Expand Capacity and Grow Revenue
With 2020 safely in the rear-view mirror, growth-oriented fabricators have turned their attention to the year ahead. Eager to make up for lost time, companies are ready to start investing again. But knowing where to spend money is the key. Here are some things to consider before you run out and make any high-end purchases.
Understand Where to Invest
That fiber laser or robotic welder will slash production by an hour. New nesting software will allow you to get three more part on the sheet and reduce scrap. But machinery, lights-out production, added services, and nesting software are useless without more jobs. What’s more such investments are costly, and the added revenue they generate is just a drop in the bucket when compared to the potential of your estimator(s).
Increase Sales by Producing More Quotes
Sales keeps machines cutting, lights burning, and is the lifeblood of any company. And there are a couple of options available for increasing sales. First you can improve your closing rate by lowering margins, undercutting the competition, and wowing the customer with rock-bottom prices. Of course, profits will plummet, and you can be sure that more than a few jobs will end up costing money.
A more profitable way to increase sales is to get more bids out the door. With more lines in the water, you’re improving the odds significantly. Here again, there are a few options. You can hire more salespeople and estimators, schedule the sales staff for longer hours, or increase the speed in which quotes are created. None of which sound particularly appealing.
The ideal choice is to accelerate the quoting process. You can try to accomplish this by simply instructing estimators to “work faster!” or you can automate the process. Let’s examine the impact of automation on sales.
Say, for example, that your sales team typically puts out five quotes a day using Excel. If an average quote is $800, that’s $4,000 a day, $20,000 a week, or $1,040,000 for the year. If your average success rate is 25%, that’s $260,000 in new business you can expect. Not bad. But suppose that you’re able to put out twice as many quotes without adding staff. With the same success rate that’s an additional $520,000 in yearly sales. Pretty nice huh? Well, many fabricators are in fact are seeing average quote increases of three times or greater. In our example that would be $780,000 of added yearly revenue.
The answer is of course to stop using manual processes and give Excel the boot so you can easily integrate a sheet metal estimating software for rapid sheet metal quoting.
What are You Missing?
Fab shops trying to increase throughput solely on the production floor are missing the true bottleneck. Most organizations pay hundreds of thousands of dollars to add additional machinery to attract new customers. However, they are missing out on a huge growth opportunity within their frontline estimating department.
While you will need to invest to grow sales – you don’t have to over-invest. Sure, expensive machinery and sophisticated nesting software are nice; but aren’t necessary to grow the business substantially. Focus on sales instead and arm your staff with the tools they need to get more quotes out the door faster. Automated quoting provides the biggest bang for the buck and quickest return on investment.
Take a closer look and let SecturaSOFT show you what you’re missing.
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