12 Tips For Growing Your CNC Machining Business
Starting a new business can be a challenging
endeavor, especially for entrepreneurs entering a crowded market with large,
well-established competitors already in place. As the manufacturing industry
experiences shifts in how it operates, how can CNC machining businesses secure contracts and grow within the industry
despite today's challenging obstacles?
Here are some tips and suggestions for small CNC machine shops to
continue growing their businesses.
1. Develop Partnerships
For many start-up machine shop owners, the early
days can be an uncertain time in which numerous concerns, such as volume
expectations, client lists, or even floor plans, have yet to be resolved. In
these circumstances, existing friendships and business connections can be
valuable assets.
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Whether having friends steer clients in your direction,
enter into partnerships, or simply provide advice on business practices,
relying on your current connections can give you a useful leg-up. Many
also build their network through industry events and webinars.
2. Target Your Segment of the Marketplace
It is generally a good practice to focus on the
specific types of purchasers that will buy your products at the best volume
rate. For example, if your shop specializes in producing gear shafts with a
diameter under five inches, try to establish relationships with companies
that purchase this product at a rate favorable to your production cycle and
turnover.
Targeting your
market niche will help you make
the best use of your specialty, like only in replacement parts. Some CNC
companies see this as a very successful model for what may seem like a limited
market. As you grow your company, you can diversify into other markets. Another
marketing method is leveraging emerging technologies such as the internet,
videos and social networking which can
help improve your shop's visibility online and reach more buyers. Share
videos touring your shop floor — you can have a video created by Thomas to help prospects get a look at
your operation.
3. Diversify According to Demand
While it’s sometimes a bad idea to take on a job
outside the capabilities of your shop when you're just starting, new projects
that seem within reach and will provide a cost-efficient result can be a helpful
way to diversify your operations. If, for example, a lathing shop has the
training and funds to undertake a profitable milling or plastic fabrication
contract, then the resulting diversity can help provide sustainable growth
even during periods when one sector of the market is on a downswing.
4. Don’t Rush to Expand
Purchasing machines that are not yet cost-efficient
or enlarging facilities without the staff needed to maintain them can slow down
business growth and hinder long-term expansion. In many cases, it may be better
to concentrate on making steady gains rather than giant leaps forward, as even
a small shop with fewer than a dozen machines or employees can still meet or
exceed the national productivity average. It's important to also communicate
your growth plans — even the small ones — to your entire team.
5. Remain Open to New Technology
Although new technical innovations can be costly in
terms of additional training and initial set-up, recently-developed equipment
may have a positive long-term effect by simplifying production methods or
providing the means to accomplish tasks that were once considered impractical.
New technology can sometimes help a business remain competitive, especially if
the innovation gains widespread notice. Exclusive Tips By
Shop owners might want to consider purchasing more
manufacturing equipment to fulfill existing and future orders. This can be a
difficult decision to make, as future growth isn't guaranteed and buying
equipment has many upfront costs. On the positive side, however, new machinery
equipment will increase production capacity and improve cycle times, which
will, in turn, create more opportunities for your business. Business owners
must weigh the risks versus the rewards — and again, communicate your efforts
to your team accordingly.
If investing in new machinery isn't an option, see
if you can modify and update your current equipment. This approach requires a
much lower investment than purchasing new items, but it can still improve your
production capacity and cycle speeds.
6. React to Your Competition
Being aware of your main competitors is a valuable
practice under most circumstances, particularly in times of economic volatility.
For example, market fluctuations can cause a slowdown in commercial
manufacturing, while leaving military production relatively unchanged (and
vice-versa). In this case, competitors from one side of the spectrum may bring
their operating standards to the other, forcing companies to accelerate their
production rates or lower prices to maintain market share.
CNC machining companies can see how their online
presence compares with competitors by requesting a free digital health
check with Thomas.
7. Invest in Digital Marketing Efforts
Another growth method is leveraging digital
marketing efforts such as emails, videos and social networking which can
help improve your shop's visibility online and reach more buyers. Keeping your
customer base happy is key to building your business, but being online is the
golden ticket if you want to attract more customers.
Begin by building on what you currently have and
talk to existing customers about what could be better. This feedback will help
you learn about their challenges and how you can create resources to address
their concerns. What type of content do they consume? What are their jobs to be
done? Publish this information on a high-quality website to attract
new customers. Organize the content into an "Examples of Work" or
"Markets Served" section on your website, like the CNC machining
website example seen below.
8. Be Flexible in Multi-Stage Processes
Companies that combine both internal fabrication
and machining operations can often save time or money by acquiring equipment
that incorporates secondary work into its primary function. For example, using
a cutting laser can often reduce the need for post-fabrication finishing, such
as smoothing or evening edges.
9. Integrate Your Operations
While vertical or horizontal integration is beyond
the reach of many small CNC businesses, it may still help bring as much of the
manufacturing process in-house as you can. Streamlining measures, such as
organizing a production schedule around a machine shop’s in-house capabilities
or prioritizing jobs based on your own production center rather than an
external supplier’s availability, can help smooth workflow and ultimately
improve output.
10. Initiate Scalable Growth
In many cases, successful business
growth is not dependent on the size of the products being manufactured,
but on the depth of the fabricating process. It can be beneficial to evaluate
the services or products you provide to your customers, and see if you can
expand the reach of those services. For example, if you produce steel tubing
for your purchasers, see if you can also provide them with the fasteners used
to join these components together. Securing more expansive contracts from
existing relationships can be a secure and scalable method of growth.
11. Step-by-Step Value Addition
CNC machining is
essentially a multi-staged process in which there is the potential for
value-added work at each stage. Consequently, a shop’s potential for expanding
its business largely depends on how many of those value-added steps it can
perform. A small business seeking to expand can evaluate its manufacturing
strengths and take advantage of any opportunity to insert itself into a
value-added production stage. This approach, coupled with gradual service integration
and streamlining, can be a valuable way to expand your small CNC business.
12. Warehousing
Equipment isn't the only part of the physical shop
floor that needs to be changed if you're expanding your business. Storage
facilities and warehouses should also be considered once you grow to
accommodate additional production. If adding on to your current shop floor
isn't an option, off-site warehousing might be the way to go. These facilities
can help lower the additional costs of maintenance and overhead typically
associated with running a warehouse.
Increase Sales In Your CNC Machine Shop
Now is the time for shop owners to do all they can
to manage and maximize their growth. The good news is that no matter how small
your industrial business, digital efforts have been proven to grow businesses.
Contact us for a free digital health check to see how you can improve and
compare against competitors. Degreed engineers support our industrial marketers
so our team understands the ins and outs of your industry.
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