It’s no secret that lean manufacturing has become an incredibly hot topic among operations executives and manufacturing firms.  When a production process reduces waste, uses small stockpiles of assembly line inventory, and implements immediate quality checks it is called lean manufacturing. Lean manufacturing was developed by Sakichi Toyoda which was used in his son’s auto company (Toyota) and was soon adopted by the global industrial market.

Manufacturers have learned that by employing Toyoda’s strategy they can not only save money by eliminating waste, but they can bring the best possible quality to the customer by constantly checking for defects and increasing productivity.

But how do you achieve lean manufacturing in your own factory? Here are five strategies to create the highest quality product with the smallest amount of inventory:

Contact Celtic Bank to discover how our SBA CAPLine and asset-based loans can give you the capital you need to grow your business.

1. Map out your current production process, from suppliers to customers, and analyze the flow of materials and information. Are there any employees, areas of your factory, or excess inventory that do not add value to the process?

2. Train your assembly line workers and motivate them to strive for perfection with zero product defects. When defects are detected, identify the problem and make necessary changes before restarting production.

3. Reduce inventory to increase capital. Having small amounts of materials delivered several times a week instead of once a month can help free up valuable space and alleviate cumbersome tracking efforts.

4. Utilize the kanban system of pulling the materials through production by only producing amounts that create value for the customer and sending internal signals when inventory is needed.

5. Expand your lean principles into all facets of your business by implementing the strategies in your office procedures and streamlining communication with suppliers and exporters.

6. Share your performance measurements and goals to the entire facility by posting missed defects, productivity timetables and necessary improvements. Be sure to also reward employees for increased productivity.

Utilizing lean manufacturing can eliminate waste, reduce product defects, and ultimately increase productivity. By implementing strategies such as mapping out production flow, motivating assembly line workers, and sharing performance measurements your manufacturing business can achieve the benefits of lean manufacturing.

Photo Credit to lean.org

Understanding global value chain is a complicated and necessary part of operating a successful business in the modern era. You already know that it takes an assortment of activities to create and sell a product. Inventory control, marketing, and customer service are just a few of the necessary activities used to manufacture and sell a successful product. This chain of multiple processes that a company uses to turn raw materials into a final item is called a value chain. When this value chain spans across several firms and countries this is referred to as a global value chain.

Contact Celtic Bank to discover how our SBA CAPLine and asset-based loans can give you the capital you need to grow your business.

Not every global value chain looks alike but in general most chain activities can be split between primary and support activities. These activities are responsible for creating a competitive advantage for the product as well as generating a profit. By breaking down the processes, companies can better evaluate which activities are creating the most cost advantages and which need to be updated. Here are the five primary activities of the value chain:

1. Inbound Logistics

Inbound logistics involve receiving raw materials and inventory control. Firms can add value in this facet of the chain by maintaining less inventory stock in order to be flexible to customer product changes.

2. Operations

The actual production from the assembly line to the final product is known as operations. Thorough quality screenings to reduce defects is one way that you add value during production.

3. Outbound Logistics

Shipping the right product out to the customer on time is the main goal of outbound logistics. Reliable distribution services are a critical element to some customers, such as those in the food industry.

4. Marketing and Sales

Even if you have the best product ever developed, the product will not be a success without the right marketing and pricing strategy. If you have a great product but don’t properly communicate your advantage over the competition your sales may suffer.

5. Service

Customer service, repairs, and return policies are the value added process that goes into effect after the product has been sold. Quality customer service creates value by gaining the consumer’s trust that they are purchasing a great product, guaranteed.

The value chain can be complicated when it is performed by one company, so imagine how difficult the process becomes when it is spread out among various global firms. Communication is vital for global value chains as information and materials need to flow accurately throughout the chain. In order for the primary activities to function seamlessly for any value chain, companies utilize support activities. These activities include research and development, purchasing raw materials, technology development, human resource management, and even financial support.

As you can see, adding steps to the global value chain process can increase the value of a product. For instance, only utilizing the primary functions without research and development would eliminate vital testing needed to satisfy the customer. Therefore, the more quality processes your company employs within the value chain (global or not), the more value the customer will see in your product.

