The past couple of years have been challenging for all industries; customers scaling back, banks making credit harder to come by, the news each and every day casting a negative view. As business owners and operators, we have not had much to celebrate these past two years. Or have we? This may depend on how you viewed the past two years, and how you see your future opportunities.
Leonard Automatics moved into our new facility in the summer of 2008. As we all know, the depth of the recession was to continue on for many months. In fact, even though it is “over”, we are all still weighed by the slow recovery. Most everyone, myself included, said “what a bad time to move into the new factory, expand capacities and capabilities, and take on new debt.” Trust me, my team I spent a lot of nights questioning such a move.
However, as the dust from moving cleared several things became very clear. The move into the new factory and the purchase of new, more efficient equipment was having a direct impact to our bottom line even amid reduced revenues from the recession. In fact, given the more difficult environment of reduced sales, our increased efficiencies were in fact fueling our survival. The difference came from reducing our cost structure and improving our ability to deliver better quality equipment more effectively. We were able to reduce labor and material costs and offer our customers savings to help drive sales. We were even able to retain our workforce to be in a strong position when the economy began to recover.
Leonard Automatics was also able to start working in new markets due to the improved technology of our manufacturing equipment, thus expanding markets to increase the strength of the company past our traditional customer base. Our success in these new markets actually allowed the company to purchase additional equipment this summer, adding to our improved capabilities and further improving the overall quality of our products.
There are many good reasons to stay the course in a recession. We always hear that “cash is King” during hard times. While this may be true, it is more important to keep in mind the opportunities to improve operations and infrastructure. Can a new piece of equipment reduce our operating costs significantly? If the equipment has the right return on investment, it can actually add cash to your operation to help make it through the difficult times.
What a wonderful time to invest in equipment. Virtually everything is on sale today. Equipment companies are looking to move product and have been willing to provide discounts to keep factory floors operating. Installation and rigging crews are hungry for work and offering great deals on installation costs.
Banks actually need to make loans to business, and with interest rates at all time low your cost is reduced which improves your ROI and overall cash flow. Instead of staying the course, this is actually the best time in years to be reaching out and investigating how to make all of our companies function better, more efficient, use less energy, and improve quality.
Leonard Automatics decided this was a great time to invest in our company, to take advantage of “deals” in new equipment, to firmly position ourselves as the economic recovery begins. In our case, the payoff was huge! Perhaps it can be for your company as well.