40 | AUGUS T 2017 www.canadianmetalworking.com
BY KEN HURWITZ
Iam often asked by
ing ones, if I
ever see trends
ities in the mar-
ketplace that all
successful manufacturers share.
Because most of my clients are
essentially doing the same type of
work, it is easy to note differences
between the successful shops that are
growing and the ones whose business
has stayed flat or become stagnant.
The following are some of the best
business practices I have recently
seen within the industry:
1. Focus on what you do well. I
realize this is a simplistic statement,
but it is amazing how quickly shops
can get caught up in trying to be all
things to their customers.
My most successful customers have
a product or family of products that
they make extremely well, and for the
most part, this is their focus. If your
expertise is in milling, then this is
the work you should go after.
Oftentimes these types of shops
will try to grow when a customer
approaches with some turning work,
for example. This means buying a
CNC lathe. If ultimately the lathe
doesn’t get used to its fullest, the
resources of the business are being
invested in a machine that does not
bring a return that other equipment
in the shop can.
My most successful clients that are
milling experts continue to put new
CNC machining centres on their shop
floors, because they know they have
loyal customers, and with the additional capacity, the work will eventually follow.
2. Find the right people and hold
on to them. A business owner is
always the company’s best salesman.
Particularly in the manufacturing
industry, it is experience and expertise that attract customers and give
However, it is almost impossible
for one person to run every facet of a
business, which means there is a real
need to find and train good people,
which is very difficult. In many ways
this is the toughest task for any manufacturer, so when you do find them,
do what you can to keep them.
Most of the business owners I work
with know how to run, set up, and
program a machine. However, the
successful ones have put people in
place to handle the shop floor while
they are out on the road trying to find
and secure new business, as well as
look after existing customers.
3. Limit your growth. For many
manufacturers, especially ones that
are in the early stages of establishing
themselves, finding opportunities
in the market is relatively easy. And
there is no doubt it is easy to get
enamoured with trying to land as
much work as possible. But, the shops
that show discipline when growing
typically are the ones that have the
longest staying power.
I was working with a customer
earlier this year who, after only three
years in business, bought a building
that doubled their floor space.
Then only two years later, they
needed to upgrade an older machine
because it was constantly break-
ing down and the repair costs were
continuing to rise. I was able to
secure them a financing approval for
only $70,000 (80 per cent of the total
cost) because their financial state-
ments would not support 100 per cent
financing, and they did not have the
ability to pull a deposit from their
Even monthly payments were
becoming a problem because they
were having cash flow issues. The
reality was that they had tied up so
much of their resources in the new
building, they were having great difficulty getting new equipment, which
is what they really needed to deliver
product and pay the bills.
It often makes sense for a manufacturer to own its facility, but a large
investment such as this has to be
done only when it can be supported
by business income.
4. Reinvest in your company.
Wherever possible it is always best to
keep profits within the company and
use them to finance product development and growth.
Many assets can be financed, not
only machinery and equipment, but
tooling packages, accessories, and
software. However, growth from new
product development and new hires
cannot be financed even though they
really are the best use of the company’s cash resources.
The ancillary benefit of having
retained earnings, which are the
portion of net income retained by the
company as opposed to being distributed to shareholders, is that it makes
lenders very happy. They see that the
company itself now has real value, so
it is easier to negotiate an increased
operating line or secure financing for
There are many reasons that some
manufacturers find success while
others do not, so looking around the
industry and making notes is certainly a worthy exercise.
Ken Hurwitz is senior account manager, Blue Chip Leasing Corp., 416-
FINDING THE RIGHT STUFF
4 common practices link successful manufacturing businesses
THERE ARE MANY REASONS
THAT SOME MANUFACTURERS
FIND SUCCESS WHILE OTHERS
DO NOT, SO LOOKING AROUND
THE INDUSTRY AND MAKING
NOTES IS CERTAINLY A WORTHY