When it comes to growth, small subcontract engineering companies are often left wondering how to take their business to the next level. As I discussed in my previous blog, expansion can often seem daunting; an abundance of competitors - as well as cash flow dilemmas - may put off many businesses from taking the necessary steps to progression. Although professional expansion can often seem like an uphill struggle, it doesn’t have to be a complicated process. By strategising your intended growth, you can set your own optimum pace to meet your long-term objectives.
Here are a few tips to help you successfully grow your subcontract engineering business:
Utilise Your Connections:
Growing your engineering business doesn’t necessarily mean taking on an infinite amount of new customers. Sometimes you may find that your existing customers sub out plenty of additional work to your competitors, as you lack the capacity to undertake all of their work yourself. When you begin to expand, it’s worth advertising your increased capacity to your existing clients first and foremost - especially the ones whom you have an exceptional working relationship with. This may well result in an influx of orders, without the slog of a massive new business drive.
That being said, it may also be beneficial to see if friends, family and business connections can send new clients your way. Referrals are a great way to increase your customer base as they come with the added benefit of a recommendation, taking out a lot of legwork in establishing trust prior to order placement.
Finally, speaking to contacts who have already undergone expansion may help you to gain additional insight into best business practices - after all, there’s no better teacher than experience when it comes to growing your engineering business!
Find Your Niche:
Sometimes it can be more beneficial to corner a section of the market, instead of being a jack of all trades. Having a unique selling point (USP) is essential if you want to stand out from your competitors, meaning that a specialist niche may serve your business well.
That’s not to say that you should drop all services that don’t correspond with your chosen niche. However, by positioning yourself as an industry expert in, say, working with a specific material, industry or component size, you will - in time - become a go-to source for any subcontract needs that fall within those criteria.
There is quite literally no limit to the number of ways that a company can possibly specialise. Whether you decide to make your own product to complement the subcontract services you offer, or you hone in on a particular process or sector, there is no right or wrong way to steer your business provided that there is a demand for the services you offer.
Do Your Research:
In order to find an appropriate niche to occupate, it’s vital that you conduct business research to make sure that you’re heading in the right direction. Growth and expansion often go hand-in-hand with investment, meaning that it’s extremely important to ensure that you’ll see a return.
Firstly, take a look at your competitors and research the services that they offer. Is there a gap in the market that you could look to fill? Whilst some processes form the bread-and-butter of an engineering business, there’s no use in offering your prospects a carbon copy of the service being touted by a thousand other companies.
Again, it could also be beneficial to turn to your existing customers for direction. Is there a service that they regularly require which sometimes proves difficult to source? Would they place more business with you if you were to expand your portfolio of processes? Look for trends that might guide you as to where to invest, as well as where to avoid.
Add Value To Your Existing Services:
When growing your engineering company, you may not have to think too far outside of the box in order to find your best foot forward. A good place to start is to add value to your existing services, or to find services that compliment what you already offer.
For instance, many companies may find that they can increase orders and grow their business by offering finishing services such as powder coating and anodising. Sheet metal businesses may also find that the purchase of laser cutting equipment will not only allow them to take on outright profiling work, but it may also make the production of assemblies and larger jobs more efficient.
Value-adds may also come in the form of accreditations, which are especially important if you’re looking to diversify into new sectors. Certifications such as TS16949 and EN9100 are specific to certain industries, whilst ISO 9001 may increase your chances of winning work no matter what!
Remember, a successful expansion is one that is well thought-out and planned - you should never rush to expand before your business is ready to accommodate your growth. Factors such as recruitment, overheads, cash flow and industry demand will always need to be assessed with any substantial boost in business. This means that it’s always preferable to take small steps for long-term payoff than to bite off more than you can chew.
Take your time to conduct the research needed and don’t rush into any snap decisions. Pause at each stage to assess your progress. The focus should always be on the bigger picture and the end objectives to stop yourself from running before you can walk.
Are you looking to expand, or do you have any advice for engineering companies who are looking to grow? Leave a comment below!