the whole process.”
Their custom patches, made of leather, PVC, and fabric, are primarily hand-stitched to last a lifetime. It isn’t the easiest way to produce a custom hat, but it provides the highest-quality headwear on the market. In addition to producing high-quality products, Custom Patch Hats also donates a portion of its proceeds for every single order to One Tree Planted and SeaTrees. “Ensuring we’re giving back to charities like this is important. We also make sure we mitigate our impacts on the environment. We’ve put together a composting program and a recycling program and figured out how to dispose of all of our waste in the most efficient way possible every year. Even as we’ve grown in headcount, we’ve dramatically reduced the amount of waste from this building. And I’m very proud of that,” said Alexander.
“We’ve worn a lot of hats. It’s such a pun, but it applies, obviously,” said Alexander. “We started in Brian’s living room. We have literally done every single job in the company. We’ve hired people to cover some job responsibilities as we grow.”
Cox had a background in design and had a lot of experience in freelance work, designing logos and screen printing shirts. Alexander worked as a high school math teacher and managed a bar. Cox had a client who asked for hats, and he tried to figure out if he could get them embroidered, but there wasn’t much margin there, so Cox figured out how to order patches, borrowed a friend’s sewing machine, and thanks to YouTube, he learned how to sew.
When he googled custom patch hats, Cox realized there weren’t any options, so he approached Alexander with an idea. Cox bought the domain, and the two friends shook hands as they formed an LLC in March 2018. They received the first organic order on the day they launched their website.
“We set out with the idea that if we could sell 100 hats a day, it’d be cool. With some extra beer money, it’d be awesome. This would be fun. But then, it blew up,” shared Alexander.
The two entrepreneurs suffered the growing pains of learning the business from the ground up. Scott continued, “When we received our first order for 250 hats, which was a lot for us, we screwed it up real bad and then screwed it up again and then screwed up a third time. I do not know why this customer was incredibly patient with us, but we learned many valuable lessons from that screw-up. It cost us a couple thousand dollars to deliver that project, but that’s some of the best tuition we’ve ever paid. Our business really took off from there. It turned into more than extra cash very quickly; we now occupy a 30,000 square foot manufacturing facility with 80 employees.”
“We had some light manufacturing here, and we had our shipping and receiving departments there. We had some production, and we had some admin, scattered. We created a bit of a process, but when we had the opportunity to expand into another 15,000 square feet, we wanted to set it up efficiently and realized we needed help to do so. We wanted everything to run really smoothly. We understood the basics of how things should move in one direction. They shouldn’t be scattered all over the place,” said Alexander. He continued, “We wanted someone to come in and say, this is smart, or this is stupid, and here’s how to make it smart.”
Custom Patch Hats hired Robert Crew, Regional Manager at NC State University Industry Expansion Solutions, and Casey Olson, Product Specialist at NC State University Industry Expansion Solutions, to do a one-day Lean flow site review of operations and Lean opportunities assessments. Alexander explained, “One of the coolest parts of learning about NC State University Industry Expansion Solutions was having actual experts in manufacturing come in, walk our facility, and tell us the things we’re doing right. They obviously gave us a lot to think about and direction on things to restructure, but they really stamped many of the things we had been doing well. Neither Brian nor I have any background in manufacturing. And we do our best to make sure we’re creating a safe and productive work environment. We had equipment that was very bright, like laser engravers and lots of sewing machines and shelving units that were 15 feet tall.”
The Industry Expansion Solutions team was able to highlight that since Custom Patch Hats had grown so rapidly, they hadn’t taken time to standardize workflow. “Multiple people on the same team were trained in different ways and do the same process differently,” said Alexander. Other areas addressed were the need for data collection, the implementation of an ERP system and supply chain optimization.
Alexander said, “They came in one day, left, and provided a summary. I was blown away by how much they were able to see, understand, and communicate with us in that one 8-hour period. It was a wonderful experience, and it’s been even more positive after the fact. What surprised me was how much information they were able to gather about our staff, our culture and how we operate. I didn’t see that coming. To be totally honest, I felt like two suits were gonna walk in here with a clipboard. But no, it wasn’t like that at all.”
“Robert and Casey came in for one workday and were able to pull SO MUCH information out of our staff and process. They identified a critical area for improvement. This allowed us to make smarter investments in the technology we are currently developing and implementing. It was a very engaging and rewarding experience.”
—Scott Alexander
The Lean flow site review of operations and Lean opportunities assessment provided by Industry Expansion Solutions had a total economic impact of $57,000 for Custom Patch Hats. There was $36,000 in cost savings and $21,000 investment in software.
