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An Opinionated Perspective on Custom Manufacturing in America
By Greg Williams - March 2012
The Key to Profit for Small Shops
As the economy continues to crawl up and out of the recession and our
industry begins to benefit, it is critically important for the small shop to
evolve. The recovery is creating opportunities for the small shop to be able
to compete and win against bigger competitors and imports from China that
never existed before. The key is to understand those opportunities and be
able to act on them now.
There was a bestselling book published in 2007 titled “What Got You Here
Won't Get You There” by Marshall Goldsmith. The book is basically another
classic self-help manual for business executives but the title describes
exactly what most small shops need to be thinking about in order to increase
profits in the new economy. Business as usual for most of us will not
sustain and grow profits going forward. Change will be required.
One of the biggest obstacles to realizing what needs to change and how to
change it is the tendency of small shop owners, salespeople and craftsmen to
develop a case of tunnel vision about their business and its processes. This
has the potential to reduce profits by substantial margins in the new
economy, even if your shop was one of the lucky ones that managed to make it
through the recession without major problems. Many of the things you have
done that made you successful in the past and got you through the crunch may
not serve you as well in the future.
The targets for improvement in a small shop are to be found in three primary
categories. How you use your technology, how you organize workstations and
manage workflow in the shop and how you deal with new economic realities.
These may seem like broad and intangible categories but - the good news is
that the changes you might need to make to practices and processes within
these categories are small, specific and most of them require little if any
financial investment.
According to a recent CMA survey of small shops about 95% own some sort of
design/manufacturing software and about 50% have CNC machinery of some sort.
Most shops have some sort of software like Microsoft office and a connection
to the Internet. All of these technologies have the potential to improve
profits by making small changes to the way they are used on a day to day
basis that expedite jobs, reduce the possibility of rework due to errors and
attract more business. There are dozens of targets for improvement in this
category alone.
Most small shops are businesses that were either new startups created by the
current owner or existing businesses that were inherited, purchased or taken
over from a family member by the current owner. Regardless of how successful
the business has been, most people operating small shops have not taken a
hard look from a perspective of critical thinking about the nuts and bolts
of processes at the work station level and the way workflow is routed and
managed in the shop. If you could take off work for 6 months and do nothing
but visit other shops around the country and see the little ways in which
certain things are done differently, there is little doubt that you would
return with several ideas about how to improve the way you do things now. In
reality, you need to be able to get the best of that information without
making the trip and start thinking about the changes as soon as possible.
The type of difficulties you may have experienced during the recession are
likely dependent upon which segment of the market that your business depends
on. We all know that residential construction took a bigger hit than some
commercial/institutional markets. High end markets seem to be recovering
faster than low end with a few possible exceptions like closet and storage
products. Payment terms have changed, customer demands for quality at lower
prices have increased and so has the overall cost of doing business. Your
ability to market your business as the best choice for quality, service and
price in your existing market, in addition to being able to evolve your
products and services to go after new markets is critical to the current and
future profit of your business.
There is a lot of information involved in fully describing the specific
changes each individual shop might benefit from, and to get into sufficient
detail really requires interaction that is beyond the abilities of text on a
page. This article is intended to present the short version of the concept
and offer you a free opportunity to find out more.
Over the last 15 months I have studied industry surveys, worked and or
talked with over 40 small shops and reached out to several organizations
involved in our industry and other manufacturing in an effort to put
together the information that small shops will need in order to increase
market share and profits in the new economy. With the help of some industry
innovators, I have organized this information into a seminar which will be
presented in various formats online and at live venues across the country in
the coming months. 1Goal customers and subscribers to our newsletter will
get the first opportunity to see a version of the seminar in a free webinar
beginning on Thursday, March 15th. I hope you will be able to join us.
Thank you for visiting my website. I wish the very best
for you and your business in 2012. As always, please call or email with any
comments, questions or if I may be of help in reaching your business goals.
Comments or feedback?
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here to email 1Goal.net.
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