Photo Credit to socialtimes.com

When considering factory expansion, it’s important to focus on the ability to increase productivity at a low cost.  Factory expansion can be an expensive endeavor with the cost of construction, higher utilities, and new equipment. Before you decide to expand, it’s important to evaluate the following factors:

●       Does expanding my manufacturing facilities line up with my objectives set in my business plan?

●       Am I eligible for a business loan or asset based loan to fund my expansion?

●       Will my current customer base remain loyal during expansion?

●       Does factory expansion bring new opportunities for growth and future profits?

Once you have decided that expanding is the best choice for your business it’s time to begin building. But instead of exploding your finances and affecting your bottom line here are three tips to expand your manufacturing facility on a budget:

1. Interview multiple builders

Going with the first builder who gives you a fair estimate may not be the best choice for your company or your budget. By interviewing a few construction firms you can get multiple opinions about the costs involved, an accurate time-frame, and the builder’s experience with factory expansion.

Contact Celtic Bank to discover how our SBA CAPLine and asset-based loans can give you the capital you need for your factory expansion.

2. Buy used equipment

Your expanded factory will no doubt need additional manufacturing equipment to increase productivity. Many businesses are turning toward gently used equipment to save on the high ticket price of brand new equipment. Although used equipment may not be acceptable for all industries, the comparable cost savings can be surprising.

3. Save on utilities

Installing new or updated heating and cooling systems into your newly expanded factory is a great way to increase your energy efficiency. In fact, you may be able to reduce your energy consumption by 40% by simply replacing out-of-date HVAC systems. For even more savings, consider building your new factory with additional sustainable features (such as renewable energy systems) which are eligible for government tax credits.

Expanding your manufacturing facility is an important part of your company’s continued growth and success. By evaluating your expansion needs, finding the right builder, buying used equipment, and cutting back on utility bills you can make your factory expansion fit into your budget.

U.S. manufacturing is seeing a growing trend of turning to green technologies in order to join the $500 billion global market for clean energy technology. MIT describes the clean energy manufacturing industry as a sector that “promises to minimize periodic fuel shortages, fluctuating costs, global warming, and airborne pollution.” New technologies such as solar power, battery power, and fuel cells are just a few of the innovative solutions firms are developing to change the way we generate energy.

U.S. clean energy manufacturing is even seeing support from the political sphere. Sen. Kirsten Gillibrand of New York has created a new grant program called Made in America which gives incentives to high-tech and clean energy manufacturing companies to create new jobs. Tax credits for New York clean energy manufacturing companies may be a future incentive as Sen. Gillabrand works to pass the Security in Energy and Manufacturing (SEAM) Act.

Interested in starting a clean energy manufacturing or new age technology firm? Contact Celtic Bank to see how we can help you bring your business idea to life.

Although you hear more and more about industries outsourcing to international factories, the U.S. is still the leading manufacturing country. In fact, over 11 million Americans work in manufacturing and these companies have doubled their efficiency over the past 50 years. Domestic manufacturers reap the benefits of lower shipping costs and simpler supply chains which can lead to high quality merchandise at a low price. Here are a few examples of popular items that are exclusively manufactured in the U.S.:

●       LL Bean Maine hunting boots are made in New England.

●       Tibor fishing reels are made in Florida.

●       The all-electric Telsa Motor Company is all-American.

●       America’s favorite motorcycles, Harley Davidson, are produced in Milwaukee.

As you can see, manufacturing is not only an important part of the U.S. economy but the global economy as well. U.S. manufacturing continues to grow, and as it does it continues to adapt to our nation’s clean energy manufacturing needs. The rising need for alternate energy technologies such as solar or battery power is reshaping U.S. manufacturing and paving the way toward a greener future.

Photo Credit to treehugger.com

You have probably heard that the SBA CAPLines program is a great source of working capital financing for small businesses, but does your business qualify for this type of financing? While standard SBA eligibility requirements apply (such as size standards) in order to qualify, there are several additional CAPLines-specific eligibility regulations that must be met.

Your small business:

●       Must have been in business for at least 12 months

●       Must have commercial accounts receivable (not including consumer dept)

●       Must demonstrated a need for revolving credit

●       Must have at least one year of positive cash flow

Must have been in business for at least 12 months

While Celtic Bank will consider financing early stage and start-up working capital financing requests under the SBA Express Program you need to have been in business for at least 12 months to qualify for the CAPLines program.

