A 257Kb PDF of this article as it appeared in the magazine complete with images is available by clicking HERE
Challenges
The single biggest challenge a laser scanning service provider faces is building long term cash flow. Most of us follow the construction industry which by nature is cyclical. Our clients do not typically plan out very far and most of our work seems to come on short term notice.
What develops is a financial gap between sales revenue and expenses. The situation is exasperated by clients who don’t like to pay their bills on time.
From the expense side of the equation, the real cost in our business is labor–trained competent people who work efficiently and can provide a quality product. They are not easy to find and sometimes harder to keep busy.
So, how do you invest and grow your company in cyclical businesses, utilizing new technology, with a labor force that’s hard to find?
Competition…Friend or Foe?
One strategy is to identify elephants. An elephant is any client that is large enough to provide your business a significant sum of cash over the course of time. This is a customer whose needs will extend beyond a year or two. Typically they must either have multiple projects, or a single project that can last a very long time. Examples are endless if you think about the need for 3d `measurement’ which in its purest form is what we do. Elephants can be found in industries like power, oil, government, ship manufacturing, healthcare, civil engineering, retail, or transportation– any market that has a continuous need for updating and/or renovation.
So once your elephants are identified, how do you attack them with such a small staff? You collaborate with your competition. You create a win/ win scenario between your business and another whereby combining your collective efforts, you can chase down the elephant–together.
Scary as hell isn’t it. Our whole lives we’ve been told to respect competition… and crush it. But you’ll benefit more by working together on a project/client then trying to fund your business from existing cash flow. Boot-strap capital is a far less attractive option strategy and will stunt the growth of your company.
Rules for Engagement
You’ll need to make sure you have addressed the following:
You must trust the management and the team that you’re considering partnering with. Sure an NDA will help "CYA", but the relationship must develop and trust has to be in place. And the only way to gain trust is to begin offering up bits of confidential information…and expect to get the same in return.
Share a common vision and mutual goals. Make sure you both don’t just want to climb the ladder, but that it’s on the same wall.
Have mutual input and formulate a plan of attack. This will help set expectations and provide a way to measure the results. Each party must know the role they play and expectations for performance. Cloudy or undefined roles will lead to disaster.
Leave both parties an exit route. Don’t assume that just because you’re successful on one project that your partnership will work on others. Never put yourself in a `make or break’ scenario. Leave an exit for yourself and the other guy. This will help to maintain the integrity of the relationship.
Be honest. If there’s success/failure– communicate it immediately and share information. You’re in it together.
Eat Elephants and Grow
Take down an elephant or two with the help of another. The collaborative effort and coordinated attack will help your business grow faster because you’re securing long term cash flow with a large client.
Ken Smerz is the President of President/ CEO of Eco3d (www.eco3dusa.com) a service provider that travels throughout the nation working with A/E/C and forensic clients. He can be reached at ken@eco3dusa.com with any questions or comments you might have.
A 257Kb PDF of this article as it appeared in the magazine complete with images is available by clicking HERE