3 Lessons Learned from Restructuring a Manufacturing Company

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3 Lessons Learned from Restructuring a $30 Million Manufacturing Company

As restructuring and turnaround consultants, we’ve seen a few things when it comes to family-held companys who have found themselves in trouble and need help in turning their businesses around. For example, from 2014 to 2017, a local manufacturer  from $30 million in revenue to $9 million. Within the span of 3 years, the company had laid off over 70 employees and lost $21 million in revenue. This type of revenue loss is not uncommon with small to mid-sized family owned manufacturing companies who didn’t have a grwith plan, processes in place, or lacked innovation. As businesses are passed down from generation to generation, a lot of issues arise from lack of revenue to product diversification as the business environment changes rapidly. But there is a deeper question related to how a 30-year business can lose over $21 million of revenue within a span of 3 years. With our involvement as restructuring consultants, we’ve helped the identify three main issues related to their decline.  Here are are some lessons that every business needs to learn from this expereince.

Process Matters

As Steve Jobs mentioned, “great things in business are never done by one person. They’re done by a team of people.” For a team of people to work together and achieve results, processes must be in place.

Unfortunately, most small to mid-sized businesses believe that documenting or implementing processes is ineffective. This mentality is the case of this manufacturing firm who has been in business for over 30 years. The company didn’t have sales processes, accounting processes, or cross departmental processes which resulted in an inability to finish projects on time and within budget.

With a reputation of late delivery, the brand of the company deteriorated. Eventually, this led to a decrease of business from loyal customers. The founder and CEO, who is an engineer by training, had neglected to implement processes within his organization which has come back to haunt him 30 years later.

Pay Attention to the Numbers

We all hear the saying “Numbers don’t lie”, but very few small to mid-sized business owners pay attention to the numbers. With a 30-year business, one would think that the CEO would consult the financial statements to manage his business; from decision making to cost management. In this case, the CEO had limited his ability to manage projects and pay attention to the financial data.

Unfortunately, this story is not uncommon with small to mid-sized manufacturing companies. For any business leader who lacks of time or ability to study their financial data, it is critical for them to hire a CFO or a controller to do the job.

Financial statements are the best gears which provides vital information to the company’s overall financial health and neglecting them can lead a company to lost $21 million in Revenue within a very short period of time.

Focus on Growth Rather than Maintenance

There are two components related to running a business:

  • The growth section which focuses on strategy, organizational change and innovation
  • And the maintenance section which focuses on the support of the business such as IT, HR, Tax and Accounting etc.

About 80% of founders spend most of their time on the maintenance side of their business. This, in fact, lead to lack of discussion and focus on strategy and innovation within the organization. The lack of spending time on the growth section of running a business is one of the reason why most small to mid-sized manufacturing firms have stagnant or declining revenue.

Throughout the years, the founder of this manufacturing firm was lost in the maintenance side of his business. Unfortunately, this was a blow to his company because not enough time was spent on strategizing and innovating.

Final Thoughts

Laying off 70 people of your workforce and losing $21 millions within 3 years is every business owner’s nightmare. To stop the bleeding  it’s never too late to reevaluate your business to implement processes, pay attention to your financial statements, and spend more time on the growth section of your business.

The bottom line: It is worth the investment to bring in a expereinced team to help you evaluate the situation and put the critical pieces in place to turnaround the stituation and begin the climb back up the ladder to healthy reveneues and growth.

 

 

Is College for Everyone?

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According to the National Student Clearinghouse, only 57% of students who start college will graduate within 6 years.  It does not take an engineer to recognize that a system with only a 50% success rate, is, for one reason or another, a failing system.  Now, some of this may be able to be fixed at the collegiate level, and we hope that colleges and universities are doing their level best to make college as accessible as possible to interested students.  I offer, however, that there isn’t so much a problem with the university system, but a disconnect in the core of what a college education is comprised of, and the needs of some students.  Simply put:

It is my opinion that college is not for everyone.

Now, this might seem like a crazy thing to say, especially in a culture that considers a four-year degree a requisite part of becoming an adult.  I want you to think back at my statement, however, and think about a word that was nowhere in that sentence: education.  Is education not at the root of the real message behind America’s “Go to college, get a job” mantra?

Do we hire college graduates because they managed to show up to a handful of classes each semester for four years?  Absolutely not!  We hire college graduates because it is our expectation that they have a working knowledge of how the world works and a healthy foundation to build successful careers in their fields of study.  In short, we value their education.

