90 Days to Professionalize Your Machine Shop: Sales (Part 4 of 12)

The goal of your business is to generate revenue.

Of course, that isn't the only goal, but it's an important one. More than revenue, you actually need to generate a profit if you want to experience any meaningful growth. In addition to that, it'd be really great if you could generate increasing amounts of revenue and profit year over year to sustain that growth and help you reach more customers.

This is especially important if you want to avoid those pesky cash-flow issues. Not having enough cash in the bank to pay a large tax bill, make payroll, or even pay for raw materials can be mortifying. Without a focus on bringing in revenue on a regular basis, your machine shop business is ultimately going to crash and burn.

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Thanks, Captain Obvious.

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Well, I only say that because it underscores the importance of being a sales-driven company. If you want to serve customers, provide well for your team, and avoid business failure, you can't allow fate to determine your success or failure. Sales and marketing are your primary tools to propel your business forward. So with that, let's tie sales into the theme of making 2023 your best year yet!?

Every machine shop business that wants to win in 2023 needs a sales system and strategy. This is true for every shop no matter how big or small you are. When you get intentional about sales, you'll dramatically increase the revenue and profitability of your business.?

Many shop owners I speak with don't have a deliberate sales strategy, much less any dedicated sales personnel on their team. They say things like "I haven't had to do sales in years, the work just finds us, and we're always busy!"

Well, in a sense, good for you! But there's more to consider here than just staying busy. While it might feel good to be busy in a year where everyone is feeling apprehensive about the economy, that doesn't mean you're automatically winning. Being busy and being profitable don't always equate. You need to have a better goal.

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The Pareto Principle.

Just like in every other aspect of life and business, the 80:20 rule applies to almost every machine shop. The reality is, 80% or more of your revenue likely comes from 20% or less of customer base. That ratio might look a bit different depending on your business, but by and large I've seen this to be true. This is both a warning and an opportunity.

The Warning: Your team is likely consuming precious resources on customer projects that don't produce a significant amount of revenue. Or worse, the business could be losing money on those jobs.

The Opportunity: Chances are, you already know which customers and what type of work generates the bulk of your revenue and profit. Ask yourself: How do we get more of those customers?????

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Pour Gas on What's Already Burning.

Take a look at your books and determine what this looks like for your business. Read and understand the data. Which customers or what types of work give you the best profit margin? Perhaps more importantly: which customers and what kind of work doesn't contribute the bottom line in a meaningful way?

Define your ideal customer. Look at the trends and characteristics of the 20% or less of your customers that make up 80% or more of your revenue. Take a look at company size, industry, types of work, lead time requirements and everything else. Then, start to identify similar companies that you'd like to do work for, track down the right contact information, and initiate a sales conversation.?

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But I hate sales conversations.

Most shop owners I know don't enjoy sales. Perhaps that's because most people don't like being sold to. I'm sure many of us have endured a few bad sales experiences where we felt like the salesperson had a hidden agenda, or that we were being tricked into spending money we didn't have on something we didn't need. So how can shop owners and sales people in manufacturing be different?

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Stop Selling.

That might sound confusing, so allow me to explain. Your ultimate goal isn't to peddle your services at random and hope that eventually someone will say yes. A successful machine shop sales strategy requires a deliberate understanding of the pain points that your customers are experiencing. Once you understand the problems, you can position your services as the solution. Ultimately you want to build trust and be viewed as a guide and a helper, not as just another vendor on the list. So ask yourself: What problems are potential customers dealing with, and how can you make their lives better? How are you best positioned to help them?

If you've been in the manufacturing business for any length of time, you can likely guess what those paint points might be. That said, there are things beyond price, quality, and lead time that affect purchasing decisions. What are your unique capabilities? Are you well experienced with difficult-to-machine materials? Do you provide production solutions, or a quick turn-around on complex prototypes? Do you have specific industry experience or skills that you are currently under-valuing? Are there supply chain opportunities where you might be able to supply components that were previously sourced from other parts of the world?

Become known in the industry for solving a specific problem, and you'll be surprised by the doors that open up.?

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Create your Talking Points

Clear and compelling communication is a super-power. Your goal is to make your customers easily understand the value that you provide. Remember, your customers are experiencing some kind of pain, and they're looking for a solution. Ask the right questions and bring to light the challenges that they are facing. Define the problem in clear and certain terms, position your services as the solution, give them a step-by-step plan, and most importantly: ask for the opportunity to quote on their work.

When you clearly communicate that you can solve a problem for your customer, your chances of success are greatly increased. Being a guide that makes life easier for your customers by solving their problems communicates far more value than spamming inboxes with generic sales inquiries.??

Final Thought

Machine Shop's that go above and beyond the call of duty for their customers are going to win. Beyond making the sale, show a sincere interest in your customers' future success. Ask them about their risks, strengths, and opportunities and then show them how you're going to help them mitigate those risks and capitalize on their opportunities. Be more than a vendor, be a strategic partner.

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TL;DR

Stop leaving the future of your machine shop business to chance. Relying on work to show up at your doorstep isn't going to make 2023 your best year yet. In fact, it might do the opposite. You need to be sales-driven to succeed.

Key Takeaways:

• Being busy alone is not a guarantee of growth, profit, or a prosperous future. You need to be busy with the right kind of customer, and the right kind of work.
• What type of customer and job contributes most to your bottom line? Pour gas on what's already burning and find similar work to increase revenue and profit. Free up some bandwidth by saying no to the jobs that don't fit this description.
• Create talking points for your sales conversations that position your services as the solution to your customer's problems. Become know as a guide rather than just another vendor on the list. Use language that is clear, compelling, and helpful.
• Ask for the sale, close more deals, increase revenue, and make 2023 your best year yet!

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A Disclaimer

Machine Shop sales can be a tricky topic to write about in a definitive way. There are many factors that make each business and corresponding sales strategy unique. Your business might be small or large. You might sell services or perhaps you produce and sell your own products. You might be heavily specialized in a particular industry, or perhaps you've just started out and are taking whatever work you can get. You might have dedicated sales staff, or perhaps YOU, the owner, are the primary salesperson. To that point, I've intentionally kept this writing fairly broad and high-level. Do you have some favorite sales tactics to share? Feel free to add to the conversation in the comment section below!