Four Steps to Boosting Your Business’s Value

Business value goes beyond balance sheets. It includes all of the factors that make up the estimated health and wellbeing of your company.

Mike Sibley, leader of the James Moore manufacturing team, and Kevin Golden, a team partner and member, join Ed Marsh, a business management consultant and principal with Consilium Global Business Advisors, to explain the benefits of creating value in your manufacturing business and practical steps for getting started. Ed works with lower middle-market industrial manufacturers with strategy and revenue growth.

Together they explain how to adapt your successful production processes to sales and marketing, developing long-term value along the way.

Manufacturers have a built-in advantage to creating value.

The same rigorous mindset manufacturers have developed to optimize their engineering and operations can be applied to the front side of the business.

“Bringing that process engineering mindset to revenue growth, strategy, marketing and sales creates an opportunity to make earnings more predictable,” Ed said. “This can take some of the burden off the company.”

Many manufacturing businesses rely on a charismatic, visionary founder to drive growth by virtue of their personality. However, creating value replicates and expands capability across a team. This insulates a company from the pitfalls that come with leaning too heavily on one person and paving the way for a smooth leadership transition in the future.

The benefits of adopting a value-driven mindset include:

• Distributing risk: Many manufacturers depend on repeat orders from existing customers for the majority of their revenue. This approach can leave a company shorthanded if a long-term customer relationship changes or dissolves. Part of building business value involves training your sales team to bring in new accounts to buffer from setbacks.
• Consistent, accurate forecasts: Reliably producing on-the-money forecasts puts you in a stronger position in talks with potential acquirers, strategic partners and commercial lenders.
• Bigger earnout: Investing in the value of your business also increases the chances of a higher earnout after an acquisition deal.

To start building business value, look for models within your business and beyond.

A first step to boosting the value of your manufacturing company is to use what you know.

Look for ways to apply hard-earned lessons from the operational, production and manufacturing sides of your business to sales, marketing and strategy.

“Sometimes people make the mistake of thinking they have to become someone completely different or overhaul what they do,” Kevin said. “Maintain your core and transfer your best practices to your sales. That adds diversity and keeps you from stagnating.”

Take a page from the playbook of technology companies. Although the tech sector is strikingly different from industrial manufacturing, the intense pressure from investors drives tech companies to innovate best practices for growing revenue. Mine these innovations for ideas you can adapt to your own operation.

Learn to think like a buyer.

A challenge that can quickly derail the process of building business value is a mindset that doesn’t flex. Buyers are changing. Younger generations often decide what to buy based on online reviews and are used to using Google searches and chatbots in the buying process. Adapting to these kinds of changes is key to staying competitive.

“The brutal truth is that nobody cares about your products,” Ed said.

That can be a painful reality for manufacturers who invest energy, research and development in product innovation. But remember that buyers wouldn’t buy your products if they didn’t have to. Understanding that mindset is vital to tailoring your marketing and sales to the buyer’s needs.

“Ultimately, buyers are trying to solve a problem for their business,” Ed said. “It’s really difficult, but critically important, for manufacturers to shift that mindset to think like a buyer in order for this whole thing to work.”

Without this mindset, manufacturers run the risk of creating a product that no one wants to buy. Even if it’s ingenious, “if no one’s buying it, then you’re not solving a problem,” Mike said.

Get started on building business value with these four steps.

Step 1: Begin with your website. Feature easy-to-find content that answers the questions your prospective customers have. Use search engine optimization (SEO), market research and design to highlight your expertise. Chatbots can help customers engage in a way that doesn’t feel threatening.

Back-end web analytics can equip your sales representative ahead of a meeting with a customer. Knowing which pages of your site they’ve visited helps staff have the right questions and leads on hand.

“If they visited your semi-automatic machine model several times, your sales rep can say, ‘Experience tells me people often are trying to decide to what degree they should automate. Is that something you all are wrestling with?’ Now you’ve got a great intuitive, authoritative, natural conversation,” Ed said.

Track your success rate in searches for certain key words, and know the percentage of site visits that convert to leads.

“People pay a ton of money for SEO and never connect the dots,” Ed said. “It’s an integrated effort in a world where buyers are 70% of the way through their buying journey before they want to talk to a sales rep.”

Step 2: Create a culture of business value. Train your marketing and sales teams to think about what customers need and why they would consider buying your products. Explain the rationale behind this approach, and make sure you hold people accountable.

“We are better than the products we make,” Kevin said. “Make sure that this gets ingrained in your culture.”

Manufacturers know how long it takes to make each piece on the floor. But they often lack those metrics for the sales side of the business.

“That dissonance represents a huge opportunity,” Ed said.

So better leverage your marketing to build business value, measure the right things. Know the sales cycle, how many leads convert to accounts, how long it typically takes to close a deal and the average size of a deal. Use digital tools to keep track of how long it has been since you’ve touched base with a customer and whether they click on links in your company’s emails.

Step 3: Tie in the full range of revenue growth. To avoid creating products that buyers don’t want, make sure strategy and marketing are intertwined.

“Marketing is often the redheaded stepchild in manufacturing companies,” Ed said. “It has to be integrated from strategy through sales and technology in order to create this framework that supports it.”

Step 4: Begin with quick wins and build from there. Quick wins create momentum and positive energy, making the work that follows easier. But don’t lose sight of the fact that boosting business value takes a long time.

Ed’s advice is to think of it as a maturity model with iterative stages. This can help you prioritize starting points and identify the steps it will take to move into another stage.

“Then you don’t have this whole massive project sitting on top of you,” Ed said. “You’ve got a series of smaller projects that you can do in parallel while some quick wins are coming in. That helps to get companies moving in the right direction.”

Incremental improvement in a few target areas, repeated over several years, leads to a significant net impact improvement in predictability and consistency. And that’s a direct contributor to business value. So leadership should understand that building this process and making it second nature can take three to five years.

“It’s important for management, ownership and the board to buy into a common vision and have a framework so they understand how all the pieces fit together,” Ed said.