Many innovative, growth-oriented extruders and molders expand rapidly early on and remain profitable and successful, but eventually plateau when they reach a certain size.
The companies’ growth generally stalls for a variety of reasons, quarter to quarter and year over year. It might be they can’t consistently meet their sales target, maintain predictable production performance levels or don’t produce the consistent quality and on-time delivery that customers demand.
Blame goes around diverse areas of the business but the truth is that most processors fail to understand and address the root cause of why they have stopped growing. Here are five key strategies that will support consistent growth in your plastics processing businesses:
1. Focus on what you excel at and what generates a strong cash flow
Identify and cater to core customers and their needs with unique products and services that your company excels in designing, molding and extruding better than its competitors ever could at a great profit margin to generate the cash required to grow. Regularly analyze the relevant data to ensure your niche remains a key differentiator and that it produces the targeted margins and growth rate. Selling your inside advantage is the key to growth and your marketing efforts.
While the focus is on that niche and its customers, managers need to develop and manage simple pertinent metrics. As importantly, it confirms their systems’ ability to retrieve, format and assess accurate, timely data to better manage their business.
2. Invest in an infrastructure that supports growth
The internal business processes are often overlooked and depend on the limited capacity of a few experienced staff members that have been present since inception. It is also common to have a myriad of unintegrated detached subsystems that burden the internal process. Enabling growth means that the internal systems such as an ERP system can support an integrated business workflow process that allows for the addition of new staff members to expand the processing capacity of the company. For example, you need to Increase your capacity to quote, place orders, schedule work orders, track production in real-time, ship on-time deliveries of quality products and invoice them.
Of course, the very best tools are only as good as the management teams that decide how they will be used and applied, but together they can minimize and eliminate the bottlenecks that reduce the efficiency of the entire operation and create significant delays.
3. Communicate challenges and victories
As the company expands and its staff members increase, the structured formal sharing of key reports that assess the state of the business is essential to ensure leaders and employees have the knowledge required to better manage and control the company. That’s important but not good enough.
First, your core values must be defined and communicated formally. Core values may include loyalty, a spirit of collaboration and long-term relationships amongst others. These have to be spelled out to attract, hire and retain the individuals that have the mindset and attitude that make them a good fit for the company culture as well as the skills and experience to meet the demands of their new positions. This is the best way to ensure you have employees who can make the right decisions and have a team that rows in the same direction.
Second, communicating goals to every member of your company is also extremely important. A goal might be correcting errors or achieving new growth targets. They are often communicated quarterly. When goals are met and objectives achieved, celebrate and recognize employees’ collective efforts with group events such as BBQs. It does not have to be complicated or expensive. In a company that values employees that act as owners, acknowledging their individual and team efforts is effective and appreciated. It empowers everyone towards achieving common objectives.
Third, adopt a frequent, time-efficient meetings culture. When a business is in its infancy there may just be one or two people making all the decisions. However, a business starts to grow, and more people make decisions, it becomes much more difficult to manage, with many more decision-making permutations requiring many more conversations. This problem can be countered by committing to daily 10- to 15-minute huddles with the key managers where daily priorities and road blocks are shared freely. These meetings should take place at the same time each day and are never to be missed or postponed.
These frequent huddles ensure everyone is aware of the company’s as well as each department’s priorities and will help employees provide new ideas on how to immediately rectify issues and identify solutions to meet targets.
These meetings should be followed up with 30-minute weekly, and two-hour monthly meetings to discuss what worked and what didn’t. They also help everyone focus on what needs to be done to improve service, efficiency or profitability.
Monthly two-hour meetings should also identify the corrective and/or incremental strategic actions that need to be assigned to key employees and implemented in the next month to ensure the company is performing to plan. This action list needs to be reviewed weekly for 30 minutes to make sure they are executed before the next monthly meeting.
An easy way to manage these meetings is to have these shorter weekly meeting on the day of the week the monthly meeting takes place. Obviously, the daily huddle does not take place on the day a weekly or a monthly meeting takes place. This makes it much simpler to plan.
It’s hard to implement and harder to stay committed to regular daily, weekly and monthly meetings, but without them, it becomes nearly impossible to work as a team, has consistent results and grow the business beyond a certain size.
4. Find and retain the best and commit to letting go of the rest
Management books like “Good to Great” by James C. Collins and the many tomes authored by retired chairman and CEO of General Electric Jack Welch tell us that the weakest link can ruin the chain.
Be loyal to the health of your company and the employees that best contribute to a profitable, thriving, growing organization. Hang onto the employees that continue to fail the firm and you send the worst possible message to all of your employees as well as the customers and suppliers you rely on to succeed and grow.
Use this quick test to help you identify the poor performers and make the tough decisions that ensure your firm’s longevity and help you retain your best team members.
Rank each employee: A) Outstanding B) Very good but needs additional mentoring, training and experience to be outstanding C) Serious performance issues the employee needs to be advised to correct to keep his or her position in the company D) Fails Consistently – Replace this employee as soon as possible
5. Select and commit to long-term relationships with key partners
Your company’s core competency is developing, designing and molding or extruding plastic products that deliver top value and performance to customers while yielding superior margins and cash flow.
Focus on growing those core competencies and when necessary outsource to top-notch management consultants, tax and legal experts, IT and related tools and infrastructure product and service providers, and marketing, advertising and publicity specialists.
For decades, small- to medium-size enterprises as well as large, publicly-held multinationals have outsourced to benefit from the best possible expertise and experience while managing headcount and related costs.
To grow a successful, profitable plastic processing company for long-term sustainability, your management team can leverage these five strategies, all of which will help maximize quality, productivity, performance, and profitability.