As seen in the Boston Business Journal
U.S.-based companies are being challenged by growth in the manufacturing and distribution sector. Consumers have choices, both domestically and globally, and, thanks to modern technology, they have the ability to compare product prices at the click of a button.
To succeed, companies need to not only remain competitive on price but bring value to their customers beyond their product offerings.
Companies are constantly focusing on delivering the best product and service to meet their customers’ demands. However, as domestic, international and technological issues become more prevalent and complex, other key challenges are affecting the industry. Here are some of the issues and ways to manage them:
Lean manufacturing— To keep costs down and remain competitive, it becomes increasingly important to do more with less. Technology and process improvement initiatives can drive down operational costs while maintaining profitability. Technological systems can maintain your data, logistics, the procurement of products at desired levels, and fulfillment of orders.
E-commerce— An e-commerce strategy can boast lower costs (up front) and increase visibility through a more focused and targeted sales approach. However, companies will need to continually analyze evolving online platforms to remain agile, which could potentially result in an increased demand on resources and larger investments over time.
As more and more companies do business out-of-state and globally, tracking sales, from both a sales and income tax perspective, becomes increasingly important. Ensuring proper compliance with ever-changing federal, state, and international tax regulations is important to avoid surprise tax obligations in the future.
Cybersecurity risks— Companies are changing their internal infrastructures to create more flexible, real-time and accessible technology information solutions. While this is typically necessary to compete in today’s high-tech business world, it creates new access points of information for outside sources. Security breaches are at an all-time high. Being the victim of these threats can result in some frightening implications.
The results of a hack can be devastating to your business; loss of personal, sensitive, and financial data can be costly, and your legal, accounting, technology, and other professionals will need significant time to respond to a breach — resulting in a loss of productivity. Make sure you are aware of the risks to your organization, by gaining a better understanding of data security best practices and risk-mitigation strategies, and by working with an IT consultant to safeguard yourself from negative cyber exposure.
Competition and consolidation— Know your competition and be able to adapt to changes in your market. Mergers and acquisitions will continue to happen — you never know who may be approached or already in the process of negotiating a deal. You can’t always anticipate these changes, but you can remain flexible to react if and when these situations come into play.
Succession planning— You may find yourself considering a transaction, but do you know what your company is worth? Have you taken steps to maximize your business’ value if you do decide to sell, and have you considered yours and your family’s long- and short-term needs before you make that decision?
It is never too early to discuss succession plans. The plans can be evaluated and revised as time goes on and things change, but the key is to plan early and proactively rather than in response to a situation that forces the conversation. This will provide security for any unanticipated events, and can help allow for more time to groom emerging leaders. Discuss your options with legal and financial counsel to prepare a strategy that is in line with your goals.
Wealth management— For most privately-held companies, the majority of the owners’ personal wealth is derived from the business. Once owners reach a point of business stability, they should re-focus their efforts from re-investing in the business to investing in assets outside of the business. Your business will probably be the largest asset you own, but this strategy manages your risk by spreading your money across a variety of investments, including stocks, bonds, real estate and cash alternatives
It is important to have an open and honest relationship with a trusted business advisor to address these trends, issues and any questions or concerns you have as you continue to tailor your business strategy for the ever-changing marketplace.