I N D U S T R Y D E S C R I P T I O N
Manufacturing is the process of converting raw materials and/or parts into finished goods that can be sold direct to consumer or business-to-business or to distributors or exported. It covers a wide range of industries from consumables to durables.
Buy raw materials and add value to it with labour and machinery to produce finished goods, then distribute it either yourself with a sales team or by using distribution partners. Manage the funding of purchases relative to the wages to produce finished goods and manage finished goods relative to sales made.
The life cycle of a manufacturing business often starts with a supply contract or a key account or customer who agrees to purchase products from the manufacturer. Often this decision to support a new manufacturer will be due to a quality or servicing issue with a current supplier. With a contract secured, plant, equipment and stock are established to begin manufacturing. Typically they are expensive to set up with heavy investment into not only plant and equipment but also initial orders of raw materials along with requiring personnel to operate machinery and move inventory. Obviously many manufacturing businesses are purchased as going concerns where key opportunities exist for example upgrading machinery with new investment, product development or adding sales expertise for market development.
The establishment phase of a manufacturing business requires the plant to be able to produce sufficient volume or quality of a finished product for a consistent cost price with a stable customer base that buy enough at the right price. If any of these processes are compromised the effect on cashflow can be extremely damaging. The expansion of a manufacturing business often means adding a sales team and or technical sales personnel or specialist design services etc. This changes the focus of the business towards managing sales teams, key accounts and customer consultation processes. All this requires the manufacturing operation to be able to maintain its quality controls. For this reason owners need to become adept in managing departments otherwise they tend to get dragged back into the plant.
Typically manufacturing businesses come under pressure when high overheads are present without the volume of sales required to cover them. This is especially true when debt serving is high. They also become stretched when additional outgoings are added without sufficient management e.g. sales personnel are being recruited but not trained or when market development and product development opportunities are being missed etc.
W H E N T O G E T H E L P
Owners of manufacturing businesses will tend to need help from a Business Advisor for any combination of the above circumstances. A key indication of needing help is when they are struggling to manage cashflow or when they need an expansion strategy to take advantage of market development opportunities. Typically we assist manufacturing businesses with an initial assessment of the current cashflow position together with their sales and marketing systems. Then we’re able to assist on how to optimise their current operation model before engaging in strategies to drive profitability.
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