Doing Business in a Global Economy

There are few markets that haven’t faced the increasing challenges brought by low-cost imports. The cabinet, furniture, flooring and other markets we serve are no exception. But, some innovative small businesses have found strategies that have allowed them to adapt and succeed in this environment. We’d like to offer some ideas on how they are doing it.

Find the High-End Niche

Competing on price in the US is nearly always a loosing battle. By focusing on higher-end or custom products and services, you can exploit your advantages and insulate yourself from some of the volatility and economic downturns of low-cost markets.

Emphasize Quality

Imports from low-wage regions of the world often suffer from a lack of quality control, not to mention damage during shipping. By setting your quality standards very high and emphasizing it to your customers, you can enhance that perception.

Capitalize on Slow Turn-around and Long Lead Times

Small shops often judge their success in the marketplace by the length of their backlog of work. But one of the biggest problems your overseas competitors have is the incredibly long lead times necessary for shipping. Delivery times often exceed 3 months. Retailers dislike trying to predict the market 4 months in advance and don’t want to hold large amounts of inventory. Distinguishing yourself by offering low minimum orders, working to implement a “Zero Backlog Strategy” and positioning your company to quickly react to customers’ changing needs can give you an edge.

Know Your Market and Stay Out Front

Make it a point to visit trade shows, your customers, your customers’ customers, your competition when possible, and even consider visiting competing markets overseas. Doing so can give you tremendous insight. By staying on the cutting edge of design and market trends, and better knowing exactly what your customers want and need, you can profit from information that has yet to reach slower overseas’ radars.

Stay Flexible and Innovate Often

If you tend to have long product life cycles and large inventories with common designs, you’ll no doubt face many copy-cat foreign competitors. By keeping production runs shorter and inventories low, you can be more flexible and adapt to the changing market demands.'

Manage Your Cost of Labor

Cut labor costs by looking for ways to streamline production with labor-saving alternatives, not by seeking the cheapest labor. In fact, offering better wages, productivity bonuses and benefits to draw and keep good long term employees can pay off with higher productivity and less production problems. And by investing in training and education of those employees, you can make further gains.

Leaner and Maybe Greener?

No matter how lean you believe your manufacturing process is, there’s always room to improve. Consider just-in-time delivery of materials, outsourcing high-volume common components, constantly seek new more cost effective alternative sources, and automation of repetitive tasks to name a few.

Solicit employees for ideas to improve processes. Some companies offer incentives, but simply asking employees for ideas on a consistent basis can yield big results! Don’t overlook energy savings either. Converting to higher efficiency lighting and climate control systems, and striving to eliminate every ounce of waste can add up over time.

Invest in Marketing and Sales

For years, many smaller shops have gotten by with very passive marketing strategies. Whether you hire outside sales reps or do it yourself, having individuals actively pushing your products to new customers and markets is a must. Branding, advertising, web sites and printed literature are often the first to get cut when money is tight, but these tools are an investment not an expense; an appealing presentation can be that subtle difference that turns prospects into orders.

Appeal to Patriotism and Environmental Concerns

While never the soul determining factor, “made in the USA” still means something to many of the end users of your products. And with environmental concerns on the rise, you can take that draw one step further. Domestic products are generally more “green” due to less shipping waste and tighter environmental regulations compared to third-world suppliers.

Take Advantage of Trade Organizations

Trade organizations often offer a collective pool of valuable information, resources for collective shipping rates, lobbying for more favorable trade policies and protections, collective marketing and more.

Partner with Importers

Some businesses have found by working with some foreign suppliers, they can maximize value for their business and their customers. Consider overseas outsourcing for components or raw material, or joint ventures with overseas manufacturers to supplement your domestic production.

In conclusion, take an honest evaluation of your company, and compare its strengths and weaknesses to your overseas competition. By streamlining your processes, picking your markets carefully, understanding your strengths and import’s weaknesses you can better position your company for success now and in the future.

A special thanks to Scott Dickerson of Banks Hardwoods, Inc., author of the presentation for which this article was based upon.