Having an Endgame for Your Machine Shop Business. Part 1: Fork in the Road

March 1, 2023
Written by: Paul Van Metre

Your ability to succeed as a manufacturing business owner correlates directly with your ability to solve problems. Putting off difficult decisions and hoping that the problems resolve themselves is human nature. That said, avoiding the problem only delays and magnifies it, making matters worse. In business, this can be a disaster. How many shop owners spend their day putting out a series of small fires, all because they didn’t take the time to uncover and resolve the root cause of the chaos? As the problems increase over time, shop owners find themselves struggling to keep their heads above water. In the fog of the daily grind, they completely lose sight of where the business is headed and why their work even matters. Many of them realize that, in starting their own shop, they just bought themselves a much more stressful, risky and often lower paying job. In times like this, decisive action is needed.

Hope is not lost. If you find yourself in a similar situation where you feel like the business is running you, and not the other way around, there are steps you can take to get back on track. The fog will begin to lift with every problem that you solve. You just need to be deliberate and optimistic about taking positive action, even when it hurts. Playing the victim won’t turn things around. Your ability to move forward will.  

Building on the theme of a recent blog post titled  “The “Haves” and “Have Nots” of Machine Shops”, I wanted to spend some time addressing a problem that plagues far too many shop owners who are inching closer and closer to the “Have Nots” category. That is, building your business without an endgame in mind. To be clear, this doesn’t necessarily mean an endgame for the business itself, so much as an endgame for your involvement with the business as its owner.

To make progress, your machine shop business needs a direction AND a destination. When you don’t define the destination, the direction that you pick could end up being the wrong one. Many shop owners who are burned out from the frustrations of running their businesses day-to-day often leave the future of their business to chance when they fail to plan. The focus of this blog series is to guide shop owners in determining a successful end game for their business. In crafting a plan to reach that destination, we’ll focus on what can be done along the way to build a business that is effective, valuable, and enjoyable to run. With that, I’d like to introduce this latest blog series, “Having an Endgame for Your Machine Shop Business,” with this first installment titled “Fork in the Road.”

Begin with the end in mind.

If you haven’t thought about an endgame for your business before, you will want to take some time to understand what that will look like for you. For some, it might be obvious. You might be the current operator of a family business that will inevitably be passed on to the next generation. Others might have the intention of selling their business one day and might even be relying on the proceeds of that sale to fund their retirement. Perhaps it’s still early into your entrepreneurial journey, and so far, you’ve only focused on the short-term goals of keeping the lights on and making payroll. In any case, going through the exercise of determining an endgame and the plan to get there will prove to be beneficial. In the case of selling the business, you want it to be highly valuable to receive the best possible return on what you’ve built. In the case of succession planning, you want to ensure that business continuity is as seamless as possible while the transition takes place. If you plan to hold onto the business into your retirement years, you’ll want to build a business that doesn’t rely on you to operate it every day. Depending on what your ideal endgame might entail, you can begin to reverse engineer the pathway to getting there. You can cast a vision of success for your business.

Unfortunately, many shop owners are currently sitting at a fork in the road, and it’s time to decide which direction to go. Many of them have been sitting in this place for years, avoiding taking action, because they aren’t confident in what to do, or are afraid to take action. A passive approach to running the business doesn’t work anymore. Resistance to change has led the business into a sedentary state, and if left unaddressed, the business will begin to atrophy. The dynamics of how a successful machine shop is run have changed drastically, even in recent years. Shops that demonstrate clear leadership, stay current with advances in technology, and build a business that runs on defined systems and processes are positioned well to succeed. Shops that plug their ears and ignore where the industry is headed will ultimately reap what they sow. I apologize if that sounds grim. Truthfully, I believe that the future can be very bright for all machine shop owners. That said, a laissez-faire approach to building a business just simply won’t cut it. Your years of hard work and sacrifice as an owner should amount to more than a pile of tired old machine tools that you’ll sell for pennies on the dollar after closing your doors. It’s time to take decisive action and make the decision to turn things around. As Napoleon Bonaparte said, “Nothing is more difficult and therefore more precious than to be able to decide.”

Grab the low hanging fruit.

Once you’ve defined your endgame, you need to design a plan for getting there. Don’t allow the busyness of day-to-day operations to keep you from completing this important exercise. You need to make the time now, to save time later. It’s easy to let your personal feelings and opinions obscure the facts about your business, so try to be as objective as possible. Sometimes removing yourself from the building and finding a coffee shop can help you find the needed clarity. Minimize distractions so that the most critical issues come to light. Don’t solve the symptoms but get to the bottom of things and solve the core issues. Ask yourself the important questions like:

  • Am I focused on the right things within the business?
  • What tasks can I delegate to someone else so that I can work on the business rather than in it?
  • What can I start doing to run my shop more proactively rather than dealing with problems reactively?
  • Which processes aren’t properly documented resulting in repeated mistakes? If resolved, how could that improve the bottom line?
  • Which hiring decision do I need to make in the next 12 months to stay on track with the plan?

One exercise I’ve learned is to put a price tag on the tasks I perform in a day, and total those up at the end of the day. If I spend 2 hours a day doing administrative work, which might be a $20/hr task, then I’ve only generated $40 of value for my business with those hours. If I can hire an administrative assistant to do that work, and I can then work on a strategic marketing campaign, those hours might be worth $1000/hr to my business. This graphic shows the principle clearly.

How Can ProShop Help?:

A great place to start in improving the operations of your machine shop business is to begin documenting your processes and procedures and eliminating tribal knowledge. ProShop’s robust training and tasks modules will allow you to define how tasks are to be properly and consistently completed in your business. This creates an accessible repository of work instructions for every team member in every department. On the shop floor, ProShop’s Part and Work Order features will allow you to record specific set-up and production instructions for repeat jobs. This eliminates any confusion about how to run machine tools correctly and increases the overall productivity of the shop floor – often by 25% or more. Perhaps most importantly, ProShop allows you to obtain the key data points needed to indicate the health of your business. Having a comprehensive understanding of business performance is the key to making the right next step forward within the “Have” category. And once you have that data, you can delegate the action steps to others, so you can work on the highest value tasks. We’d love to help your business get unstuck and on track for successfully reaching your endgame!

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