Feedback on manufacturing focused searches?

April 22, 2020

by a searcher from New York University in Los Angeles, CA, USA

I've been considering starting a search and I'm evaluating sectors. The thing that I keep hearing is to focus on service-based sectors and avoid things like manufacturing. I'm curious to know why that is? I know service-based operations have higher margins but manufacturing businesses seem exciting as well.

I'm also curious if there is a list somewhere of the different types of industries/sectors to look at?

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Reply by a searcher
from California State University, Los Angeles in Beverly Hills, CA, USA

I recently tried taking over a manufacturing company. Like ^redacted‌ said - The technical part was very difficult for me. Learning engineering was a challenge, despite the people hired to do it. All of the technical knowledge that needs years of schooling isn't going to "just come". However, if there is suitable middle management and you are essentially running the strategy and global operations, it may be doable. I was trying my best to implement streamlining techniques to make the company run more efficiently. It ended up not working out as the sales had dropped more than 50% and the owner decided not to sell.

Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA

Manufacturing gets a bad rap because it can get very complicated operationally, independent of revenue levels, i.e. even as a small business. Complexity can be a barrier to entry (good) but it can also increase the risk of failure. Some financial metrics are objectively bad in manufacturing, one that comes to mind is cash conversion (time of purchase of raw materials to point at which customer pays for product). But some of these things can be improved in various ways. I don't think as a sector it should be excluded though.

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