Three Ways Manufacturers Can Prepare for the “Two-Week Notice”

Date March 1, 2021
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Employees are a critical asset for any manufacturer. However, as we face a tightening labor market, many manufacturers have struggled to find new hires. This problem is magnified when an employee decides to leave an organization. The typical two-week notice does not leave ample time to locate and train a replacement, leaving the business scrambling to cover the tasks of the departing employee. While these transitions are generally not easy, personnel changes are inevitable, and manufacturers should seek ways to prepare.

Consider three ways that manufacturers can plan for employee transitions:

  1. Document Critical Processes and Procedures

    Oftentimes, manufacturers struggle with the transition because the tasks that a departing employee has performed are not documented. When that employee exits, they take their knowledge with them, leaving the business to struggle.

    First, manufacturers should identify each critical process. Both office and manufacturing processes should be considered, from paying payroll to operating machines, or from using software to preparing goods for shipment. Next, write down each step of the process. This can be done with written instructions, visual flow charts, or in other ways that make the process or procedure easy to understand and follow. When outside vendors can provide support, include their contact information so anyone referencing the process or procedure knows how to find that help. Lastly, management should ensure that any written instructions are updated periodically or as tasks change.


  2. Cross-Train on Critical Functions

    Losing an employee can place a burden on co-workers, who may need to complete additional tasks while a replacement is found. While having the written process or procedure will be helpful, cross-training employees on critical functions can further ensure that tasks can be completed and can alleviate some of the uncertainty that occurs when completing a duty for the first time.

    Cross-training ensures that employees have received instruction on critical processes from those completing the tasks on a regular basis. Ideally, these employees would also complete the task periodically to ensure that they can do so completely and accurately. Cross-training has the added advantage of ensuring a backup in the case an employee has temporary time away from work, such as for a vacation or illness.


  3. Know Your Recruiting Options

    Advertising an open position, attending job fairs, working with employment agencies, or engaging recruiters are options to help manufacturers fill open positions. However, different positions may deserve different recruiting strategies.

    While management will not complete some tasks related to replacing the departing employee until their exit is known, knowing recruiting options in advance can help manufacturers work expediently to find the replacement. Consider developing relationships with recruiters and exploring available recruiting options before there is an open, immediate position to fill. This will allow management to make quick decisions when that need occurs. In any hiring situation, it is important to find the right person for the open position; making a poor hiring decision can create further burden and transition pains for other employees and the business. .


Are you undergoing transition or planning for an employee to depart? HBK Manufacturing Solutions can help you prepare for this change. Contact a team member at 330-758-8613 or manufacturing@hbkcpa.com.

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The “New Normal”: Three Considerations for Manufacturers

Date February 16, 2021
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As the COVID-19 pandemic progresses, manufacturing executives have been forced to consider the “new normal”. Businesses have faced notable change over the past year. Even for the many manufacturers that were considered “essential”, social distancing, mask use, and virtual meetings have replaced handshakes, trade shows, and face-to-face collaboration. As we face the one-year anniversary of COVID related changes, how will the pandemic continue to impact our operations?

Even without COVID, manufacturers should consider external forces that could affect their businesses; however, the pandemic has reemphasized the importance of this analysis. External forces are those that we cannot control, and their unpredictability can make them somewhat difficult to assess. As a result, some manufacturing executives choose to focus on areas they can control – pursuing new customers, adopting new technologies, or implementing lean processes, for instance. However, by analyzing and reacting to our external forces, we can look for ways to mitigate their impact or capitalize on them to strengthen our businesses. For example:

  • Several hurricanes (or external forces we cannot control) that have affected the Gulf of Mexico area have impacted the supply and cost of certain plastic resins. To mitigate this risk, some plastic processors choose to increase their raw material inventories during peak hurricane season or dual-source these materials with suppliers in different geographies.
  • The rise in dietary restrictions (an external force we cannot control) has increased the demand for certain products. Many food manufacturers have added gluten-free or dairy-free products to their offerings to satisfy those with such restrictions.
  • The rapid pace of technological change (an external force we cannot control) has affected many manufacturers. By adopting additive manufacturing technologies, manufacturers can provide rapid prototypes more quickly than they can with their traditional processes.

You likely have evaluated how the pandemic has and will continue to affect your business. In addition to this key impact, consider three additional areas of external forces:

  1. Customers.

  2. Customers are a key external force: we cannot control them, but they are critical to our success. We take action to mitigate against risks, such as developing relationships with key decision-makers, but those actions may not always help us retain or grow that customers’ business, like when that decision-maker changes.

