Why Engineering Businesses Shouldn't be Failing

There is no getting away from the fact that many businesses are facing challenging times at the moment and going forward there is further uncertainty. With the full global impact resulting from the ongoing pandemic unknown, it is testing the robustness and ingenuity of the business world.

As unique as the pandemic has been, it is not the first time we will have witnessed an unexpected event, outside of our control, which ultimately affects the ability to drive revenue.

With such far-reaching restrictions in place, changes in business and individual habits are inevitable and if this was over the short term, then it would be far more manageable, but when you are considering many months or even years then you need more than a short-term fix.

When businesses get into difficulties when these situations happen, then there are really two reasons. One, they are too reliant on one type of customer, or secondly, they are not agile enough to adapt. You may believe the business model may be a cause or too large overheads, but if you can switch the bulk of clients and quickly alter the business then you can continue to thrive.

I have seen at first hand the impacts of the first cause. We were in a situation where over 80% of our revenue was generated by one customer, and then when they had a falling out with the main operator, we suffered. Again, when we were dependent on the oil and gas sector, which was generating over 75% of our revenue, we took a huge knock when the oil price crashed in 2015.

The financial impact on our business was huge, though with both instances were able to come back stronger. It is easy to see that this level of reliance was too risky, but we were working on the adage of make hay when the sun shines and we did well out of it, but only over a limited period.

I see parallels between these situations and the current one where we have been able to spread our risk across a variety of sectors and customers. We are seen as niche in supporting large engines, but when you look at the sectors these cover, there is a huge variety and when you replicate over global locations, the variety continues to increase.

Whilst it is one thing to recognise these different opportunities, if you are serious about converting them into meaningful revenue, then you need to be able to adapt the business offering to suit. 

• What are the specific needs of the new opportunity?
• How can you deliver on this?
• How can you offer something different to any current providers?

... the list could go on.

And I believe engineering businesses have a distinct advantage when it comes to being able to adapt their specialist offering to new clients, though unfortunately they rarely recognise this. They tend to perfect what they do, making it so focused on their specialism, or customer, they cannot see the masses of other clients who could benefit from the same skill base, just tailored for their specific needs.

Spend time looking at the opportunities out there and not on how you have to cut the business to reduce the effects of a difficult situation. Shift the focus and you’ll see an exciting future ahead.