Your business must have commercial accounts receivable.

There are several industries that commonly utilize the CAPLines Program that meet the commercial accounts receivable criteria such as manufacturing, wholesale, import-export, and commercial services (like staffing or transportation).

Must have demonstrated a need for revolving credit

The Standard Asset Based CAPLines Program is intended to bridge the working capital gap created from the carrying of receivables and inventory.  Common working capital needs include the purchasing of inventory, materials used in production and payroll.

Must have at least one year of positive cash flow

In order to qualify for the CAPLines Program, the applicant must be able to demonstrate sufficient cash flow to service all existing fixed business and personal obligations (repayment ability) for at least one complete year.  The period that is most commonly used is the most recent completed fiscal year-end (FYE) and the supporting documentation used in the analysis includes business and personal tax returns, a business debt schedule, and consumer credit report.  If the applicant is unable to demonstrate positive cash flow including sufficient ability to afford the interest-only provisions for the most recently completed FYE, the loan request must declined.

Are you interested in obtaining a CAPLine Loan to grow your small business? Contact Celtic Bank to discover how we can help you achieve your business goals.

Photo Credit to moneywatch.bnet.com

You’ve heard that community banks are the best choice for small businesses since they offer personalized customer service to meet your company’s needs. But, how do you measure this difference and how big of a difference is quantifiable? We decided to find out. In order to prove this superior customer service claim, we asked a  few of our prospective business loan partners to record the time it takes them to connect with a loan officer on the phone the first time they call a bank.

Each small business owner tested the customer service response of each bank by calling the small business contact number and asking about a small business loan. We kept track of the time it took to look up a telephone number and speak to someone regarding our small business lending questions. Here are our findings:

1. National Bank A

National Bank A is a very large institution with its own small business division. Unfortunately after looking over their site, many were unable to find a contact number for “existing accounts”. One owner called this number and was connected to a recording which asked her to speak her responses. After going through a few choices she responded to the recording “apply for a loan”. Her frustration grew as the recording kept interpreting her selection with “report a lost or stolen card”. Finally after a few minutes the recording sent her to a sales associate but, to her dismay, she was put on hold for about five minutes.

Conclusion:

Time to speak with a live person: 8 minutes

2. National Bank B

National Bank B is slightly smaller than Bank A but still has a commercial lending department. When one owner accessed their website for a contact number for asset-based lending the site led him through a series of three questions before giving him a telephone number. Unfortunately, the questions did not allow him to choose options for a new business and led him back to their general business banking telephone number. After calling the main number he had to once again speak his options to a recording and was then asked to enter his bank account number before speaking to a business banking associate. Since he was a new customer, he was unable to enter this and therefore was never able to connect.

Conclusion:

Time to speak with a live person: 10 minute attempt, unable to reach a live person.

3. Celtic Bank

We also asked people who called Celtic Bank about their experience. One owner called using the small business loan number listed on our blog and a live person answered and asked where she would like her call directed. When she shared her interest in a small business loan, she was immediately connected to a local loan officer who was able to answer all of her questions. She voiced her relief as she was not only connected with a loan officer, but a loan officer that specializes in small business lending.

Conclusion:

Time to speak with a live person: Less than 1 minute

It’s easy to see customer service matters and certainly matters to Celtic Bank. Beyond boasting superior customer service, community banks offer flexible loan criteria and small business knowledge to help guide you through the financing process. By partnering with a community bank that is also an experienced small business lender you can be confident in the service you will receive throughout the lending process.

Photo Credit to customer-service-workshops.com

When considering raising money for a small business, entrepreneurs have a very important decision to make as to how they acquire capital.  Perhaps the two most popular forms of fundraising for businesses are debt financing and equity financing.  Each has different pros and cons associated with it, and it is extremely important that a business owner carefully considers which type of financing is right for their business.

Debt financing is what most people think of when they think of a loan.  In debt financing, a business sells bonds, bills or notes to an individual or institution with the agreement that they will repay the principal plus an agreed-upon interest amount.  Generally, as long as a business is able to grow with the money it is lent, paying the debt back is not a problem.  Complications arise when a business is unable to pay the loan back and defaults.  At this point, the lender may sell assets to pay their debt or declare bankruptcy.

