The COVID-19 pandemic has had a major impact on the economy and many glass and glazing companies are looking for ways to strengthen their businesses during this time. To address this issue, the Fenestration & Glazing Industry Alliance (FGIA) hosted a webinar titled, “Financial Management and Value Preservation in a COVID Economy,” on May 19 with presenter Michael Collins, partner and managing director of Building Industry Advisors LLC.
Collins began by emphasizing that health and safety should be a company’s first obligation, but that owners also have an obligation to find the best ways to navigate the economic situation.
To improve profitability, Collins pointed out that entrepreneurs should focus on increasing revenues while decreasing the cost of goods sold; sales, general and administrative expenses; other expenses; and interest expenses.
Way to increase revenues include:
- Cross-selling: Get customers to consolidate with one supplier while supply chain management is more difficult than before;
- Up-selling: Get current customers to purchase feature-rich and higher margin products in addition to products they are already buying; and
- Optimize Manufacturing Footprints: Reconfigure lines to accomplish social distancing and appoint a social distancing manager for each location or work station.
Collins said it’s also important for companies to take this time to evaluate and invest in their sales force. With face-to-face selling currently out of the picture, it is critical that all sales team members have the ability to use video conferencing technology.
“If someone on your sales team is not comfortable with the new medium consider pairing them up with a more tech savvy member of your team who can teach them how to use the technology while also learning about sales,” he said.
This is also a good time to assess the sales team’s LinkedIn pages to ensure they are professional and consistent with others at the company.
Collins said companies should consider offering new products and services such as producing personal protective equipment, sneeze guards or glass partitions temporarily.
Another way to safeguard a company is to focus on product and project level profitability.
“Companies often fail to account for all costs related to a project, especially those with high design complexity or tangential manufacturing. Are you being appropriately paid for the value you provide to customers?” he asked.
He suggested that companies seek relief from suppliers and vendors in addition to these other methods.
“Depending on the severity of the impact, consider asking lenders for temporary relief regarding timing of payments or terms,” said Collins, adding that companies also can change their insurance or ask equipment leasers if they can return unused equipment. “This is a time when people are more willing to help out and make things work.”
Prior to the COVID-19 pandemic, much of the industry was facing a labor shortage and concerned with the hiring and retention of skilled employees. Now some companies are having to furlough or lay off some of those sought-after individuals. Enhanced unemployment benefits on the federal level in addition to state unemployment benefits are making the competition for rehiring workers, especially at the production level, more difficult.
“To address the challenge of workers who may be making more for staying home, companies often offer a retention bonus that will run as long as the enhanced unemployment benefits run,” said Collins.
He added a few other suggestions to enhance profitability in the longer term:
- Clean up mail and electronic marketing lists;
- Evaluate customer relationship management systems to ensure a company’s name is in front of its customers and prospects when unable to meet face-to-face;
- Use social media, especially types used frequently by the competition; and
- Consider geographic expansion once states are opened up further.
Click here to read part one of this article.