When it comes down to it, the most important thing in any business is its bottom line. Statii Director Mark Thornhill offers his tips on how SMEs can improve on that crucial last line of figures which, after more than 20+ years as an entrepreneur in the manufacturing and engineering sector, he’s got a few of!
In any business, there are many things that count. To name but a few: your name, your brand, your reputation, your integrity and your position in the market place. But when all is said and done, what actually matters above all else is your bottom line. You’ve done all the hard work in starting, promoting, stocking, marketing and selling your business, but at the end of the day are you actually growing?
A business owner should always make decisions based on potential profit, and having been involved in running manufacturing companies for the last two decades, here are my top tips on how to maximise those numbers as much as possible.
- Forget how it’s always been done
When it comes to improving profit margins, SMEs have many advantages over their larger competitors. Big businesses come with baggage; it is trickier for them to change direction, whereas with a smaller size comes freshness and flexibility. An SME can respond quickly to changes in the marketplace; unlike with huge titan-like companies, their directors don’t have to visit umpteen different departments in an attempt to instigate different ways of doing things. It’s very important for SMEs to exploit these natural benefits as much as possible. Instead of doing things in the same way as they have been done in the past, consider how you can improve on what you do. Don’t be afraid to innovate and be creative.
Shining a spotlight on the ever increasing need, for all manner of businesses to report and analyse of a variety of functions and processes. If this be collecting data within google analytics to improve the performance of your company website. Or implementing an enterprise resource planning (ERP) software, monitoring every process within your business, identifying where profit is made and lost.
One further point worth making of key importance is the ability to accurately measure aspects of your business where you would like to see improvement – without this, it is difficult to advance. If you haven’t got these measurement systems in place, consider buying a software that will help with this. The market place is awash with ERP & MRP software. A comprehensive Manufacturing Resource Planning Software will answer any questions raised by manufacturing business owners.
- People are always paramount
Whatever type of business you’re in, whether it’s cutting-edge software or hand-carving tables, the people you have around you are always the best asset you have.
Business owners make a huge mistake if they let their vanity get in the way of recruiting the best people for the job. Always put your own pride aside and try to hire people who you admire and respect, and, dare I say it, are better than you! That way you’ll give yourself the greatest possible chance of getting those profits up and, better still, you’ll have a business to be truly proud of.
This being said, regardless of management style, be that light or heavy involvement. Employees are still a resource and like all resources can be improved, usually by collecting relevant data that can display peaks and troughs of productivity. Most manufacturing companies who aspire to grow, turn to small business software and some end up using shop floor data collection capabilities built into purpose built software packages, this usually takes theform of an enterprise or manufacturing resource planning nature.
- Delegate, delegate, delegate
This can be one of the most difficult things for any business owner to learn, particularly if you’re in charge of a company which you started from scratch yourself. Yes, you should have a handle of all aspects of your business – from suppliers to marketing to customers – but that doesn’t mean that everything has to remain inside the head of you, the owner, where no-one else can see it! That’s where the point above comes in. If you’ve got a good team of people around you, even the interns, you’ll be on the right path to allowing other people to share responsibility.
In any business, it’s no good working yourself to the bone trying to do everything. That is not an efficient way of working. Find ways of imparting the skills and knowledge about your business to your employees, whether it’s by means of daily five minute stand-up meetings or a social media platform that everyone in your workplace can see. Not only will this lessen the load on you but, in doing so, will give you a clearer vision as to where you want the business to head in the future, along with the time and headspace to think more strategically.
Also, it will give your staff the chance to come up with ideas you may not have thought of. You might not think that is possible if the business was your vision in the first place – but believe me, it is!
- Value suppliers as much as customers
While it is certainly true that it is vital in any business to build good relationships with your customers, it is equally important to forge those strong bonds with your suppliers too. In order to boost profits, you need to keep those costs down so finding ways of staying friendly with the firms which supply your equipment is key. You’re their customer and they will value your loyalty – so take advantage of this and try to get yourself low-cost deals in return for your continued custom. Treat them well, always pay your bills on time, and you’ll be rewarded by good service.
Once again an aspect that if managed correctly can result in increases in bottom line profit, information that can be found regardless of your data management techniques. Spreadsheets will allow you to view which suppliers you value most in regards to monetary value. However, to gather information such as top performing suppliers in regards to delivery and quality, a customer relationship management (CRM) or Manufacturing Execution Software (MES) software will display data for the purpose of constant improvement.