4 Focuses to Help You Scale Your Manufacturing Business
Content was originally published on Inc.com on May 18, 2016.
12 years ago I was fortunate enough to start working with a new client, Stephanie Harkness. She and her husband Jack had built a thriving manufacturing business in Santa Cruz, California.
They were smart, dedicated, and planning ahead for their eventual exit from their company which they intended to sell in a few years time.
If you’re a manufacturer, you’ve likely heard of Stephanie. In addition to being very high profile in that world, she is also the former Chairperson of the National Association of Manufacturers (NAM).
I just want to give credit where it is deserved, and Stephanie greatly impacted my business growth perspective, especially as it applies to manufacturers. (She was also my co-author of the Build a Business, Not a Job.)
With that clearly shared, here are my top four suggestions on what to focus on to scale your manufacturing business.
Focus Area #1: Build Out Your Sales System and Upgrade Your Sales Team
For those manufacturers who rely on a sales force to sell their products (either directly to the end users of their products or through the sales channels that in turn sell their products), strengthening your sales system and upgrading your sales team is a big leverage point to grow your company.
- Your lead management system (to make sure all leads get identified, graded, and put into a reliable follow up process)
- Your baseline sales process (to make sure you scale your best practices on how to follow up with your leads, improve your sales scripting, and close more business.)
- Building and refining your system for finding, hiring, managing, coaching, and compensating your sales team.
- Layering in evergreen sales systems like formalized referral systems and reactivation strategies to spark past customers to buy again.
Too many manufactures settle for subpar growth because they aren’t willing to shake up their existing sales force, nor invest the energy to formally upgrade their marketing and sales systems.
Take the example of Chad Johnson, business coaching client we worked with who was dealing with a major challenge: one of his major customers (worth over $3 million a year of business) had a huge market reversal and as a result Chad’s company had lost over $2 million a year of business. He was down to one sales person and needed to grow sales.
One strategy we recommended was a formalized reactivation strategy. Chad and his company created a short list of past customers and a formal schedule to reach out by phone to each of them. The results? Chad’s company reactivated two past clients bringing in $80,000 in sales in just 75 days. (Plus these clients were back buying from them on a regular basis.)
Look back over the above list and pick one area to brainstorm ideas on to grow your sales team and formally upgrade your sales system.
Focus Area #2: Build an Expert System to Help You Bid on More Work, Faster, and More Accurately
Your ability to scale is directly proportional to your company’s ability to create cookie-cutter processes for mission-critical areas. Your Expert Systems capture the hard-earned wisdom of how to perform your company’s core business functions.
They replicate that expertise in a formalized process and connected set of tools, training, and controls to make it possible for the business to own that expertise versus the know-how being held in the brain of a key employee. Not only does this protect your business from the loss of a key employee, but it also allows you to replicate this formally expert-level-only process in a coherent system.
Most manufacturers generate a large percentage of their work by responding to RFPs (Requests for Proposals). Considering how important it is that you both respond with a profitable and winning price, and that you lower the cost of time and money to respond to any one RFP, consider formally building your “RFP response” or “bid creation” system.
Does your company secure most of its orders through a bid, reverse auction, or “RFP” (request for proposals) process?
If so, one of the key things you can do to grow is to build an expert system that helps you find, grade, and quickly, efficiently, and accurately bid on more potential contracts.
We regularly coach clients through building an “expert system” to do the following:
- Gather a larger pool of potential projects and contracts to bid on.
- Efficiently process through these potential projects, and based on a clear criteria, filter out which opportunities they should (and should not) bid on.
- Tap into your company’s best intelligence to know what price and terms to offer. (Normally this is simply drawn from an expert’s head in the company. Instead we help our clients to formalize this knowledge so that most, if not all, of it can be done independent of any one team member and expert.) Accuracy is the key here as you’ll be living with the terms of the contract you bid at for months or in many cases, years to come!
- A template driven process to package your bid with the correct languaging and format to both support your sales efforts and to protect yourself in the fine print.
Focus Area #3: Building a Successful Hiring and Retention System to Get and Keep the Right People
Most manufacture businesses struggle to find and keep the right talent.
Have you built your hiring process? Do you have a successful system for retaining your top talent? Both these are critical for successful manufacturers.
Listen to what Stephanie Harkness – Former Chairperson of National Association of Manufacturers says,
“Too many business owners are afraid of hiring better, smarter, more experienced team members to lead areas of their business, as if the presence of these team members threatens to eclipse the insecure owner. I’ve always believed in hiring top people and giving them the resources and support to do a world-class job. In fact, this has been the single biggest secret that Jack and I have discovered on our journey to Level Three.”
One manufacturer we coach is in a small community in rural Georgia. They struggle at times filling key roles. If this is a challenge you struggle with, you’ve got to work to retain your key people and find ways to systematically improve your hiring.
- Upgrade your “employment opportunities” section of your website, selling not just your company, but your city or town. Look to your local Chamber of Commerce or Board of Realtors to get compelling pictures and video to use on your site, and to link to the best parts of your area.
- Use trade shows and industry gatherings as recruiting opportunities to build a pool of potential future hires.
- Create a formal process to start leveraging the contacts of your existing top staff.
Focus Area #4: Strengthen the Financial Pillar of Your Company
8 out of 10 manufacturers that we work with initially had sub-par financial systems and controls.
This hurts them in 3 main ways:
- It hurts them when trying to manage cash flow. They don’t have the predictability of income and expenses that would allow them to make better, smarter, and more timely financial and strategic decisions.
- It hurts them when they go for financing to replace or secure new capital equipment.
- It hurts them in their collections – which radically reduces their sustainable growth rate. Yes they eventually get paid, but their receivables can stretch out for 60-90-120 days or more, simply because they don’t have a solid system in place.
What our manufacturing clients come to learn that because their businesses tend to be so capital intensive, building on a solid financial foundation is critical to make sure their growth is sustainable and to make smarter strategic decisions.
So there you have my four suggested focus areas to help you scale your manufacturing business.
In fact, I’m about to teach a new webinar that will show you the five steps to grow your manufacturing business the right way. If you’d like to join me on this special webinar training, please just click here to learn the details and to register. (It’s free.)
Good luck scaling your manufacturing business.