Do you feel like your machine shop is in a rut? There’s plenty of work and you and your team are always busy, but still, you never seem to get ahead. It feels like there’s always a cash crunch looming or there’s always a crisis that you have to deal with. Sometimes you may even wonder whether the rewards of running your machine shop are even worth all of the stress and headache.
Running a shop is no simple task. You have to deal with managing employees, implementing a process, balancing the books, and marketing yourself and getting new clients. If you’re like most shop owners or managers, you’ve probably learned a lot of that on the fly.
The good news is that it’s never too late to turn your shop around. Often, when shops are busy but still struggling, it’s for a few common reasons. Fortunately, some adjustments to your systems, processes, and mindset can resolve those issues and get you back on the fast track to success. Here are common mistakes that many struggling shops make everyday:
They work on jobs that aren’t profitable.
All business is good business, right? Not quite. Chances are good that your shop is great at doing a few specific things. That’s a good thing. It’s helpful to have a strong niche because that allows you to focus your efforts on what you do best.
However, many shops are also tempted to go outside their comfort zone for the sake of getting business in the door. A customer may need some work done that falls outside your usual work for them. Rather than open the door to a competitor, you take on the job.
Here’s the problem. When you take on work in areas in which you have little experience, you may actually be creating an unprofitable situation. Your workers aren’t used to that kind of work, so it will undoubtedly take them more time. You may not be sure which kinds of materials you need and could make mistakes in the ordering process. You may route the job incorrectly through the shop, creating further delays.
A one-off job like this might not be such a bad thing. However, when you’re consistently bringing in work that’s outside of your core competencies, you’re putting your shop in a difficult situation. Instead, focus on what you do best. If you want to expand into other services, do it slowly and make sure you have the capabilities to do so.
They’re not thoughtful about purchasing and ordering.
Take a walk around your shop floor. What’s it look like? Are there tools sitting around? Materials waiting to be used? What if you walked out and saw piles of money sitting on the floor going unused? You’d be pretty upset, wouldn’t you?
Well, it’s the same thing. One of the toughest aspects of running a shop is managing the cash flow situation. A lot of that has to do with purchasing materials and tools. When you buy materials, you’re tying up cash into resources that should generate a profit. But what if you order the materials too soon and they sit around? What if you buy way too much and then you have leftovers sitting around?
That’s capital that could be used for a better purpose, like paying workers overtime to get ahead on jobs or doing some advertising or marketing to bring in new customers.
One way to manage this better is with a solid job shop software platform. Job shop software can help you get a grip on how long it takes to do each job, so you can order your materials with a little more knowledge and insight.
Focusing too little on customer service.
Sometimes when you’re really busy, it’s easy to let customer service fall by the wayside. You’re so caught up in getting jobs done and out the door, that you don’t take the time to check in with customers.
The problem with this is that very often, you won’t hear that a customer is unsatisfied until they’re heading out the door to a competitor shop. You think everything is fine and then one day they surprise you with the news that they’re leaving. Or, even worse, you just don’t get any more orders from them and you never find out why.
Put a process in place to check with your customers regularly. Find out if they’re satisfied and what else you can help them with. Ask about their goals and challenges. Provide them with regular updates on their in-progress jobs and when they’ll be completed.
Job shop software can also help you in this regard. With a robust software platform, you can quickly see where each customer’s orders stand. That makes it easy to give them a regular report on their outstanding work.
They run too much work through only a handful of people.
Do you feel like you’re involved in every single job that goes through your shop? Does it feel like the shop just couldn’t operate without you? That’s not a good thing. As a shop owner or manager, you may feel like you need to keep a firm grasp on the shop’s processes. However, it’s just impossible to grow and scale with too much work running through one person.
This is also true if you have all the jobs running through one supervisor or all the ordering and invoicing going through one admin person. That may be fine when you only have a few customers, but what happens when you have a few hundred?
The answer is to invest in your employees. Give your team the resources and knowledge they need to take on more responsibility. The more latitude and autonomy that you can give to your workers, the more you and your management team can focus on more important items, like growing the business and finding more customers.
Relying on disjointed systems that don’t work together.
Does this sound familiar? Job orders are written down manually when they come in. Material orders are kept in a filing cabinet in the back. Invoices are on a spreadsheet on a computer in your admin’s office. Your shop workers write down the job’s progress on a paper traveler floating around the floor. A bunch of random notes about how to improve the shop are tucked away somewhere on your smartphone.
Somehow, this combination of systems and processes comes together and work flows out the door. As you probably, already know, though, no shop can grow and scale without a seamless process in place. At some point, your quality or your turnaround time or both will start to suffer.
In fact, if your bottom line doesn’t look as strong as you’d like, your shop is likely already suffering from having a disjointed process. Good news, though: This is easy to fix.
The best place to start is with an ERP software platform that is specifically designed for machine shops. That can help you get everything on one system and better communicate information to the team. That will allow you to drill down on your quality and ensure that all deadlines are being met.
Contact us to learn more about how Shoptech’s E2 software system can help you get your shop under control. We’d welcome an opportunity to speak with you and share how our software has helped shops who were dealing with the exact same challenges that you’re facing.