After a tough few years, manufacturers are working their way along the road to recovery. Owner managers can take advantage of the perfect opportunity to strengthen their business’ performance and future-proof their operating models. Manufacturers can conduct a viability test, which can contribute to a more resilient and stronger business which is prepared to meet future challenges, rather than trying to revert to how thing were prior to the pandemic.
Key focus areas
Manufacturing businesses can prepare to scale up rapidly whilst ensuring they have the necessary resources in place, so they don’t have to rely on Government-backed financial support as it draws to an end. Owner managers can achieve this by assessing these four key areas:
- Cashflow
- Communication
- Innovation
- Protection
Know your cash position
It is important that owner managers have a clear concept of their company’s current and predicted cash position, to ensure they are confident that they’re able to cover their liabilities and invest to keep up with growing levels of demand. To start off with, manufacturing businesses need to consider whether they will have enough cash in the bank to pay necessary bills. If this is not the case and further investment is required to assist growth or capital expenditure, early identification will allow engagement with potential funding partners to find the most suitable fit for the business.
Communication
Effective communications is vital for future proofing. Owner managers need to consider whether they’re doing enough to build valuable relationships with their suppliers as well as their customers, and learn about their operations and commercial and operational challenges. If the business is confronted with its own cashflow complications, have lenders or creditors been approached to renegotiate payment terms?
Looking forward
Even though the pandemic has caused significant difficulties across the sector, there have been some positive changes that have been introduced. Owner managers should take the opportunity to build on these through further innovations rather than necessarily reverting back to the previous habits. For example, how else can the business adapt to exploit new or expanding areas of demand?
Protecting the business
Taking steps to protect the business starts with careful consideration from decision makers. Reviewing insurance cover should be the first place to start, making sure the most suitable cover is in place; taking into account any developments in the business and ensuring it has a robust credit management strategy.