    In addition, the pandemic may have changed your customers; perhaps, you manufacture a new product after entering the personal protective equipment (PPE) market, or you have lost customers who were not able to weather the economic strain of the pandemic. As you evaluate your customers, ask yourself:

    • Why do your customers buy from you?
    • What value do you bring to them?
    • What new technologies, innovations, or trends are your customers seeing, and how can you help them? For instance, manufacturers who supply the residential construction market may consider curb appeal trends, while those supplying retail stores may consider needs for social distancing.

  3. Competition.

  4. Like your customers, your competitors are also a key external force on your business. You cannot control your competitor’s actions, but they can have a significant effect on you. You likely are already monitoring your competition. What actions can you take to ensure you remain competitive or to increase your competitiveness with these businesses? For instance:

    • Who are your competitors?
    • Are new competitors entering your market?
    • Why do you lose business to your competitors?
    • Are they offering different value to your customers?
    • Should you look for ways to improve the value that you offer?

  5. Other External Forces.

  6. A popular tool for analyzing the external environment is called “PESTLE” (or PESTEL), an acronym of six key forces in an external environment: Political, Economic, Sociocultural,Technological, Legal, and Environmental.

    Consider each area:
    • Political: How can politics affect your business? We anticipate President Biden’s administration could invoke policy or tax changes. How can these changes affect your business?
    • Economic: The COVID-19 pandemic has already impacted our economy, resulting in low-interest rates, threats to economic growth, and low levels of disposable income.
    • When economic fluctuations occur, how does your business react?
    • Sociocultural: Do changes in the population growth rate, demographic, income distribution, or lifestyle behaviors affect your business or the products your business manufactures?
    • Technological: This assessment focuses on how technology may affect your business. For instance, manufacturers may consider how automation could improve their efficiencies or how adding a different technology can support the value they bring to customers.
    • Legal: How do specific laws affect your business? For instance, if you are exporting to a new country, what laws will you need to follow? If you are entering a new product line, what regulations should you consider?
    • Environmental: A business’s impact on the environment can affect practices including corporate social responsibility. How do your company’s actions affect the environment? In addition, could other ecological forces, such as weather or climate, affect your business?


For support evaluating the impact of COVID-19 and other external forces on your business, contact a member of HBK Manufacturing Solutions, a team of professionals dedicated to supporting manufacturing clients and their unique needs. Team members can be reached by calling 330-758-8613 or emailing manufacturing@hbkcpa.com.

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Manufacturers, Is Your Budget the Power Tool It Needs to Be?

Date January 3, 2020
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A budget—or a proforma, forecast, or projection—is a financial prediction of what might happen over a given time period. As such, manufacturing businesses use budgets to prepare for the year ahead. Executives, managers, and financial professionals employ budgets to aid in their decision-making and to ensure their company is on the right path toward meeting its financial goals.

Think of budgeting as a short-term financial planning process for your business. While a budget itself doesn’t serve to increase profits, it can help you gain the visibility needed to make the kind of decisions that increase profitability, improve cash flow, and otherwise better your company’s financial position. A budget can also help you identify red flags and allow you to take quick action to either mitigate or prevent an issue from having negative financial consequences.

Budget for More Than Your Profit
Preparing budgets takes time and insight, likely from many areas of your business: prior year trends, sales forecasts, internal projects, changes in your industry. Also, be sure to include all areas of your financial performance in your budgeting considerations. Some manufacturers only focus their budgeting efforts on their profit or loss, but other areas can be just as important to your future. For instance:

  1. Is your business planning to invest in new equipment? If so, you could encounter a cash outlay that is not reflected on a proforma income statement. A cash forecast can help you plan for a major purchase while ensuring that you do not affect the business’s daily operations.
  2. Are your sales increasing? Will you need to hire new employees? Understanding your compensation and training costs at a detailed level can help you make good decisions as you grow, such as the right timing for adding new hires.
  3. Does your lender require you to meet covenants? Review your covenant agreements and consider preparing forecasts for these financial metrics so that you understand how to remain in good standing.

Prepare for Change
No matter how much time and effort you spend on a budget, it’s not likely to be perfect. Change is constant. So when conditions change, or when you find yourself outperforming or not meeting your budget, what should you do?

The worst thing to do is discard your budget. Even imperfect budgets have great value. Determine why your results differ from your projections. Can you learn from past budget flaws to become more precise in the future?

Consider making changes to your budget or creating a rolling budget. A rolling budget predicts a full year ahead, for example, as opposed to a calendar or fiscal year. Rolling budgets help you project financial performance on an ongoing basis.

For questions or to discuss budgeting options for your company, contact a member of the HBK CPAs & Consultants’ Manufacturing Team at 330-758-8613.

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