If you are a regular reader of the Slippery Rock Gazette you know there are literally hundreds of pages of information inside their pages on how to improve your business. Those of us who submit that information care about this industry, and we want all of you to be more successful.
There is so much helpful information in SRG’s pages that it can be overwhelming to know just where to start. To help, I’d like to offer some guidelines as you approach improving your business in 2022.
To successfully improve your business, you need to decide that you are going to run your business instead of the business running you. You will no longer spend all your time working IN your business – you will now spend time working ON your business. You will decide how your business operates – not your customers or employees. You will make the decisions and take the actions needed to take control of your business. You will deal effectively with your sacred cows (June 2021 Sacred Cows May Be Killing Your Business).
Only when you get comfortable with living outside of your comfort zone, will you begin to drive lasting improvement in your business.
This comes from deciding that enough is enough and, from now on, things will be different.
NEXT: TAKE CARE OF THE BASICS
Goals: Yogi Berra said, “If you don’t know where you are going, you’ll end up someplace else.” My version of that is: If you don’t know where you are going, maybe you are already there.
What are your goals for 2022? What level of revenue and profit are you shooting for? Do you plan to add equipment in your shop? Do you plan to add salespeople? Is this the year you finally take the leap and go digital?
Just as essential as planning for this year is planning where you want to be in 5 years. This should be driven by your exit strategy. Your exit strategy relies on cashing out at a certain dollar figure. This means your business needs to sell at a price that gives you those dollars. Today’s value of your business is your starting point. The exit strategy is your end point. You should be charting a path to get from where you are now to your exit date.
Defining your end goal is critical to help you get through the inevitable rough patches on this journey.
Management: Build the discipline of a management cadence. In May of 2021 (Manage to Get Your Life Back) we talked about what that rhythm looks like. The article included specific examples of daily, weekly, and monthly activities that keep you and your mangers focused on the critical issues that drive the performance of your business. This cadence is the foundation of your business management system.
Good management also includes making sure you have a training program for all positions. This program is driven by the roles and responsibilities as defined in your job descriptions. As difficult as it is to find good people these days, the last thing you want to do is to spend all that time and effort recruiting good candidates only to have them fail because you didn’t train them. You must have a good training system that helps ensure every new hire has a high probability of being successful.
Just like it is critical that you take care of your employees, it is also critical that you take care of your equipment. A strong preventive maintenance program can greatly extend the useful life of your expensive machinery. I have a client who is still using the same water jet, bridge saw, inline polisher, and CNC machines that they bought over 15 years ago. They are clean. They consistently deliver a quality product. And they have little unscheduled downtime. This is because they have been consistently maintained, upgraded as appropriate, and had critical components replaced/rebuilt when needed. That’s just good business.
THEN: SHIFT INTO HIGH GEAR
After you have your foundation in place and you begin to assess where you are this year, you will find that you are in one of 2 modes:
- A long backlog of work that will keep you busy for a couple of months, and you really need more capacity now, or
- You have significant production capacity that isn’t being used and you need more sales now.
If you are in mode #1, you have more sales than your shop can handle. The system described in my series of articles from Dec 2020 through May 2021 will show you how to free up over 20% of the capacity you are already paying for. Additionally, it will help you drive to a short, fixed template-to-install lead time of 5, 6, or 7 days. Implementing all the components of that system will also allow you to begin predicting your month-end profitability – while you are still operating in that month.
This is the key to running your business proactively as opposed to constantly being in reactive mode.
If you are in mode #2, you need a good sales and marketing strategy. This does not include a strategy to offer the lowest price in your market. A good marketing strategy is based on defining what you do better than anyone else – why customers should buy from you. It then details how you will deliver that message to your market segments.
If you want to grow your retail market segment, you might generate some videos that show your graphic-wrapped trucks, your installers in clean uniforms, and examples of how you use technology to communicate effectively with customers. (Ex: Show a text with a photo of your lead installer, his name, and the expected arrival time for today.) That video would include your tagline and website. This message can be effectively delivered on multiple social media platforms.
If you want to grow your dealer or contractor market, you might integrate your messaging in marketing collaterals that can be used in a snail mail campaign that is followed up with phone calls and personal visits. This messaging could be the same as in the retail example above or it could focus on your short lead times and very low callback rate.
It is important to remember that you are in the business of solving problems for your customers. Effective marketing tells your customers how you do that better than anyone else.
As you work through all the above suggestions, it is important to play to your strengths. Know what you are good at and make sure you have the processes dialed in to robustly support that work before you decide to add a complementary product line. For example, I’ve had clients that wanted to add cabinets to their countertop business. This is a logical move: the products go together like hand and glove. It looks good on paper until you realize the company:
- Consistently misses template and install targets
- Has a 7% callback/remake rate
- Has trouble keeping good employees
- Has no PM system so its machines frequently break down
- Has an owner that constantly chases the newest ‘opportunity’ or ‘special project’
Adding cabinets to a fab shop like that could easily kill the entire business. Play to your strengths.
As you review the information provided by all the resources represented in SRG, remember that your business is a vehicle to help you achieve what you want in life. Use these resources to help you build a strong foundation for how you run your business so that it can take you where you want to go.
As a fab shop owner, you deserve to have a business that makes you money and also allows you the time to enjoy it. If you need a COACH to get you started…contact me at Ed@FabricatorsCoach.com or 864-328-6231.
[This article was published in the March 2022 Issue of the Slippery Rock Gazette, find it at: https://www.slipperyrockgazette.net/index.cfm/pageId/4520/How%20Do%20I%20Control%20the%20Chaos%3F/ ]