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Increasing the Value of Your Foundry

Jan. 1, 2018
Now is the time to begin the process of understanding the value drivers of your business and to focus on them in the coming year.

I hope you experienced an increase in your business during 2017 and have high hopes for the coming year. As business owners, the end of the year is often a time of reflection and planning. One of the goals you should set for 2018 is to make sure you have a plan for increasing the value of your business. The old adage, “manage your business as if you were going to sell it,” is a cornerstone for many successful businesses. If you haven’t viewed your business that way in the past, now is the time to begin the process of understanding the value drivers of your business and to focus on them in the coming year. Here are a few more goals you may want to add to your New Year’s resolutions:

Make an investment to understand the current value of your business. Have an equipment appraisal and business valuation completed. If you own the real estate your business occupies, get a real-estate appraisal too. It’s hard to plan for your future if you don’t know your starting point.

If you have a business plan, update it. Make sure your plan is still relevant to your business today and your plans for the future. Make sure your sales and expense projections are realistic. If you don’t have a plan, dig in and put one together. That document should be used as a management tool, and will be useful in dealing with your bank if ever in need of an additional credit line or growth loan. Your business plan should include how your drawings, production, and sales data are being managed, stored, and the protected. It also must include marketing, sales, and operations plans for the year, complete with budgets and projected results.

Do a SWOT analysis. Knowing your Strengths, Weaknesses, Opportunities and Threats is an invaluable management tool. Be honest in your assessment and set goals for maximizing the positives and reducing the negatives of your business in 2018. Also, this is how you will identify new markets to pursue and what it will take to get there, and help you to determine if now is the time to add new capabilities like 3D printing capabilities or additional automation.

Conduct a Lean analysis. A value-stream mapping session will help you to understand where waste occurs in your production processes, from molding to finishing. A Lean analysis also will help you to identify new bottlenecks that have developed. Make a real effort to solve for these wasteful and problematic situations.

The days of putting on a band aid solution to just get by, are over. Understand the benefits of 5S and put them to work so that any customer or potential buyer could see it in action by simply walking onto your production floor.

Analyze your position within the business. If you look in the mirror and realize that you are absolutely critical to the operation of your business, then you have a problem that needs to be addressed. Identify people within your organization that can be groomed to become a more integral part of your organization and take the steps to educate, train, and mentor them. There is nothing that limits the value of a business more than when the key employee is the owner.

Make a commitment to your balance sheet. Hopefully, your P&L statement improved during 2017 and you see opportunities for improvement in 2018. While it’s natural to keep an eye on the bottom line and the balance in your checking account, it is “mission critical” to make sure you continue to improve the strength of your balance sheet.

Remove any personal expenses from the P&L. This may mean a slightly higher tax obligation, but it will increase the value of the business significantly.

Deepen the relationship with your key advisors – attorney, accountant, banker, and others. Make sure everyone is on the same page when it comes to planning your business’s future.

Gerry Chadwick

Gerry Chadwick is president of Sunbelt Business Advisors of Southwest Ohio, a business brokerage firm experienced in helping manufacturing business owners understand the value of their business. Contact him at LinkedIn or visit