If I Were 20 Years Younger
We hear a lot of owners say, “If I were 20 years younger, I would…,” meaning they would make major investments or strategic changes if they had the time to realize the return on investment. Other reasons for not making investments are the lack of funds, lack of energy, etc. However, we feel that the return on investments does not always take as much time, money, or energy as owners think.
Some of the investments that owners can make include the following:
Equipment: Some companies in the PCB and PCBA sectors have a CapEx deficit in terms of equipment and facilities. It is easy to fall into the trap of stopping CapEx in lean years, then not making up for it when markets recover. Once a company falls behind, it becomes even more expensive to catch up. One way to make up for it is to buy used or new-ish used equipment. Any new equipment should more than pay for itself within a few years in terms of efficiency or new customers. Companies should promote any new CapEx to customers and media, which can attract new customers and projects. Check with local municipalities for tax credits for investments.
Training: People fear change, but they crave progress. Similar to new equipment that brings efficiencies and capabilities, a well-trained work force is more productive, efficient, and loyal.
Certifications: Many small companies let their certifications lapse or stop working towards new goals. All electronics companies should continue to push the envelop in terms of technology, quality, and capabilities.
Enterprise Systems: ERP, CRM, and design software upgrades—these investments all cost time and money, but it is more expensive to not invest and eventually find yourself behind the times. Many of these systems have moved to a SaaS model and are becoming easier to implement, which makes it less costly. Also, due to cybersecurity requirements, companies must have more secure, compliant systems or customers will be forced to send their jobs somewhere else.
Sales/Marketing/PR: Many small companies have almost no sales, marketing, and PR efforts. That is a guaranteed way to stay small. Staring at the phone or email inbox does not make new customers contact you. It costs nothing to manage and encourage salespeople. Marketing can be done efficiently, such as sending out monthly newsletters and articles. Everyone has a story that they can promote.
Management Team/Delegation: Owners should develop their management team by delegating tasks, coaching, paying for training, and encouraging their team to develop new skills. It is hard to sell a company that is over-dependent on the owner.
Financials: Still using spreadsheets or Quickbooks? It may be time for an upgrade. Before launching into a major investment, challenge your CPA/tax advisor to find improvements. Every $1 in increased efficiency goes into the owner’s pocket, and results in a 4, 6, 8X increase in value at the time of sale.
Facility, parking lot: We understand that owners do not want to build a new facility a year before selling, but it does not cost a fortune to put in new lights, paint here and there, fix the parking lot, etc. Perhaps the landlord will give some credits for facilities improvements. Some cities or other government entities give credits for LED lighting or solar panels. If the employees see that the owner is not putting any money into the facility it hurts morale.
Customer projects, designs: Business owners may not want to change their company into a science project, but it pays to take on selective projects that increase the connection to the customer as well as improve the company’s capabilities. Working with local universities and community colleges is an inexpensive way to promote technology as well as find new employees.
Partnerships: Many businesses supplement their capabilities by forming partnerships with companies that have different strengths. For example, a rigid PCB shop working with a flex shop on marketing leads, or with an assembly shop for special PCBA jobs.
Owner education: Many owners seem to reach a plateau and stop trying to learn new tricks. Meanwhile, the world is changing. Believe me, I know it gets harder to learn as one gets older, but it is good for the brain and the company to keep learning. Find out what your weak points are and take some steps to learn what you can. The last time I looked, the Internet and YouTube are free and have tons of interesting/educational information.
Why do owners put off or stop investments? Some of the reasons are milking, cruising, lack of energy, life-style decisions, etc. Owners always must decide whether they want to grow, sell, milk, or close. We often see that companies do not have an estimated valuation that would be high enough to compel an owner to sell. By continuing to invest in the company, employees, and capabilities, owners can help ensure a great payday and smoother process at the time of sale.
Tom Kastner is the president of GP Ventures, an investment banking firm focused on sell-side and buy-side transactions in the tech and electronics industries. GP Ventures has offices in Chicago and Tokyo, with five people in total. Tom Kastner is a registered representative of, and securities transactions are conducted through StillPoint Capital, LLC—a Tampa, Florida, member of FINRA and SIPC. StillPoint Capital is not affiliated with GP Ventures.
