The thing about business planning is that it presents options that are available at some future point. Having a clear view of potential options can be remarkably useful. Especially when your business collapses around you.
Take this example – a TAB member had a small engineering workshop in Tauranga, with two CNC machines that were fully committed. The opportunity to expand capacity was in the 2021 plan (built using the TAB planning tools). In mid-2019 disaster struck – one machine failed and the business was in real trouble. The machine was no longer supported by the manufacturer and after six weeks of attempted repairs and imported second-hand parts that failed to help, the reality was accepted. Customer orders had been given to competitors to supply and the machine was scrapped.
Now the choice was to re-invest or close!
Fortunately, the planning had been done on new capital investment and the monthly accounts were in very tidy order in preparation for the inevitable scrutiny by a lenders credit committee. So a new machine was purchased at $200,000 and the business began a new chapter.
Time out of the business: This owner was forced to take time away from being completely focused by his workshop and now had time to talk to customers and potential customers. What he learnt was worth more than his lost production.
Customers: This was the opportunity to leave behind the customers who were low margin or late payers as the company took on new business.
New Investment: The new machinery catapulted the business’s capability over the competitors and gave the business a competitive edge to talk about. It changed the business’s position in the Tauranga engineering business.
New business: Was being won on the capability of the machine, at improved margins, for the reality of the market was different from the owner’s perception. It was not a priced based market! The lowest price was not the key desirable. It was reliability-based. Customers were willing to pay for surety of supply and were not interested in obtaining a lower price.
– Craig Ross, TAB Business Owner, Bay of Plenty