This year I started collaborating with some companies that have chosen to move from the production of a semi-finished product to producing their own finished product. The most frequent situation is that of those who previously produced a component, and who have now developed their own machinery. This is an important change of strategy and one which, it is my impression, many other companies in our area are about to make. This change usually arises from 3 needs:
- Better control over the end market and its dynamics.
- Not depending on a few or even just a single customer.
- Having more control over pricing.
Here are some reflections borne from my assistance along this path.
Most of the investments and attention are – at least initially – on the product. And rightly so. However, other problems arise which those who have always worked for third parties sometimes do not know. I am talking about: knowledge of the market and its logic, the development of a sales network and, finally, communication. This is where my skills come into play.
Another recurring situation in this change of strategy is the lack of references. Making the first sale is often more difficult than expected – and stressful. Breaking the ice is easier when the product has strong characteristics and when the unit price is low. For example, it is more difficult to sell a machine that costs a few hundred thousand euros.
In some cases, there is also the fear of competing with the company’s long-term customers. Orin any case to neglect the business that is the basis of the company’s success. This is a more difficult balance to find when the company is smaller.
Many of these companies are now second-generation run. These are not easy moments and I admire the courage of these young entrepreneurs. However, meeting new challenges is typical of our small and medium-sized enterprises. I am convinced that in 2021 we will reap the first fruits of this labour!
If you want to learn more about these issues, read my book Exporting in 7 Steps.