A New Hope

John Kielich, CPA, CVA, Managing Director of M&A Advisers   email | bio
LeAnne Foster, Business Analyst   email
February 2010

We can only wish that 2010 can be titled, like Episode IV from the Star Wars movies, "A New Hope". The last 15 months have been difficult times for manufacturing companies in the United States and in Wisconsin. If you have been able to survive in this environment, we congratulate you. If you have managed to grow your business in 2009, you certainly have a great story to tell. We could all learn a thing or two from these surviving and thriving organizations. Ask yourself the questions below if you are trying to add value to your business, sell your company or survive in this economy, as these are all questions surviving companies have answered.

• Are you price competitive? Survey your competition, especially international manufacturers that can make your product for less. To remain competitive with manufacturers that leverage inexpensive labor, consider employing tools such as lean manufacturing to help you improve your cost structure and insulate your business from low-cost labor threats. Even if you cannot provide product at the lowest cost, all is not lost. Remember, customers look at a combination of quality, cost and delivery to determine their vendors.
   
• Do you have one major customer? Being dependent on one major customer makes your business extremely vulnerable especially in this economic market. Recently, an attorney shared with us a story about a company that filed bankruptcy due to the downturn in sales experienced by its one major customer. If you have a customer that provides 50 percent or more of your revenue, it is time to diversify your customer base. Gain market share and add customers by leveraging the products and services valued by your customers.
   
• Do you have one major vendor? The same rules apply to having one major vendor as do for one major customer. If you have a vendor that is your single source, it is important to diversify your suppliers. That way if one supplier does fail, you are still protected and able to provide your product to customers.
   
• Do you have new products? Too often we find manufacturers have depended on a single or limited product offering for too long. Innovation is invaluable. Keeping fresh products in the pipeline allows you to offer new ideas to clients and to have multiple sources of income.
   
• Do you have a great staff? Keep them!! Any product or service is the result of your staff. Retain your key employees, because in the end, they are the ones ensuring that your products are made and your customers are satisfied.
   
• Is your property presentable? Maintain your office and shop floor in a showroom state. Your property will speak for your product, any first impression should be positive.

If you have any questions, please contact John Kielich or LeAnne Foster (262/754-9400).