When a Business Tune-Up Isn’t Enough

Posted on September 16, 2009

Project your business trend lines out to 2020. Do you like what you see? Minor tune-ups may not do the job when you need an engine rebuild.

Tuning-up your manufacturing business to run more and more efficiently may not be enough to insure a healthy, growing, prosperous company over the next ten years. Take a look at the big picture.  Compare your business and/or industry ten years ago versus now, then extend the trend lines ten years forward.  What do you see?  Take the time to put down your reality.  Just estimate the numbers; they don’t have to be exact.  You may want to add other attributes as well.

If your future doesn’t look pretty, keep reading.

Most manufacturers have two sides of the business:  the production capability and the product invention/design capability.  These businesses are really two businesses in one.  You may well have competitors that outsource the production.  And you may have competitors that do the production, but not the product design. If you want your future to be different than what the projection seems to be, you’ll have to go well beyond tuning your business.  You’ll have to make some big changes in one or both sides of your business.  In a nutshell, you can:

• Identify new products that your customers need or are buying from someone else, and find a manufacturer somewhere to build them or;
• Review the capabilities of your factory floor and find new in-demand products that they can make, and sell those to new customers.

It is no easy task to do either of these.  But if your company is diminishing, you are either going to disappear, be merged away, or end up in a different line of business by 2020.  I’d suggest that now (or yesterday) is the time to start figuring out what direction you’ll be headed in.  I lived through such a search in the early 1980’s.

A few takeaways from that experience:

1. Start while your existing business is still throwing off some cash, so it can fund your forays into new areas.
2. Your first forays will likely fail, but you’ll be learning.
3. Make sure you don’t risk it all on the first idea that comes along.  Always reserve enough to survive to try yet again.
4. Building new products with existing production methods for existing customers is the easiest path.  Finding new customers is always very hard.  Building new products with new production facilities for new customers is starting a brand new business, and is always the most challenging.
5. When you start looking for a major new product or customer set, you will be distracted from your core business, and it will begin to decline faster.  You don’t have forever to make the shift.
6. Setting the clock back to the way the industry was in the “old days” can only happen if you switch to a new, younger industry.
7. This is not an easy change.  You will need an exploration plan which you’ll work at consistently and with discipline, and it will still be hard.  New ideas must be researched, and must compete against each other.  If every new idea that is to be tested is given stepchild status, none of them will ever work, and they will all be waste.
8. Sometimes it is better to sell your business (or shut it down) and save your money in the bank, rather than risking it all in the hopes of continuing operations.

Does all this seem radical?  What about continuous improvement?  What about better sales techniques?  What about more product variations?  What about new product innovation that you can produce yourself and sell to existing customers?  What about achieving economies of scale?  What about leaning on suppliers for better prices?

These are all good things to do, should always be done, and amount to tuning your business.  I’m assuming that you’ve made efforts on all of these to some degree over the past decade, and that your present business performance is the sum of your efforts.  If those efforts haven’t been enough to increase the health of your business over the past ten years, then they’re likely not to be enough to do it over the next ten years.