Pulling your business out of a financial hole can seem like a herculean task, but only if you look at it as one insurmountable challenge, rather than a process that you can tackle by degrees.
With that in mind, the following steps can take your machine shop from having a balance sheet that’s heavily in the red to a much healthier place.
Optimize consumable items
Your current policy might be to do away with consumables like tool heads at predetermined intervals, regardless of whether or not they are still serviceable.
This is potentially wasteful, so it’s better to switch tactics and instead make replacements on a case-by-case basis. That way your costs will be driven down, although this should not come at the expense of falling short of safety regulations.
Upgrade from inefficient machinery
If rising energy costs are putting the squeeze on your machine shop, it could be more economical to replace older equipment with more efficient, modern equivalents. There’s a cost to doing this, of course, but over time it will pay you back many times over.
Reduce material waste
If you’re not making maximum use of the materials you work on, then every offcut will cost your company dearly, from a cumulative perspective.
Reducing material waste can come down to a fundamental thing, like changing the design. It could mean switching to a material that is more easily recyclable on-site, or reusable in another context.
Sell machinery that you no longer need
Platforms like Revelation Machinery provide you with the perfect opportunity to offload equipment that is sitting in your machine shop gathering dust and taking up space.
There’s a temptation to cling onto older gear just because you’ve grown attached to it and you believe that it might come in handy at some point. But when faced with financial calamity, you can’t afford to let your heart rule your head.
Embrace preventive maintenance
Earlier we discussed wringing every last drop out of consumables in a machine shop, and while this is a sensible cost-cutting strategy, it should not come at the expense of keeping machinery in tip-top condition aside from this.
The reason is simple; if you aren’t maintaining gear to adequate standards, it’s more likely to break down or result in imperfect levels of performance. Both of these can be more disruptive and expensive than preventive maintenance, so staying on the ball in terms of maintenance is better in the long run.
Rethink your supplier relationships
Bringing in materials at competitive prices isn’t always easy, but then nothing worth doing is. If you’ve had an established relationship with the same supplier for years, and prices have crept up steadily in this time, now is when you should be playing the field and getting quotes from other sources.
Establish whether a change of location would secure you savings
If you rent the space occupied by your machine shop operations, then price rises in this area can really sting, especially if you’re already feeling the pinch in other aspects of your operations.
There are a couple of ways to deal with this, and the simplest is to negotiate a lower rent with your landlord, which may or may not be possible depending on market conditions.
If this fails, you could think about moving your shop to new premises. This has costs and complexities of its own, of course, so you need to do careful calculations to see if this is financially justifiable.
No one is going to make tough decisions about the direction your machine shop business takes but you, so don’t bury your head in the sand if your finances are out of kilter; take action and regain control.