To a greater extent than other types of companies, the value of a manufacturer is likely to be driven by the quality of its products and its efficiency in producing them. On the other hand, the value of wholesalers and smaller service companies often depends on the owners’ relationships. As a consequence, the value of a manufacturer is more likely to be impacted by management’s efforts in preparing for the sale of the company. (more…)

Businesses are prone to fraud just as individuals are. Taking precau-tions to avoid mail and check fraud makes good business sense and can save your credit rating and your business. (more…)

During a period of rapid expansion, manufacturing companies invest heavily in machinery, equipment, receivables and inventory. Leverage increases quickly as debt (versus profits) is used to expand. Mezzanine financing allows management to execute a relatively aggressive expansion plan without impairing its normal working lines of credit. It is particularly useful in the manufacturing environment due to the relatively high capital requirements of the industry. (more…)

Small business owners negotiate on a daily basis. Whether it’s haggling with a supplier, bartering with a business partner or motivating an employee, negotiating is a fundamental reality of small business. But that does not mean it is always done well. To negotiate well is to improve your chances of having a successful business. (more…)

For many manufacturers, outsourcing is a low-risk way to start a new business or expand an established one. As in any business, outsourcing makes most sense when a specific function can be accomplished better, faster, or cheaper by an outside vendor. The following case study shows how one small manufacturer has achieved success by outsourcing all of its functions except administration, sales, and marketing-including the manufacturing, warehousing, and shipping of the product. (more…)

Running a business without a business plan is like rock climbing blindfolded. Your chances of making it successfully to the top are slim. And the process will surely be a death-defying one. (more…)

Manufacturers need to implement financial strategies that ensure continued growth, provide for the replacement of expensive equipment and facilities, and position the company for the right expansion or acquisition opportunity. As traditional financing sources continue to be relatively tight, this often proves to be one of the more difficult tasks faced by a growing company. Strategic changes, such as rapid growth or acquisitions, often require companies to seek financing beyond their internal resources or traditional bank lenders. The private placement of equity remains one of the most viable capital formation alternatives for manufacturing companies. (more…)

Most small businesses greet the collections process in the same manner they would greet a ven-omous snake in their kitchen. No one wants to deal with it until their life is at stake—or in this case their business. But at some point you have to deal with it. With some preparation and a little courage, you can charm the snake right out of your business. (more…)

Implementing the best purchasing strategies is critical to a manufacturer’s success. Many companies can improve their bottom lines by 6 to 10% by improving their purchasing procedures. Here’s an illustration: assume that purchased materials account for 70% of a manufacturer’s total expenditures. If a company with a normal profit margin of 10 to 12% achieves as little as a 1% savings in purchasing, the net result is a 6% benefit to the bottom line. In fact, the savings should be in the 5 to 10% range. In addition, the payback on improved purchasing procedures is generally realized quite quickly. Companies that initiate improvement strategies should expect to see benefits within two years. (more…)

There are several rules of thumb used by bankers in making secured lending decisions and managing loans. Manufacturers should understand these rules so that they can monitor their credit ratings and maintain their ability to borrow on favorable terms. (more…)