In Scaling Up, Focus on 3Ps: Pricing, Partnership, and Pipeline

June 18, 2014

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For manufacturers, a surefire method of securing opportunities for scaling up business is becoming a preferred supplier to a larger manufacturing organization. Here are the steps needed to ensure a smooth approach that sets the table for high growth.

Positioning your small business to scale up is often highly dependent on being a valuable partner to a larger manufacturer’s supply chain. If your company can secure this position, even in an economy with tight competition and the potential for cutbacks, it is more likely that you will be able to take your business to the next level.

As opposed to conventional capacity building, the ability to scale up is a part of the capability to reconfigure manufacturing systems and allow production capacity to be quickly adjusted to specific customer demands while maintaining cost efficiency -- in this case, being a preferred, strategic supplier to a particular large organization. Like any strategic growth plan, there are a number of steps that need to be taken early on to ensure a smooth scale-up. To get your business poised for rapid growth, consider the three Ps in this order:

1) Pricing

“Your customer is a buyer first and a partner second.” So says Buckley Brinkman, CEO of the Wisconsin Manufacturing Extension Partnership, whom I met at the Corporate Venture Forum, an event hosted by American Express OPEN to encourage partnerships between large companies and entrepreneurial ventures. Before companies become partners, they expect the other party to respect the bottom line.

Providing better customer service does not always mean you get away with charging a higher price. In a strategic alliance, competitive pricing is a must. A savvy small company knows that getting in the door of a large organization before procurement takes place means that it has to offer a lower-price solution than the competition. This is what secures a front-row seat in the selection of preferred vendors in the future.

2) Partnership

High-growth businesses realize that they must be more than just component or product providers to their customers; they must position themselves as valuable partners. One small manufacturer has used this very concept to successfully scale up to where its metalforming business now is comprised of a significant portion worldwide exports.

Jeff Clark, CEO of Waukesha Metal Products, a Wisconsin provider of custom metal stampings, sheet metal fabrications, and in-house precision tooling, utilizes a program management philosophy where his account managers -- who are often engineers -- work with customers to examine challenges and gaps in their processes and think through innovative and cost-effective solutions. Positioning the company as a partner to its customers has made a significant difference in its growth trajectory, which has enabled Clark to serve many original equipment manufacturers (OEMs) around the world.

RELATED: What to Expect from a Metal Stamping Provider 3) Pipeline

Small businesses and entrepreneurial-style companies must constantly look to the future, knowing what is needed to grow the business, keep up with customers’ needs, and ward off the competition. By looking ahead, Clark realized that he needed to begin developing a talent pipeline to grow his next generation of employees. Having a keen understanding of what his customers’ needs will be and what that will require of his workforce, Clark went out into his community to create internship and apprenticeship programs for local students.

Waukesha Metal Products is an example of how a company can position itself not only to customers but also in the community to attract strong team members as it  grows. Clark knew that getting students involved in the manufacturing industry early in their lives could positively impact the community while growing a talented workforce that his company needs for its future. It is a win-win strategy.

To recap what it takes to scale up your business for sustainable success:

  • Position yourself as a preferred vendor at the onset by providing not just impeccable customer service but also competitive pricing.
  • Be a partner in thought and in action, instead of limiting your role to just a vendor.
  • Develop a workforce pipeline. It takes a skilled, educated, and experienced team to grow a company into the future.
Too many small and entrepreneurial businesses miss opportunities because they become so focused on just closing the deal that they forget to step back and analyze where the gaps are in their industries and see what solutions they can bring to their customers. Direct your leadership team today -- even if it is you looking into the mirror -- to take one day each week for the next three weeks to develop a 3P plan of action and position your company to successfully scale up.

Top photo credit: David Castillo Dominici at FreeDigitalPhotos.net

 

Dona StoreyDoña Storey is the American Express OPEN Advisor on Scale Up, advising entrepreneurs on how to find rapid growth through corporate and government procurement as well as helping large organizations scale their entrepreneurial partners to better meet demand in both the commercial and government marketplaces. She is an entrepreneur herself with extensive experience running and scaling up a business.
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