6 Ways Small Manufacturing Businesses Can Become More Profitable in 2022
Profitability is an elusive thing in many industries, and small manufacturing firms can struggle more than most to claw back more money than they spend.
With that said, let’s outline a selection of strategies that should spur up and coming businesses in this sector towards making a profit, both this year and beyond.
Keeping costs down by purchasing used equipment
Even if you’re seeing sales growth, your profit margin can be monopolized when you need to buy equipment to keep up with increasing demand.
This is where choosing second hand machinery in place of new units will serve you well. Whether you get old metal lathes at an affordable price point, snap up used mills, grab pre-loved grinders, relish older routers, or invest in any other equipment for your business, there’s ample opportunity to reduce costs.
When choosing used equipment, make sure it comes from a reputable supplier and has been assessed and inspected rigorously. All the biggest brands are represented on the second hand market, so a combination of cost-effectiveness and exceptional variety will stand you in good stead.
Looking for inefficiencies through lynchpin metrics
Another fundamental way to drive profitability up in a small manufacturing business is to measure as many aspects of your operations as possible, and use the data that’s generated to indicate where inefficiencies exist.
From the amount of material wastage that is created during production, to things like machinery downtime and beyond, making the most of the metrics that are in your control is a way to squeeze more out of your organization without making major changes.
Feeding into the discussion of monitoring and interpreting influential data points, it’s worth touching on the role that artificial intelligence plays in modern manufacturing.
From being able to detect defects that are invisible to the human eye, to creating predictive maintenance schedules that will keep equipment running smoothly for longer, AI-enhanced software tools are increasingly relevant in this industry.
Moreover, as the market matures, they are within reach of smaller companies as well as their larger counterparts, so there’s less excuse to avoid jumping on the AI bandwagon right now.
Gaining a foothold on the web
Small manufacturing businesses are not known for being particularly tech-savvy, at least from the perspective of forging an online presence that helps them connect with new clients.
This is a shame, since they are also well positioned to take advantage of the tools and platforms that typify digital marketing in 2022.
For example, heavy machinery and production line technologies are well suited to content creation, especially for things like photos and videos. And even non-experts and average consumers will appreciate seeing how certain specialist equipment is put to work in your business.
The point is not to necessarily worry too much about whether your online brand-building and marketing efforts are hitting home with the exact audience you are after, but to experiment with different approaches and aim to convert prospects through the solidness of your web presence alone.
Giving employees the opportunity to thrive
The machinery is just one part of your business that you need to take care of, because your workforce is just as relevant with regards to productivity and ultimately profitability.
Asking employees for feedback on their experiences and for input on how you can make improvements to their working conditions, for example, will help hugely. It’s not just about keeping people happy from day to day, but also making them loyal in the long term, because a high turnover of team members only leaves you with steeper costs for recruitment and training.
Thinking about packaging
Last but not least, if your profit levels are not where you want them to be, it is worth investigating the role that product packaging plays in determining sales figures and stimulating brand recognition.
You don’t necessarily need to do away with your existing designs and start from scratch. However, it is useful to do a bit of research and establish whether there are some elements that could be improved, with minor tweaks potentially leading to major benefits.
In all, a bespoke approach to making your manufacturing business more profitable is necessary. Failure to make changes could scupper your chances of viability in 2022 and beyond.