I will be the first to admit that for most of my life, I couldn’t imagine what a person was supposed to do after a high school, if not find a four-year college or university.  It seemed like a symptom of laziness or of a lack of fore-sight.  What I’ve learned since then, however is that there are, especially in the mid-west, some amazing opportunities for intelligent individuals who simply do not learn well in a lecture-hall setting.

Example:

For example, the IBEW’s electrical apprenticeship is a rigorous 5-year program that involves 4-8 hours of weekly classroom instruction on top of 40-hour workweeks.  In this apprenticeship, students learn the hands-on skills you’d expect including welding, wiring, and state code requirements, but they also learn how electricity works at a molecular level using trigonometry.  This doesn’t sound all that different from coursework offered to an electrical engineering major, except that frankly, given the choice, I’d choose the electrician to wire the addition on my house in a heartbeat.

After completing the apprenticeship, electricians are expected to take continuing education classes to help them keep up on proper technique and safety standards.  In addition, many go on to be foreman or project managers.  This involves intrapersonal skills involving customer service, and employee management.  Electrical project managers are also expected to order materials and be able to negotiate good prices for the work being done.  These skills are very similar to those learned on a business administration track at a university.

Cost of Education

Aside from being a time-consuming proposition, bachelor’s degrees are expensive!  Even in-state tuition and living costs for a regular, state university like the University of Illinois for the 2018-19 school year is estimated by the university to run between $31 – $36k per year.  This adds up to over $120k for a traditional bachelor’s degree.  Many would feel ill at ease to leave a recent high school graduate in charge of our house for the weekend, but it has become commonplace to expect them to pick a major and a college or university at this same age.  Even if the student realizes in the first year that they aren’t ready for a college or university, they’ve likely already tallied up thirty thousand dollars in student debt.  In what other way can a person so young make a mistake equal to the cost of a down-payment on a starter home?  The electrical apprenticeship mentioned above, on the other hand, is provided at no cost to the student.

Want to Know the Best Part?

If a tradesman decides down the road that he or she is interested in attending a college or university, the school will still be there.  There will always be a way for a person who is interested in educating themselves to learn something new.

Cause and Effect

By changing our script from “go to college” to “get an education,” we can show high school students and graduates that we, as educators and employers, are supportive of both their personal and professional aspirations.  Individuals are not meant to be cranked through a collegiate assembly line, but to find vocations that fit their skills and interests.  College graduates have a hugely important role to play in our society, but so do tradesmen and manufacturers.  We owe it to the young people in our communities to teach them that both are viable and responsible options.


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Attracting the Best Talent out of Colleges

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Twice a year, students are coming out of college looking for a job that’s right for them. In today’s day and age, this group of people are looking for a wide variety of perks. A company’s ability to offer these perks can significantly impact a potential new hire’s decision to come on board.

Most Attractive Offerings

What your company can offer to their employees can either attract new ones or push them away. The most attractive offerings to graduating students in this generation are compensation plans, opportunities for advancement, and technology.

Compensation Plans

When most people think of compensation, they just think of how much money is going to be paid. This is a common misconception that most people entering the workforce now struggle understanding. It is important that companies demonstrate what they can offer in terms of what they can pay and what other plans they can provide. Those other plans need to include certain benefits including paid time off (PTO), health and other medical insurances, retirement plans, continuing education, etc. The more of these you can offer and present to this group of people, the more success you will have in hiring the best talent in your related field.

Opportunities for Advancement

People in this generation are also extremely interested in career development. As a company, you need to be able to provide opportunities for advancement. According to Forbes, 87% of millennials say that career development and job advancement are important to them when looking for a job. If your company is a flat organization where it is not growing or turning over positions, you need to seriously think about reorganizing to a structure that will.

Technology

In today’s world, technology is everything. Millennials are attached to technology and the more you can offer, the better. Technology you need to offer includes updated computers and monitors, presentation screens, and phones. Technology that is icing on the cake includes tablets, iPads, and work cell phones.

Important Factors

Work-Life Balance

A balance between work and outside life is important for any employee. In order to attract the best talent coming out of college, employers need to offer flexible hours, holidays off, and vacation days. “Flexible hours” means the ability to come to work late or leave early for a valid reason and make up the time in another day. This allows employees to be able to do things in their life that need to be done during the week without any problems.

