Top 11 Issues Facing the Manufacturing Industry in 2019
- March 12, 2019
- Posted by: Quarles Business and Financial Strategists
- Category: Business Advice
What are your goals in 2019 for your manufacturing business?
With enough hard work and good business decisions, there’s no reason why you can’t achieve your business goals this year!
So, what’s standing between you and success?
We’ve compiled a list of the top 11 issues facing the manufacturing industry in 2019, so you can be ready for whatever is thrown your way!
1. Cash Flow
As a manufacturing business owner, you’ll understand why your cash flow is so important. And why it can be so difficult to keep positive!
With every rising material costs and inconsistent revenue, cash flow can be a slippery slope. However, there are a few things you can do to try and improve your cash flow.
- Get your invoices faster with smarter invoicing and better debt collection
- Start looking at credit scores before getting involved with businesses
- Offer discounts for early repayments and penalise late payments
- Use invoice automation
- Shop around for cheaper materials/ways to cut back on expenses
2. Skilled Labour Shortage
WA, especially regional areas, is currently facing a skilled labour shortage in the manufacturing industry. This has created a need for more focus on finding good workers.
Your manufacturing operations rely on the strength of your workers. Labour costs are a pivotal expense, so you need to be getting your money’s worth from your employees.
Low productivity and frequent mistakes can end up being pretty costly and diminish your margins.
All these costs can be helped with an improved hiring system, so you get the best workers for your manufacturing business.
Examine your hiring process and see what needs to be improved. Are your jobs ads letting people know exactly what skills you’re looking for? Are you advertising in a place where enough people will see it? When you find a potential employee, are you asking the right questions and following up with their references?
By taking the necessary steps to improve your hiring process, you should be able to find the right workers to get the job done.
3. Chaotic Work Environment
We often hear our manufacturing clients say things like “there is too much going on for me to get things done”, or “if I am not here the whole thing stops working.”
These complaints point to another key issue for the manufacturing industry; chaotic work environments.
Manufacturing business owners often end up trying to do it all, and fail to put the proper hierarchy in place to operate smoothly.
Creating a strong team, delegating important tasks to key employees and developing a positive work environment with strong communication should bring some structure into your chaotic work life.
4 Slow Business Systems
Speaking of chaos, what do your current business systems look like?
Do you often find yourself surrounded in paperwork?
Are you wasting countless hours on mundane tasks when there is more important stuff to be doing?
When you have 101 things on your to-do list, you can’t afford to waste time with outdated business processes.
Online software, such as WorkflowMax, allow you to streamline your processes including payroll, generating quotes, scheduling staff and invoicing.
5. Keeping Up with New Technology
Technology is always evolving, which can bring new opportunities for your business.
However, it can also bring additional costs for new equipment, training or experimentation with new processes.
It can be tricky to identify the difference between time and money-saving innovations and expensive waste of times.
With the increase in new technology, the pressure to keep up with the latest innovations and make the right choices of when to invest has been greater than ever.
It’s important to keep an eye out to see what new technology is being developed and engage the help of a professional before deciding to invest.
Interested to see what the future may hold for your business? Check out these 17 innovations that will power the shift to smarter factories.
Guess what goes hand in hand with technology? When you bring in new technology to your business, you also bring in new risks, thus the increased need for cybersecurity.
Hackers can potentially make their way into automation systems and other computerised equipment, which could be costly or damage your business.
The cost may feel like an unnecessary expense, but the peace of mind is worth it. Some programs, such as Xero, come with security features that keep your data safe.
7. Environmental Issues
Before getting too focused on cyber security and the digital world, we also need to consider the real world – the environment.
The pressure on manufacturing companies to be more environmentally responsible is ever increasing, so what can you do to be more eco-friendly?
Here are 5 tips to help make your manufacturing business a little more green:
- Conduct an energy audit to find out where you are wasting energy
- Considers swapping to more energy efficient equipment
- Start getting recycled materials, such as recycled plastic
- Stop waste by recycling your own materials
- Switch to renewable energy, either by installing the facilities yourself or working with your energy provider
It’s practically impossible to become completely eco-friendly, but hopefully these tips will get you a little bit closer (and potentially save you some cash!)
8. Keeping Up with the Competition
If the pressure of keeping up with new technology wasn’t enough, you also have your competitors to think about.
Customers are always looking for a better product at a better price, which makes the market highly volatile and competitive.
A new business could come in and re-invent the wheel, making your product obsolete. Or perhaps they will find a slightly cheaper way of producing the same good and offer a more competitive price.
Here’s what you can do to stay on top:
- Keep up to date with the latest innovations and get the right tech
- Watch what your competitors are doing and learn from their success
- Always look for improvements you can make in your products and operations
9. Bookkeeping and Accounting
Accounting for manufacturing businesses is unique, as they are the only business that creates new products from scratch.
This can create accounting problems, as you will need to account for the raw materials and processing costs while calculating the value of the finished items they create.
Many manufacturing business owners choose to deal with all the accounting tasks themselves and do their own bookkeeping. This is a mistake, as this will take you many hours where an accountant could do it much faster.
The accountants job is to save you money, so the money you think you’re saving by doing it yourself could actually be costing you money.
Even if you’re still not convinced, you can get advice from a business and finance expert for free by booking a free consultation.
10. Personal Finances
When it comes to being a manufacturing business owner, it often isn’t very financially rewarding, especially in the beginning. The fact is, you will have to endure some pretty hefty start-up costs before you even get close to paying your own salary.
So it’s important to live frugally and manage your personal finances, so that you have the money you need to support yourself as well as running your business.
Here are a few simple money saving tips:
- Give up your daily coffee and save $1000s a year
- Review and reduce your bills
- Start taking lunch to work
- Track your spending
- Start buying items in bulk
- Chase the discounts
11. Lack of business plan
Just like any other business, planning is the key to success. Having goals and outlining the steps that it takes to get there will help keep your business on track.
Your business plan should include your finances, business operations and the marketing of your business. These aspects are all critical to the success of your business, and reviewing them will really help your business growth.
If you aren’t sure how to write your business plan, check out our business plan template!
Of course, we think the best thing you can do for your business growth is to come in and talk to us! Our business experts can help identify problem areas for your business, improve your business processes and help achieve your goals!
Book a free consultation to get started.