Volume 16, Issue 5 - June/July 2015

TREND TRACKER
mcollins@buildingia.com

Broom or Bust
Spring-Clean Your Business and Sweep Problems to the Curb
by Michael Collins

When the market is busy, it’s easy to focus solely on executing orders. It’s important, however, to step back from working “in” your business and spend some time working “on” your business.

This can take the form of various housekeeping exercises, and the first of these literally involves cleaning—your manufacturing plant, that is. We’ve toured very few facilities that didn’t have at least one or two dusty piles of outdated or obsolete inventory.

Now, when your business is humming along nicely, is the time to get rid of these piles. Donate usable products and capture the tax deduction. Sell recyclable materials for scrap. Whatever you do, get rid of them.

You can use the extra space to start positive programs such as a lean manufacturing supermarket. Such internal supermarkets represent convenient stocking stations for frequently utilized profiles, hardware, fasteners and other items. There’s nothing better than trading an eyesore that is a source of anxiety for an area that enhances productivity.

Clean Out Irksome Employees

Beyond the manufacturing plant, it’s a good idea to review your roster of employees to identify any sources of trouble. We’re aware of one company where, following a 360-degree peer review, a surprising number of people pointed to one individual as the source of much unneeded conflict and other problems. This is the employee who causes so many complaints that you aren’t sure how he or she even found time to interact with that many people. In that situation, a fair severance and an invitation to pursue other opportunities led to a nearly palpable sigh of relief. It’s bad for morale to keep troublemakers on your payroll, whether they’re in sales, manufacturing or the back office.

If you have existing openings to fill or you create openings as just discussed, this is a great time to clean up your hiring wish list. Now is the time when many workers are interested in changing jobs. If they secure a new position now, they can make appropriate decisions regarding which school their children will attend in the fall and other family matters.

Just because it’s getting more difficult to find good people doesn’t mean no one is looking to switch. A sales professional may be unhappy about changes to their territory, or new competition from a newly established operation, or a change resulting from a merger. There may be an engineer whose requests to travel less frequently have fallen on deaf ears. In any case, strong workers are in play every day of the year. If your previous methods have not succeeded in attracting the right talent, consider retaining a building-industry-focused recruiter.

Another area that may need cleaning is your roster of customers. During the recession, few companies could afford to be choosy regarding their customers. Now, however, the winds are again at your back, and it may be time to deal with unreasonably demanding, unprofitable or otherwise draining customers. If you can afford to lose these problem customers, charge them whatever you must to make them profitable for you. If they stay? Great. They’re now worth having. If they leave? Problem solved.

Trim Your Product Line, Too

Finally, now is a great time to clean up your product offerings. If there’s a product you’re making yourself at a thin margin, consider outsourcing it and then selling it on a distribution basis. Murphy’s Law guarantees that products with thin margins probably also have an inordinate number of problems. What could you do with time freed up from dropping them?

On the other hand, if you’re considering introducing new products, think about distributing them rather than manufacturing them. The sales lost during the six months to a year (or more) that it takes to introduce a new product can be hard to ignore. Distributing a product, rather than designing it from scratch, can result in an immediate revenue stream. Also, once you’re an expert at that product segment, you can always introduce your own product later.

These housekeeping steps will guide your company to a strong finish in the second half of the year.


Michael Collins
is an investment banker and a partner in Building Industry Advisors. He specializes in mergers and acquisitions in the door and window industry.

DWM
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