By Gene Russell, Manex President & CEO
A smart business plan for manufacturing is more than smart. It relies on data and it is essential as manufacturers and small business of all types climb out of the COVID-19 era. Let’s look at the steps we take at Manex to develop that data-driven business plan for manufacturers.
While developing strategies and business plans for California manufacturers, we like to look at data. Specifically, we look at the industry segment or segments that the company is operating in, as well as 3 to 5-year company financials. It is helpful to understand the economy, the industry itself, governmental assistance if any, key external drivers, first-tier suppliers, second-tier suppliers, first-tier buyers, and second-tier buyers. It is important to look at similar industries as well. These could be faster-growing adjacent industries that we may consider expanding the company into. Finally, it is helpful to compare the company’s operating and financial data to the industry in a form of benchmarking:
- Revenue Growth
- Profit Growth
- Profit Margin
- Industry Structure (both negative and positive)
In addition, key trends provide historical and projected economic data specific to manufacturing within the sector. We look at a company’s strengths, weaknesses, opportunities, and threats (SWOT) analysis and the industry sector SWOT. We can provide historical data back to 2011. We look at globalization, number of firms by year within the USA to look for increases or declines in domestic participation. Competitive advantages of key players are outlined and analyzed. Products and services are segmented by percentage for easy comparison. What are the demand determinates and how have they shifted historically and what is the trend line forward? Exports and imports to and from major counties are discussed. What states within the U.S. contain the highest concentration of competitors?
Cost structure benchmarks are very important to review as well. We include:
- Other Costs
Based on further analyses and data, we discuss the barriers to entry, major players if any, and other important players. Capital intensity, technology and systems, volatility, regulation, and industry assistance are reviewed.
These discussions and analyses are taking place at the ownership and leadership level of the company while interviewing a few managers, and line personnel for their expertise and knowledge.
We want to set specific ways to meet or beat industry data over a three-year to five-year time frame. What will it take to gain one or more accounts per year in scale and quality of your current top three accounts? What products or product categories should be de-emphasized over others? Are you chasing too many small accounts?
Finally, what new sectors should the company be considering? Growing into adjacent markets is a good approach for tapping new revenues. Because we start with an industry analysis including a market needs analysis, we provide the right starting point. Many people approach an opportunity like a hammer looking for nails. Bring a solution agnostic approach during your first look at an opportunity. You need to develop a strategic storyline built around your SWOT details and see if it meets or beats the new market or industry sector. Is your storyline acceptable and realistic? Overlay the financial needs, and the timeline required to make your move. Play around with best case, most likely case, and truly a worst-case launch and the required investments in capital.
Manex brings over 194 industry profiles and analyses with our relationship with IBIS World through CMTC/MEP. In addition, we have highly relevant 22 consumer-focused sectors from Euromonitor Research, also through CMTC and MEP. Euromonitor also provides excellent data and trends regarding digital consumer trends, households, income and expenditures, lifestyles, and population. We have found that the combination of IBIS and Euromonitor within the consumer sectors like food provides an excellent platform for analysis, planning, benchmarking. What types of stores sell the most of your product or new proposed product, what major chains? Are prices expected to decline? These are but a couple of many, many available data points.
Let us know how we can build, shape, or assist you in your strategic plans.
Gene Russell is President and CEO of Manex and has over 30 years of senior executive strategic planning, operational management, and consulting experience in the manufacturing and technology sectors. With his extensive knowledge of manufacturing operations, he has developed and implemented key strategic initiatives for companies, allowing them to improve performance and achieve profitable growth. He can be reached at firstname.lastname@example.org.