The niche for heat press cut vinyl is small orders up to 12 to 18 pieces, custom names and numbers and orders that are time sensitive....As you are already aware, once you get into higher numbers it is hard to compete against screen printing....
But having said that, I have found over the years there is good potential with plastisol heat transfers as an alternative ...Check out companies like
Heat Transfers | F&M Expressions | Custom Heat Transfers and
Heat Applied Custom Screen Printed - Digital Transfers | Transfer Express FM is a good choice for custom transfers and offers gang sheets.....TE has a program called Easy Prints which allows clients to pick layouts, clipart, fonts, etc. to make a semi custom transfer....Both companies produce and ship quickly and in a lot of case you are able to turn around an order quicker than screen printing....
The great thing about transfers is the ability to produce on demand....For example at an event, fair, festival, etc. you can press shirts on demand and sell exactly the colours and sizes required and not have any left over pre-printed shirts....It takes a while to estimate the best number of transfers to order but it will come in time....And even if you have a few left over, you are still making money on the one you sold....
There is also the opportunity to do gym strip orders at schools.....You go into a school with blank shirts and shorts, logo transfer & number transfers.....You take orders and press on demand....Each set has a unique number so the school knows who they belong to.....
Good luck.....