In our continuing series “Finding New Customers For Your Manufacturing Business – The Ultimate How-To Guide,” we’re exploring the wisdom and the “how-to” of entering new sectors. If there is one thing that is just as certain as “death and taxes,” it’s change. Emerging technologies can wipe out entire sectors. If you want your manufacturing company to survive, you better have a plan “B” before trouble strikes. Do not wait until your core business declines to the point of no return to try to position your company in a new market sector.
Diversification and additions to the markets your company provides products and services to, not only increases sales, it makes your manufacturing company more attractive to potential buyers. By positioning a stronger market presence before embarking on an exit strategy, you are more likely to attract a buyer willing to pay a higher multiple and thus maximize the return on the sale of your business.
Many manufacturers don’t put effort into seeking business within different sectors because they mistakenly assume that the cost of entry is too high. That is not necessarily the case. Ask yourself “What other products can I manufacture with the equipment I already have?” If you’re stamping parts for the auto or military industries, cannot the same machines be used for medical or dental devices? Depending on the industry you intend to enter, you may have to completely re-tool. That was the case when we sold a gun barrel manufacturer to a stamping house. The transaction required the company to purchase different equipment. If you have the capital to do that, great; for smaller manufacturers that might be working on a tighter budget that might not be possible. That’s OK - work with what you have. Using your imagination doesn’t cost a dime.
So what industry should you target? I suggest that you start by following the money. What industries are on the rise and are expected to have double-digit growth in the next 10 years? Enlist the help of Google to find what industries are growing. Review sites like www.IndustryTap.com to learn about emerging technologies. Daily newsletters like MIT’s Technology review will get your imagination and creative juices flowing.
Once you’ve determined an industry that your team has the skills and manufacturing capacity to enter, it’s all about positioning and marketing. With Internet and social media venues, it is much easier to break into a new area and position yourself as a player within a particular field. What in the past took years and tens of thousands of dollars to accomplish can be done a shoestring budget and in under a year’s time. A sound brand strategy would include the following:
- Web site development
- Sales Brochures – both print and electronic versions
- Corporate video
- Public Relations – news releases
- Blog articles
- Web presence through social media
- Trade show participation
Here’s an example of a manufacturer entering a new market from their press release that appeared in several online venues:
New Wire Marine, the Charleston, S.C. based marine electrical system designer, announced today that they have purchased new Computer Numerical Control (CNC) equipment, a high-tech, computer-controlled cutting tool that has allow the company to enter the commercial switch panel market. The CNC machine is able to cut any shape with high precision on a 2D surface and will enable New Wire Marine to raster engrave stunning graphics and detailed logos and text into their switch panels. New Wire Marine hopes to fill a very large gap in the OEM (original equipment manufacturer) switch panel market by becoming an affordable vendor and leading supplier of custom switch panels to smaller boat builders. Most vendors in the business will only supply large quantities of a single panel and they don't have the logo engraving and backlighting process that the engineers at New Marine have developed. Small builders will find that at New Wire Marine there are no minimum quantities, they accept requests for variations in panel design (such as switch label and position) and will even help a client completely re-design a panel layout.
Check out the company’s web site, they’ve clearly been successful entering this market. On their site, customers can choose from stock switches or design and order a custom product. This company is a great example of a manufacturer using social media well. Their Facebook page rocks! They show examples of their work and have established a community of followers with posts that reflect their core audience’s interests. I particularly like the one about funny boat names! They are also using Google+, Twitter and YouTube. They’ve brilliantly used free social media venues to break into a new market segment.
Entering a new market might be as easy as asking the question, “What other products and services can I provide to my existing customers and are there other sectors that the same products are used in?” That is precisely what New Wire Marine did! Positioning your company as a provider of a new product or service is really not as hard as you think. Notice from their press release that New Wire Marine perceived a gap in the market. Most providers were only taking large orders. They used that to their advantage creating a savvy brand strategy.
I also practice what I preach. Asking that same question led this Industrial Auctioneer to the realization that I could provide other services to the manufacturing industry. With that realization, AcceleratedMfgBrokers.com was born. We built a brokerage business exclusively servicing the manufacturing industry. As New Wire Marine has done, I used the Internet and social media to position the company as a leader in the field. A very short time and 20 million in listings later, here’s what you find when you search for “Manufacturing Business Brokers”:
This was accomplished on a shoestring budget.
Expanding into a new market is a great way to leverage your core business for growth.
In the past, the cost of entry has been prohibitive. With today’s technology, you can explore new markets WITHOUT risking your core business.
In my experience, most manufacturers are not marketers and therefore either don’t believe the power and importance of marketing or simply make it harder than it has to be. I stumbled upon an online report that drove this point home.
In spring 2013, Oracle Eloqua commissioned Forrester Consulting to research current and planned L2RM (Lead to revenue marketing) practices in manufacturing companies in Germany, the UK, and the US. Survey participants came from manufacturing companies with a company size of 500 employees or larger and 80% of these companies sell to businesses.
Here’s what I considered to be the most interesting part of the survey, from the executive summary:
“Manufacturing companies that sell primarily to businesses instead of consumers have not traditionally maintained a strong marketing discipline. Many of them only have a product management function as opposed to product marketing; most manufacturers are led by either ex-engineers or ex-sales professionals with little understanding of what marketing can do; and engineering or production people often consider their products to be self-explanatory and that all is required is a well-trained (on the product) sales force to ensure success. A recent Forrester survey among B2B marketers found that these manufacturers derive only 23% from net new customers, much less than other sectors like financial services (36%) or tech and telecom (31%). While manufacturers may invest in corporate and brand marketing to ensure that they are at least recognized in their target markets, the concept of lead or demand management, as a marketing discipline is nascent, a status compounded by the reality that many of the manufacturers are dependent on external sales resources: distributors, agents, and/or OEMs. However, general business buying behavior has now changed across all purchasing categories, whether buying a single product or a complex business service. Business buyers tend to do their own research and delay a conversation with sales until the latest possible time. And, facing stagnant or mature home markets, most manufacturers must now seek to grow into new marketers, often in new segments or even geographic territories. So they are now investing in marketing resources and processes to be able to address these new markets and find new customers.”
So you’re not used to being a marketer….I get it. There are companies out there to help. Some specifically work within the manufacturing sector to help companies create brand strategies. You can be the best machinists in the world, but if the world doesn’t know you’re out there, you’re screwed!
The bottom line is that if you want to find new customer’s for your manufacturing business you will need to embrace modern marketing and brand positioning techniques.
Not knowing how is no excuse…find somebody that does. If all I did were industrial auctions, without actually promoting and marketing my company and its services, I’d be out of business. You will be too. If marketing and social media are outside your “comfort zone,” think of how uncomfortable it would be to call an industrial auctioneer to close your dying business. Isn’t selling an ongoing and thriving enterprise in order to retire a much more attractive option? You bet it is! Breaking into new markets will help you get there.