New Manufacturing Opportunities Call For Thinking Ahead
October 22, 2013
After reading this article in Accounting Today, I’m inspired to share one of its encouraging facts: According to a Boston Consulting Group study, a significant number of large manufacturers—48% to be exact—plan to return production to U.S. soil. As the article goes on to discuss, this fact is especially exciting for U.S.-based small businesses and entrepreneurs.
Here’s why: The homecoming of these larger, established manufacturers gives smaller manufacturers, wholesalers and distributors opportunities to build new revenue streams and relationships. And, with unmatched agility, entrepreneurs are well positioned to help large companies find quick and efficient solutions to technical problems.
It’s likely that several of you within the manufacturing segment have already experienced—or are preparing for—growth. While it’s easy to get caught up in the buzz of new business, it’s important to think ahead to when the market will inevitably slow down.
Taking lessons learned from the last economic downturn and sticking with best practices can help you navigate the complexities of growth and prepare for market adversity.
Best practices may include strategic planning, budgeting, and identifying key financial ratios for benchmarking. It’s time to cross-train employees, develop robust employee recruitment and retention programs, and build a capital reserve to help bridge financing through downturns. Organizational pillars like business structure and succession planning should be established, too.
As a firm focused on the manufacturing industry, we’ve worked with clients who have already taken steps to prepare. For instance, we’ve assisted several smaller manufacturers and their lenders in facilitating a solid banking relationship—key to financing growth as well as providing resources during a slowdown.
As opportunities come ashore in the manufacturing world, small businesses and entrepreneurs must be prepared for growth, as well as the next downturn. After all, thinking ahead can help you stay ahead—even in the face of market adversity.
Andrew Thom, CPA, CFE, is AEM’s Manufacturing Segment Leader. When he’s not navigating southern Minnesota waterways in his kayak, he’s helping clients navigate changes in their business. You can reach Andy at 507.304.6830 or at andrew.thom@aemcpas.com.