Qimtek

The Qimtek Blog

Back to blogs

The Expansion Conundrum

Sarah Venning

Within companies from all sectors, continued expansion is a tangible sign that the business is going in the right direction. Expansion is the gateway to a larger turnover and ultimately, a bigger profit margin. However, whilst expansion can universally spell headaches in terms of personnel, the engineering and manufacturing industries also face a number of unique challenges, including the purchasing and implementation of new plant & machinery.

Unfortunately, these obstacles are a necessary evil that needs to be overcome for the greater good of the company’s future. If you’re in the enviable position of imminent expansion, then there are a number of factors to consider to ensure that your company’s growth is not inhibited due to poor planning.

Engineering Recruitment:

It’s no secret that engineering recruitment is a tough nut to crack in today’s market. With a smaller number of skilled candidates entering the pool – whilst many of the existing candidates are approaching retirement – many companies have found themselves burdened with a desperate challenge to find and retain new talent. This has led to bitter battles between would-be employers for a small number of skilled engineers, with higher and higher wages generally dictating the more desirable position at any given time.

Fortunately, there are a number of recruitment companies who specialise within the engineering sector. They may be able to broker a benefits package with the candidate which is more agreeable to your company; furthermore, the use of a specialist recruitment agency removes the headache of locating skilled workers to begin with. Although agencies generally charge a finder’s fee, you may find that these are a small price to pay in contrast to the time and resources it takes to recruit by yourself.

Alternatively, if you have time on your side and are looking at longer-term expansion, then why not consider implementing an apprenticeship scheme? Not only do apprenticeships help your company, but they also benefit the industry at large by growing the candidate pool. You may also find that apprenticeship schemes are more cost-friendly than recruiting a fully-trained engineer, with financial help available from the government to companies running apprenticeship schemes. What’s more government research has shown that 90% of apprentices remain with their employer after their apprenticeship has ended, meaning that you could benefit from a loyal, skilled employee within your organisation for many years to come.

Investment in New Plant & Machinery:

With expansion inevitably comes investment and many questions are still being asked surrounding the optimum timing for plant & machinery purchases. A ‘chicken and egg’ dilemma is unavoidable – that is, is it better to purchase the plant & machinery first of all, or line up the work and dip your hand into your pocket later on?

Of course, there are pros and cons for both scenarios. Firstly, teething problems are almost inescapable on some scale and by lining up work prior to machinery purchases, you run the risk of letting customers down whilst these are ironed out. On the other hand, machinery can prove extremely expensive, meaning that many companies are keen to start working towards return on investment sooner rather than later.

The route that a company decides to go down is dependent on a range of circumstances, meaning that there is no ‘one size fits all’ solution. However, provided that it is financially viable for your business, it’s almost always better to properly address any potential setbacks caused by setup, prior to lining up immediate work for the machine – at the end of the day, a business cannot grow successfully if its reputation is tarnished, which is precisely what is risked by potentially letting down customers.

Is My Customer Base Ready?

Before you consider recruiting new staff, investing in new plant & machinery, or even moving to bigger premises, it’s worth assessing the viability of your customer base for long-term, repeat business that will sustain your company’s growth. If you’ve recently taken on lots of one-off orders that have eaten up your capacity, then it is likely that this is only a temporary wave that your company is riding. That’s not to say that you can’t focus on turning these accounts into longer term customers – after all, you’ve already got your ‘foot in the door’, so to speak. If you want to find out more about enhancing your existing client portfolio, then it’s worth reading our blog on effective account management here.

Upon closer examination, you may find that you need to focus your efforts on replacing ad-hoc customers with more lucrative accounts to aid expansion. If so, you may find this blog and this blog to be of interest. We also have a range of other engineering sales blogs that you may find useful when tailoring your new business strategies.

Seamless Expansion – Is It Possible?:

Whilst some companies find expansion much easier than others, it’s important to remember that a number of factors can influence the transition of a small engineering company into a much larger one. Financial health is the key factor which will support a positive expansion, whilst other factors - such as recruitment - can also come with an underlying element of luck of the draw.

Although not everything is within an expanding company’s control, by properly planning your expansion and allowing your business enough time to grow organically, you can limit the number of setbacks your company experiences, whilst paving the way for growth to become a precedent of your business’s future.

0 comments

About Sarah Venning

Sarah is a sales & marketing content writer, with six years of experience within the engineering & manufacturing industry.  Working both at Qimtek and on a freelance basis, she can usually be found hammering away at a keyboard or with her head in a pile of engineering drawings. 

Share this article

Add new comment