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SHAPING STRATEGY 7 Bottom Line-Increasing New Year’s Resolutions MARK MEHLING, MANAGEMENT ADVISOR H 1

customer and a client. It’s a lot more than semantics. Te days of being the “only gas station in town” are over. Te internet, transportation and commu- nication makes access to metalcasters all over the globe easier than ever. You can beat the competition, eliminate price as the only decision point and increase Client Lifetime Value with this conversion effort.

2 3 Eliminate one myth this year

Tere are seven myths that infused most failed metalcasting businesses. Te most pre-

dominant is “my business is different,” implying nothing new works here, even if proven elsewhere. For every solution proven throughout the world,

appy New Year! (Ok, now get back to work…) How many New Year’s resolutions did

you make for the business? Whether a metalcaster or a supplier to the industry, you have a fresh new opportunity to make minor, inexpensive changes that will alter the rest of the year and on into the future. Here are seven resolutions that others may ignore, but you could use to make an impact far above the investment. And all can start in the president’s/CEO’s office without interrupting the workflow.

Build a quote system Most metalcasting facilities

pour multiple alloys and deal with different types of buyers

across different products. And they try to do it all with a single quote method. Without a system, they miss out on a lot of quotes. A quote system that analyzes wins and losses, while adjusting every part of the system in advance of the next quote, will earn more “A”-graded clients for longer terms—with higher margins—because the metalcaster is perceived as the perfect solution.

Convert customers to clients

Anyone who reads my columns knows the tremen- dous difference between a

the reaction is “well, we tried that” or “but our foundry (or supplier busi- ness) is different.” Te second biggest myth is “buyers only buy on price.” No matter which myths you choose to consciously eliminate, even if only one, you can redraw the future without a lot of investment.

4 5

alcasting business can expect from a client (not a customer). Te top level math is simple: average spend per


Become a “cash cow” Tat’s the reaction one

foreign buyer had when he commented on his $1 billion

plus purchase in the U.S. Te chairman of the new corporate buyer was quoted in the media as saying the “foundry will make a big contribution to our company as a cash cow.” And it’s not as hard as you think.

What does a new buyer look for? Cash flow, of course, but also repeat- able systems throughout the business, especially sales and marketing. Even if the business is not for sale, without an ongoing system to bring in quotes, the future is all based on fickle fate. Plant systems can be quickly corrected, not so with establishing long-term stabil- ity through client relationships, quote monitoring-and-correction systems and provable client lifetime values. Tese are what make a cash cow, not the bull.

Implement a simple-to-use dashboard

Using five to seven numbers can accurately forecast six to

12 months ahead. Let’s eliminate the problems seen in 2009 when accoun- tants didn’t help until the blood bath had started. A system of leading indi- cators can avoid a repeat. Te system should also integrate “how to fix” with “what to fix” when there are defects in revenue and expenses identified.

Leverage the math of CLV Client Lifetime Value

(CLV) is an accurate estima- tion of the revenue a met-

month times the number of months as a client. Increasing either of these variables means additional money with no additional marketing costs. Tat’s the first eye-opener. Te second is better. If a new client is worth $1 million over its lifetime with you, what would you buy one for? If you recognize that spending $10,000 to get $1,000,000 is a good investment, you have now established a reasonable budget to get a single client. Tat’s the beginning of CLV math.

7 Apply the “1% solution”

What’s that? It’s recognizing that a busi- ness doing $20 million a year

would see an additional $200,000 with just a 1% change. Resolutions 1-6 have the capability to generate an additional 1%. Te investment to accomplish any is well below $25,000. So even a small metalcasting facility, grossing only $5 million, could invest $25,000 that returns twice that within 18-24 months and then continue to produce additional quotes, revenue and profit from the changes implemented. Makes sound business sense. Henry Ford’s famous statement, in

all its simplicity, is what applies now: “If you always do what you’ve

always done, you’ll always get what you’ve always got.” It’s a new year. Change! For expanded audio comments

on this article, click on the QR code or type in the link below. Send your thoughts directly to Mark@TeFound-

To hear additional insight from the author, scan the QR code with any smart device. Tis one-page introduction cannot fully explain the program. For space reasons, many details have been left out. For more information, contact the author at Mark@

January 2015 MODERN CASTING | 47

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