Social Interactions

  • Many people entering the workforce for the first time need positive social interactions in the workplace. It is a must that coworkers are friendly, engaging, and collaborative. This eliminates those nervous feelings and allows for successful work.
  • Another great attraction is the use of off-site events. Company retreats, trips, and picnics are an excellent way to blow off some of the stress caused by work-related activities. Not only will this allow employees to blow off some steam, but it will also give them a chance to enhance relationships with coworkers.
  • To young professionals, free company gear can mean a lot. Things like T-shirts, polos, backpacks, hats, and jackets all branded by the company will make an impact. Employees will be able to show off and market the company while enjoying the luxury of free gear.

Company’s Purpose

Lastly, most people want a job that has a purpose; the ability to work for a reason other than just a paycheck. If a company has its values, purpose, and mission developed in full, it can bring more attention to employee candidates. While searching for a job, potential employees can match up a company’s values with their own, as well as seeing the purpose and the mission. This allows them to find the job that’s right for them.

If a company doesn’t offer most of these perks, they’re most likely not going to attract the best talent.

 

 

Why I Chose a Small Business over a Large Company

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Each company has their benefits as well as their negatives; regardless if they are a small or large company. For personal reasons we make our choices based on a variety of opinions. Looking at what each type of can offer a college graduate we can decide individually which is a right fit for you and your preferences.

What Large Companies Can Offer Recent College Graduates

Large companies benefit the college graduate through brand name association, co-workers, social aspects, and networking. Disadvantages of large companies such as feeling insignificant and being singled into a specific role. 

Brand Name Association

For a large company, the brand name has an immense impact. For example, companies like Google have absolutely no problem attracting employment-seeking individuals solely based on their brand name. Just by having that brand attached, employees automatically gain an advantage in future job searching processes. That advantage lies in the fact that they can get almost any other job that they want merely because that brand name is highlighted on their resume.

Co-Worker Camaraderie

The next thing that these large companies can offer is relatable coworkers. Whether it be at an intern level or at the fresh out of college level, there will be other people in the same exact position as you. Other new-hires will be joining this company around the same time, which gives a sense of relatability and ability to collaborate more effectively. This offering is a huge advantage for these companies. These new-hires will feel more comfortable and less stressed out starting off their jobs knowing that there will be others in the same position to relate to.

Social Benefits

As for a social aspect, it is believed that large companies can have both an advantage and disadvantage. The benefit comes in networking. As we know, with big corporations or firms, comes a much greater number of employees. The ability to be able to network yourself with as many people as possible is a huge turn on for potential new-hires for it can benefit them tremendously throughout their career.

Feeling Insignificant

The major disadvantage is that to this large company, you will start as just another number to them and it will be harder to create more interpersonal relationships with coworkers.

Singled into One Position

In a big company, they will typically only allow you to work in the field that they need you in the most. Then when you want to go to a different company, they might want you for something else that you have no experience in.

What Small Businesses Can Offer Recent College Graduates

Small businesses offer their own unique benefits, mainly due to the ability to engage on a more personal level. As well as offer flexibility within the company.

Hands On

At a smaller company, a recent college graduate will be engaged in a more hands on experience in more than just one field. The experiences are by far more practical and transferable.

Business Insights and Exposure

Small businesses can offer insights and exposure to more components of how the business is ran. This will allow a recent graduate to develop and grow in multiple aspects of their professional career. Also, skills you learn from working at a small business are considerably more likely to be useful in the future if you decide to work elsewhere.

Social Benefits

Social interactions and contributions in a small business bring several advantages to a young professional. Here they will have a mentor that will work more closely and frequently with just them. These mentors share their experience through stories that they have experienced through their careers. Regardless if the stories are specific to the company or the past jobs that they have experienced. The reduced boundaries are a big plus in growth and experience building through one-on-one training interactions.

Feeling Significant

they will feel more meaningful to the group rather than just another number in a large group. This is also true because your ideas, opinions, and suggestions are taken much more seriously while at a small business.

Co-Worker Benefits

You begin to gain a sense of camaraderie with coworkers and management. You will be receiving honest feedback based on your ideas. Giving the opportunity to brainstorm or spitball ideas with co-workers that have the same goal; building the company up.

Small Businesses Win

Based on these thoughts and offerings, I would choose a small business over a large company 10 times out of 10. If a small company is the right fit for you and your preferences, it makes much more sense to go along that route than be potentially miserable at a large company. In my recent experience along with talking to friends who joined large companies out of college, I truly believe that I made the right decision and would hope that many others decide to follow along the same path.