12 Tips For Growing Your CNC Machining Business
Team Thomas September 7, 2021
Growing a business can be a challenging endeavor, especially for entrepreneurs entering a crowded market with large, well-established competitors already in place.
As the manufacturing industry experiences shifts in how it operates, how can CNC machining businesses secure contracts and grow within the industry despite today's challenging obstacles?
It's a good question, and we're here to help answer it — take a look at our tips and suggestions for small CNC machine shops to continue growing their businesses in an ever-crowding market.
1. Develop Partnerships
For many machine shop owners, the early days can be an uncertain time in which numerous concerns, such as volume expectations, client lists, or even floor plans, have yet to be resolved.
In these circumstances, existing friendships and business connections can be valuable assets.
Whether having friends steer clients in your direction, enter into partnerships, or simply provide advice on business practices, relying on your current connections can give you a useful leg-up.
Many also build their network through industry events and webinars.
2. Target Your Segment of the Marketplace
It is generally a good practice to focus on the specific types of purchasers that will buy your products at the best volume rate.
For example, if your shop specializes in producing gear shafts with a diameter under five inches, try to establish relationships with companies that purchase this product at a rate favorable to your production cycle and turnover.
Targeting your market niche will help you make the best use of your specialty, like only in replacement parts. Some CNC companies see this as a very successful model for what may seem like a limited market. As you grow your company, you can diversify into other markets.
Another marketing method is leveraging emerging technologies such as the internet, videos and social networking which can help improve your shop's visibility online and reach more buyers.
Don't forget to share videos touring your shop floor — you can have a video created by Thomas for free with an advertising program to help prospects get a look at your operation. (Take a look at the example below!)
3. Diversify According to Demand
While it’s sometimes a bad idea to take on a job outside the capabilities of your shop when you're just starting, new projects that seem within reach and will provide a cost-efficient result can be a helpful way to diversify your operations.
If, for example, a lathing shop has the training and funds to undertake a profitable milling or plastic fabrication contract, then the resulting diversity can help provide sustainable growth even during periods when one sector of the market is on a downswing.
4. Don’t Rush to Expand
Purchasing machines that are not yet cost-efficient or enlarging facilities without the staff needed to maintain them can slow down business growth and hinder long-term expansion.
In many cases, it may be better to concentrate on making steady gains rather than giant leaps forward, as even a small shop with fewer than a dozen machines or employees can still meet or exceed the national productivity average.
It's important to also communicate your growth plans — even the small ones — to your entire team.
5. Remain Open to New Technology
Although new technical innovations can be costly in terms of additional training and initial set-up, recently-developed equipment may have a positive long-term effect by simplifying production methods or providing the means to accomplish tasks that were once considered impractical.
New technology can sometimes help a business remain competitive, especially if the innovation gains widespread notice.
💡 Thomas Tip: CNC machining companies can see how their online presence compares with competitors by requesting a free digital health check.
Shop owners might want to consider purchasing more manufacturing equipment to fulfill existing and future orders. This can be a difficult decision to make, as future growth isn't guaranteed and buying equipment has many upfront costs. On the positive side, however, new machinery equipment will increase production capacity and improve cycle times, which will, in turn, create more opportunities for your business.
Business owners must weigh the risks versus the rewards — and again, communicate your efforts to your team accordingly.
If investing in new machinery isn't an option, see if you can modify and update your current equipment. This approach requires a much lower investment than purchasing new items, but it can still improve your production capacity and cycle speeds.
6. React To Your Competition
Being aware of your main competitors is a valuable practice under most circumstances, particularly in times of economic volatility.
Market fluctuations can cause a slowdown in commercial manufacturing, while leaving military production relatively unchanged (and vice-versa).
In this case, competitors from one side of the spectrum may bring their operating standards to the other, forcing companies to accelerate their production rates or lower prices to maintain market share.
7. Invest in Digital Marketing Efforts
Another growth method is leveraging digital marketing efforts such as emails, videos and social networking which can help improve your shop's visibility online and reach more buyers.
Keeping your customer base happy is key to building your business, but being online is the golden ticket if you want to attract more customers.
Begin by building on what you currently have and talk to existing customers about what could be better. This feedback will help you learn about their challenges and how you can create resources to address their concerns.
What type of content do they consume? What are their jobs to be done? Publish this information on a high-quality website to attract new customers. Organize the content into an "Examples of Work" or "Markets Served" section on your website, like the CNC machining website example seen below.
8. Be Flexible in Multi-Stage Processes
Companies that combine both internal fabrication and machining operations can often save time or money by acquiring equipment that incorporates secondary work into its primary function.
For example, using a cutting laser can often reduce the need for post-fabrication finishing, such as smoothing or evening edges.
9. Integrate Your Operations
While vertical or horizontal integration is beyond the reach of many small CNC businesses, it may still help bring as much of the manufacturing process in-house as you can.
Streamlining measures, such as organizing a production schedule around a machine shop’s in-house capabilities or prioritizing jobs based on your own production center rather than an external supplier’s availability, can help smooth workflow and ultimately improve output.
10. Initiate Scalable Growth
In many cases, successful business growth is not dependent on the size of the products being manufactured, but on the depth of the fabricating process.
It can be beneficial to evaluate the services or products you provide to your customers, and see if you can expand the reach of those services. I you produce steel tubing for your purchasers, see if you can also provide them with the fasteners used to join these components together. Securing more expansive contracts from existing relationships can be a secure and scalable method of growth.
Whatever your growth plan is, skipping a business plan is a common mistake industrial businesses make. Create a plan that documents what milestones you should be hitting and the steps to reach them. This will also help you as you apply for small business loans, grants, or other crowdfunding campaigns.
➡️ See our free business plan template to get started.
11. Step-by-Step Value Addition
CNC machining is essentially a multi-staged process in which there is the potential for value-added work at each stage.
Consequently, a shop’s potential for expanding its business largely depends on how many of those value-added steps it can perform. A small business seeking to expand can evaluate its manufacturing strengths and take advantage of any opportunity to insert itself into a value-added production stage.
This approach, coupled with gradual service integration and streamlining, can be a valuable way to expand your small CNC business.
Equipment isn't the only part of the physical shop floor that needs to be changed if you're expanding your business.
Storage facilities and warehouses should also be considered once you grow to accommodate additional production.
This year, warehousing demand has been ramping up so be sure to plan accordingly. If adding on to your current shop floor isn't an option, off-site warehousing might be the way to go.
Final Thoughts: Increase Sales In Your CNC Machine Shop
Now is the time for shop owners to do all they can to manage and maximize their growth. The good news is that no matter how small your industrial business, digital efforts have been proven to grow businesses.
Not ready to make the call yet? Check out the additional resources below to help get more CNC machining contracts:
1. It's not rare to see a job shop fail — check out real advice from real job shop owners on the biggest mistakes to avoid.
2. Thinking of expanding your business into profitable markets? Check out our blog How To Market Online To Buyers In The Defense Industry
2. Small business manufacturers who advertise their business on Thomasnet.com receive more online RFQs. It's free to sign up — create your free Thomasnet.com profile here.
3. Planning your marketing budget? Read this eBook to learn 10 ways manufacturers effectively spend their marketing budget and where you should allocate yours to increase sales.
4. Learn how small manufacturer USTEK used online advertising to grow their business (37 new RFQs in less than 18 months) in their case study here.
And, finally, as we mentioned above—we can do a free digital health check of your business to make sure that your online presence is maximized and ready to help you out perform your competitors and take on new business.
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