Even if you come from a long line of entrepreneurial manufacturers, knowing how to manage a manufacturing business comes with experience. But by becoming a manufacturer in the first place, you’ve proven that you have the ambition to do what it takes to be successful, even if it isn’t always a smooth ride.
If your business needs a push toward growth and profitability, these five actions could help:
- Review your business manufacturing plan
- Invest in upcoming technology
- Research new products
- Evaluate your sales and marketing strategy
- Keep sufficient funds on hand
Review Your Business Manufacturing Plan
Your business manufacturing plan should serve as your company’s foundation. This comprehensive guide should detail where you are, where you want to go, and how you’ll get there, including your budget and financial projections. Once you have created or updated your plan, consider asking another successful business owner to pick your plan apart, and see how well it holds up.
Even the best business plan isn’t carved in stone. It needs to be reviewed and updated periodically if your original vision didn’t end up working out, or if business conditions have changed and it doesn’t look like you’ll reach your goal. It may be difficult to admit where you went wrong, but changing paths at the right time is part of knowing how to manage a manufacturing business successfully.
Suppose you manufacture drivetrain components for gasoline-powered vehicles but demand is low because your customers are shifting gears to electric cars. Dealing with such a major change can be challenging, but revising your business plan can help you find a successful way to confront it.
Or suppose you make copper electrical conductor products and the price of the metal — your biggest manufacturing cost — has risen by 25% since you completed your business plan. It might be tempting just to raise your prices, but you should consider how that will impact your business manufacturing plan first.
Invest in Upcoming Technology
Maintaining technical proficiency is key to knowing how to manage a manufacturing business. Manufacturing technology evolves constantly, and you and your employees need to invest in new technology and learn how to use it to remain competitive. Advances such as computer-assisted design (CAD) software for manufacturers, accounting and inventory management software, and, in some sectors, 3D printing enable greater productivity. The most productive manufacturers embrace new tech tools that help them keep their prices competitive, and equipment financing can help you afford these new tools.
Even when technology isn’t advancing rapidly, you face the challenge of training new employees on how to operate your manufacturing equipment properly and safely. Suppose you run a machine shop; operating and maintaining a precision high-speed lathe isn’t a skill that can be learned quickly. You should incorporate an employee training program into your business plan to make sure everyone receives timely and consistent education.
Research New Products
Customers expect new and improved products, and maintaining a robust research and development program will help you meet these expectations. You don’t have to come up with something new every year, but making even incremental improvements to your existing product line can help you stay competitive.
Your customers could be your best source of ideas for new products and improvements. One way to gather their suggestions and constructive feedback is to establish a customer advisory committee. Ask six to eight people that represent different demographic segments of your customer base to serve for a one-year term on this panel. Chances are that most people you ask will be honored and happy to serve, if they don’t think it will take too much of their time. Plus, they might even become stronger customers in the future. Make sure to express your gratitude to those who join the committee by offering a free or discounted price on one or more of your products.
Another way to evolve your business is by embracing the concept of total quality management (TQM). According to the American Society for Quality, TQM is a formal, long-term process that organizations use to continually improve products, services and company culture based on customers needs. Companies with TQM plans follow eight principles to ensure their business is always sustainably growing.
However you decide to research new and improved products, you might need a capital infusion to follow through on your ideas. For example, you might need to invest in some new equipment, which can be financed by heavy equipment loans.
Evaluate Your Sales and Marketing Strategy
Next, consider the effectiveness of your sales and marketing strategy. If you develop a reputation for manufacturing a fine product, you will get some referral business. But that takes time, and you may be eager to get new customers sooner.
Like many business owners, you may be tasked with drumming up business. Knowing how to manage a manufacturing business also involves knowing when to bring in more help, such as marketing and sales expertise. Successful marketing strategies vary depending on your customer base and how they like to receive information. Most marketing strategies tap multiple channels, like social media, advertising, trade shows and directory listings on websites like Thomas. Asking your best customers how they found you could also lend insight into what strategies work best.
Strong sales talent is almost always expensive, especially in a strong economy. But you might need to bite that bullet when you’re growing a manufacturing business, even if you’re good at sales yourself. Your sales expertise can help you know what to look for when you hire someone else. Sometimes it’s necessary to pay a top salesperson more than you’re paying yourself, at least while you’re building your customer base.
Keep Sufficient Funds on Hand
It’s common to need extra funds to meet your operating needs and to help your business expand. A financing partner can help you assess your capital requirements and identify the most economical way to satisfy them. For example, that might mean lining up some heavy equipment financing and leasing equipment instead of buying it. As a manufacturer, you may have more financing options than you realize, and exploring them could be a smart move.
Knowing how to manage a manufacturing business is not an easy undertaking, but it can be a source of significant financial and emotional reward. Focusing on the essential requirements for success will help you reach your goals.