by Michael Watkins, MBA/JD, EBITDA Growth Systems
There are many coaches and mentors available to small-to-medium business (SMB) owners that have owned, worked in, engaged with and/or analyzed tens of hundreds of businesses. As a result of their “travels” most would feel safe in stating that (there is a very high likelihood) that if you own a machine shop it is probably a gold mine. If your shop is currently producing quality parts, on time, at a profit, then you know exactly what I mean. If your shop is misfiring on one or more of these – quality, schedule, or price – then fix the one(s) that are broken so that you can experience all that is in store for your business.
Of course, the SMB owner that is struggling to generate and/or maintain profitability would either ask – “how do I determine which one(s) are broken?”; or ask – “how do I fix the one(s) that I know are broken”. In either case, a fairly useful answer would be to find a specialist that understands your customer and understands your industry. Find a specialist that is already familiar with most of the mistakes. Either they will have made them personally or they will have experienced them through their clients. The point is, they are familiar, so they can save you the time and money associated with failed plans and strategies.
To be clear, gold isn’t typically lying around on the surface. One must pan for it (if they want a little) or mine for it (if they want a lot). In the same way, the “gold” that is contained in your business isn’t lying around on the shop floor. One must work for it. And one must work for it using the right tools. That having been said, any machine shop is capable of generating a lot of revenue and a lot of profits. Gartner Research recently completed an in-depth study of CNC machine shops and discovered that even fair to middling machine shops averaged growth rates of 25.1%!
The Gardner Research also provided insight into what separates high-performance shops – those that excel at income, profit, and growth – from average ones. The study found that the characteristics of higher performing CNC machine shops included gross sales that were 14% higher than other shops, and net income of 12.9% versus 5.9%. Moreover, the average growth rate for high performing CNC machine shops was 51.6%! There is gold in those hills! Most SMB owners just need a capable guide to help them find it.
Your mission is to find a firm that can determine “which one(s) are broken”, and is capable of prescribing a strategy to fix them. This is the key to finding the proverbial gold – profits. These firms have developed tools and approaches that have been vetted through experience to work in our industry. Firms like yours should avail themselves of these tools so that the mining is easier and much more fruitful.