Stone Industry Perspective: How to best value your fabrication business
It should be no surprise to anyone that our market is constantly changing and we, as fabricators and business owners, have to adjust our operating models to stay innovative and competitive, but most importantly, cater to an all-knowing, multi-generational customer audience. The truth is, today’s economic environment, increased exposure to media resources and consumer access to information have created the need for us to re-evaluate our priorities and question which direction our business should take based on available resources.
The questions most fabricators are faced with today include:
- Do we lower our costs?
- Change our product lines?
- Invest in equipment and technology?
- Add or reduce staff?
- Invest more in marketing through a new campaign, website, events, etc.?
Now let’s face it, most of us build a business to be independent and in control of our future, but the day-to-day activities seem to always get in the way of the definitive goal, and most importantly, can deter us from achieving our bigger objectives.
The ultimate purpose is to build a business that has (and adds) value. Whether you are looking at building your business to leave a legacy for your family name, or are seeking exit strategies, the most important thing any fabricator should know is the value of their business.
Through The Rockheads Group, we work with our members to help them channel their efforts and ensure they are building a sustainable business by providing them with insights in the following areas:
Financial Health – We encourage our members to review their financial stability in a very consistent manner and have developed a benchmark platform that allows them to review specific KPIs against similar-sized fabrication companies. The main goal around financial health in the valuation of a business is knowing key financial ratios, and most importantly, a focus on assets and EBITDA.
Safety Standards – Our members have a deep understanding of industry regulations and health and safety standards. In the past, we’ve partnered with leading safety compliance companies like ESGI to bring our members the knowledge they need. Adding value to your business is all about maximizing safety processes and minimizing risk.
Talent Development – Business value often lies on who’s behind the business. Aim to cultivate a team that is strong enough to help you build a business and flexible enough to adjust when needed. Rockhead Sales University offers a complete sales training platform that can be facilitated virtually, coupled with the support of a professional sales coach on staff.
Equipment – Knowing and understanding the proper use of your equipment will help minimize risk and waste, as well as ensure your investment is protected for the long term. Keeping a good grasp on when it’s best to upgrade or add new machinery is critical to maximize output and improve customer experience. We work with partners like Poseidon and BACA Systems to educate our members on how to make the best of their equipment. As new equipment is developed and launched, key manufacturer partners share industry standards with our members to help them build on the value (assets) of their business.
Real Estate – To buy, rent, lease, reduce or expand is a question that we often hear during our member gatherings. The reality is that each business and market is different so there is no standard rule to this topic. However, it is important to keep in mind the ultimate business goal (grow or exit) when making decisions related to real estate as these can significantly impact future valuation.
Marketing – Developing a good business model includes keeping your sales and leads pipeline flowing with qualified customers -- but how do you best achieve this? There are many ways to increase exposure and lead generation but finding the right strategy requires looking at a combination of tactics that can add long-term value to your business. We’ve partnered with the Marqet Group to help our members identify which outlets are best for their target audience and where/how current customers are converting. This paves the way in implementing the right combination of efforts to help increase both digital and physical footprints that add value to the overall business.
We encourage anyone looking at building long-term value for your fabrication business to engage with like-minded fabricators and seek out the support of experts in each of the categories mentioned. At the end of the day, it’s what you do now that contributes toward building a successful business (and brand) that will help ensure you’re meeting your ultimate business goals. If you would like to become a Rockhead member and learn more about the benefits we offer, please visit our website at www.rockheadsusa.com.