November 24th, 2010 
Jonathan Dionisio 
If you have read the October 2010 purchasing managers index (PMI) released by the Institute of Supply Management (ISM) (Industry Surge a Good Sign to Acquire a Manufacturing Business), you may have considered buying a manufacturing business. But just like any other industry, the manufacturing sector can be very complex and unique.
For one, not all manufacturing businesses for sale are the same. Each one is uniquely involved in assembling its own product line. While some businesses are into creating medical devices or surgical equipment, others are busy developing industrial heaters, signage products, generators, and more. Thus, choosing which manufacturing business to buy can be challenging. To make your decision process easier, here are some thoughts to consider:
If you already own a company, it is best if the services of your current business complement the product line of the company you would like to acquire. For example, if you already have an advertising and signage business, you might consider buying a company involved in manufacturing signage products such as tags, sign cards, vinyl labels, etc. This will allow you to widen the services of your company and expand your current market.
Using the ISM Index report, companies like yours that are interested in acquiring a manufacturing business should look at the following to assess the status of the company:
- New Orders – does the company currently have new orders lined up to manufacture their goods? If not, when was the last order placed?
- Actual Product – is there a demand for the product? What is its market standing compared to other similar products?
- Production – what is the status of the production of their products? Does the quality meet or exceed industry standards? Are the raw materials readily available? How long does it take to produce their range of product? Is the production cost reasonable?
- Employees – How many are tenured against temporary workers? Would you need to hire more?
- Inventories – Has their inventory increased or decreased in the past few months?
- Fixed assets – As soon as your acquire this business, will you need to purchase new equipment?
Once you are done assessing the status of the businesses you are considering, it will be easier for you to decide which one to acquire.
Some economists consider manufacturing as a wealth-producing sector in an economy. They believe that manufacturing is an important piece in regards to promoting economic growth and development. By buying a manufacturing business for sale, you do not only help your company expand, you also pave the way for the recovery of the economy and the improvement of employment rates.
Sources:
http://www.ism.ws/ISMReport/MfgROB.cfm
http://en.wikipedia.org/wiki/Manufacturing
http://www.bizhelp24.com/basics/introduction-to-running-a-successful-manufacturing-business-contents.html
http://www.bizaura.com/general-business/the-basic-needs-of-a-manufacturing-business/
http://logistics.about.com/od/forsmallbusinesses/a/small_biz_manuf.htm
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