Debt financing may be right for your company if you already have a steady, proven stream of revenue and expect that revenue to continue for some time.  Well-established businesses looking to expand generally have the most success with debt financing options.  Additionally, a willingness to take on debt signals to other investors that you are committed to your business and are confident that it will succeed.

A business finances through equity by selling stock in their company to a bank, investment firm, or the public.  Once the value of a business is determined, there are a myriad of options to buy different kinds of stock, both common and preferred, in that business.  The amount that a business is paid for each share is determined by how the business is valued and the type of share received.

Equity financing can be a great option for young companies without proven revenue streams who have a high risk of defaulting on a traditional loan.  Some owners can be apprehensive about “losing control” of their business assets and complicating operations within their business. It is always important find a comfort level and balance in how you allot your equity for financing. Talking to your bank in depth about your current assets and your revenue milestones and timeline for reaching these goals is important in finding the right balance of equity and liability.

The decision to take on debt versus the selling of equity is a complicated one.  Celtic offers advice to small business entrepreneurs and owners every day. Please do not hesitate to call us (801-449-1991) so we can help you make the best possible decision for your small business.

Photo courtesy suite101.com

When planning to open a new small business you should consider opening a green car wash. Not only are eco-friendly car washes great for the environment but the novelty of these businesses ensures less competition in this niche-market. Your environmentally conscious customers will be shocked to learn that one at-home car wash can use as much as 140 gallons of water while many green car washes use less than 30 gallons. Here are a few ways you can save water and make your car wash green:

●       Recycle all the water used during the car wash process.

●       Build your car wash facility with recycled materials.

●       Use only biodegradable soaps and avoid cleaning products with harmful chemicals.

Opening a green car wash requires knowledge of water-saving technology, eco-friendly products, and car wash competition. To get you started, here are three steps you can take to open a successful green car wash:

1. Research a car wash location. Green car washes tend to do best in urban areas with little competition. Also, find an area that has extensive community groups focused on the environment as you may want to partner with these groups in the future.

2. Join a car wash association. By becoming a member of a car wash group such as the International Car Wash Association you can find supplier guides, the best water saving technology, and have your questions answered by car wash experts.

3. Create a business plan. Your business plan should outline an analysis of your customers and competition, describe your facilities, and estimate the needed financing to start your business. This plan will also aid you as you contact your local lender for small business financing.

If you are interested in opening a small business in your area, a green car wash may be the perfect business for you. With a pre-determined target market, eco-friendly business model, and by providing a service that every car owner needs, the popularity of green car washes continues to grow.

Photo courtesy biggreencarwash.com

You’ve heard lately that community banks are the preferred lenders for small businesses. But what advantages do these smaller institutions have over national banks? Here are a few reasons why a community bank may be the best choice for your small business financing:

1. Customer Service

With such a large volume of customers to serve, many national banks are unable to provide individualized service. You may lose potential sales or construction work might be delayed if you ever encounter problems with your loan and a larger bank is unable to respond to your requests quickly and efficiently.

Unlike national banks, a community bank has the ability to partner with you in your small business venture and they even have a personal interest in your business success. Community banks know that the local economy (and therefore local banks) benefit from the success of area businesses. An individual small business will have very little impact on large-scale national bank.

2. Flexible Criteria

Many national banks have strict criteria intended to approve and reject loan applications as quickly as possible. Community banks, on the other hand, have the ability to look at your financial track record and make discretionary decisions. While national banks may face restrictions that only allow them to only offer traditional loans to traditional business ventures, community banks can offer creative financing (such as CAPLine loans) for innovative business ideas.

3. Small Business Knowledge

One of the biggest advantages community banks have over national banks is that they understand the importance of your small business. After all, community banks are small businesses themselves. Community banks know firsthand how to run a successful small business and can take the time to walk you through every step of starting, funding and maintaining your business.

Obtaining funding for your small business can be a complicated process. By working with a community bank you can simplify the lending process while receiving the customer service, funding options, and expert advice you deserve.

Photo courtesy of  mybanktracker.com