Published On: Fri, Apr 22nd, 2016

Here’s Why Manufacturing Businesses Are Failing

The manufacturing industry is incredibly large. There are loads of successful companies that make a lot of money in it. However, for small manufacturing businesses, life can be a struggle. Here are the main reasons they’re failing in today’s business world:

Manufacturing equipment

There’s No Demand For Goods

For a manufacturing company to survive, people need to buy the goods it produces. If there’s a demand for the goods, then business will be booming. You’ll have a lot of customers to sell to and secure some large contracts. The issues are when you make something that generates no demand. When no one is interested in something, it’s hard to sell it. The problem is, a lot of small manufacturing companies produce things that aren’t in high demand. Or, they make items that don’t stay in demand for a long time. So, they end up spending lots of money to manufacture the goods, and end up with a surplus. Essentially, they’ve wasted a ton of cash because their items won’t sell. If you want to start a small manufacturing company, then you must do your market research. See what things are selling well, and then create them.

Sub-Standard Equipment

One of the main reasons small manufacturing businesses are failing is because of their equipment. All the machines and equipment you use have to pass a PUWER assessment to be deemed good enough. A lot of the time, small companies will cut costs and buy second-hand equipment. The trouble with this is that it doesn’t live up to the PUWER regulations. So, they end up having to pay to get the equipment fixed and up to standards. Or, they have to shell out lots of money on new stuff. As well as costing extra money, this has an even bigger effect too. If you can’t use your equipment, then how will you make anything? Production of goods will be put on hold, and the business will struggle. Often, all it takes is some dodgy machinery to run a manufacturing company into the ground.

High Production Costs

As I mentioned earlier, it costs money to manufacture goods. The key to a successful company is keeping these production costs down. When you do this, you can sell your items for profit, and everything goes swimmingly. However, there are many instances where a company pays too much by way of production costs. They’re paying too much for their raw materials, and it has a bad impact on the business. It can mean you have to bump up the price of your goods, so you still make money with every sale. The issue here is that the price may be too high, and people won’t be interested in buying. But, if you don’t raise the price then you won’t be making as much money on every sale. Your income will be very low, and leads to your company struggling to stay afloat.

Now you can see the three key reasons behind the failure of small companies in this industry. Obviously, to succeed, you should work on ensuring these issues don’t come up.