I’ve been involved in manufacturing since I was in high school when I was working part time at my family’s gear business. Since then, I have learned a lot of things: some from my co-workers, a lot from my father, and more from our customers and other business owners. One very important lesson I learned is that our management group did not know everything and needed some outside information and help to make our company function and improve.
However, many companies I have spoken to claim they have no time for anything beyond what they are doing daily to work in their businesses. To that, I argue that in order to succeed, the management of the firm must make some time to work on their businesses. Excuses can be made, but none addresses the basic problems that business owners face on a daily, weekly, monthly, or yearly basis.
Most companies have a lawyer and a CPA for the initiation of incorporation and the annual tax return preparation. When was the last time you met with either of these two entities to have a discussion that affected the future of the business? Issues such as general tax planning, machine purchase options and what affect it will have on your bottom line, pension/profit-sharing/401K plan changes, or business transition planning should be discussed.
Got those things covered? Most companies don’t. Your CPA in particular can offer some excellent insights to let you know how current activities affect your tax situation and profitability. If you don’t know much about accounting, they can explain it. Don’t be embarrassed. You don’t know accounting, and they can’t run your machines. It may cost you more money and time to review your information, but it is essential that you know more than how much your checking account grew in the last month.
It may be hard to believe that some companies were initially set up as sole proprietorships and that this status was never changed when additional employees were added. When the sole proprietor dies, the family may be in for a rude awakening when the IRS gets involved. Or if suitable transition planning is not done and the owner who does everything dies, the remaining family will get little more than the value for the equipment and customer lists and not the proper sale price for a company that is viable.
Larger companies have problems too. Maybe there are multiple families or family members involved in the company. Without transition planning, it can get ugly.
I know of one company that had five partners who were all around the same age. They had no partnership agreement, cross-sell agreements, partner life insurance, or transition planning of any sort. They got lucky when the partners started to die off slowly and several years apart, allowing the others to pay off the widows. It’s not best to rely on luck to run a business.
While all companies have employee issues, as your company gets larger, there will be more issues. It seems that most companies, at some point, wind up with a “rules lawyer” who pushes your buttons on matters such as bereavement leave, jury duty, and vacation time. If you’ve got an employee manual or are thinking about putting one into place, get it reviewed by your attorney for legality and enforceability.
Another great source of information are the persistent sales folks that appear to form an endless line wanting time from you. If you’ve got your head buried in your work, you may miss opportunities to buy new or better equipment, implement more efficient processes, or network to gain knowledge of your industry.
Professional societies and associations are another excellent source of information about what’s going on outside your door. The American Gear Manufacturing Association (AGMA), for example, is one of the best sources of specific information on the gear industry as well as providing you with the opportunity to actually help write the gear manufacturing standards for the United States and the world. If you don’t at least investigate the changing technology that is out there, I guarantee your competition will.
There are many consultants in this industry, including myself, who could help you identify problem areas and recommend solutions or process changes that can dramatically improve your bottom line. You may think that the cost of hiring a consultant is more than you can afford, but I want you to ask yourself what the cost of doing nothing or continued floundering could be, compared to the cost of a consultant.
If you think it is cheaper to deal with these types of problems yourself or do nothing at all, it sounds like you are working in your business instead of working on your business. Your business will benefit from the help. Don’t be afraid to ask for it.