(Sept. 13, 2003) — When we talk about mergers and acquisitions, we sometimes get caught up in numbers: the annual sales volume of the firms, and the number of employees, plants and machines that each company brings to the table.
That's a common mistake. But perhaps that's because the most important part of a typical deal is something that both buyers and sellers want to keep secret.
If you're a typical manufacturer, you know that customers are everything. You may have terrific technology and top-notch shop-floor workers. But unless you have customers, that's all nothing but untapped potential.
In fact, the lack of customers is a prime reason that many start-up firms fail. They miscalculate the time and expense of finding customers, and run out of capital before they reach a level that can sustain the company.
Sometimes large, established companies fail for the same reason — they lose a key customer and can't find another to pick up the slack. The bankruptcy of Kmart Corp. revealed a few plastics companies that fell into that trap.
Manufacturing companies live and die by the following simple rules:
* Pick good customers.
* Serve them like you want to keep them forever.
* Don't be too dependent on any customer. Be prepared for the day when you and your most important customer part ways.
Small companies frequently like to make a big deal about their list of Fortune 500 customers. But established firms often don't dare even whisper the names of their key accounts. There's no need to tempt fate, after all. Not with so many lean and hungry-looking competitors lurking in the shadows.
Need more proof of the importance of customers? How about this: How often does it seem that one of your best customers is also the biggest pain in the neck on the planet? They treat you like you've got nothing better to do than handle their every request and cater to their every need. Yet you find a way to bite your tongue and work together. Enough said.
Few plastics companies are big enough to have a reputation that surpasses that of their customers. Even within their mostly small-town locations, plastics processors, mold makers and compounders are mysterious employers that make products for other people, using a process that's hard to explain and making parts or raw materials that are only vaguely familiar.
Their customers, on the other hand, which sometimes have little to do with the product beyond design and marketing, get all the glory and attention. And most plastics companies couldn't care less.