Perspectives on remote ownership for a mfg business

January 30, 2024

by a searcher from Harvard University - Harvard Business School in Denver, CO, USA

Hi all, I'm currently pursuing a mfg. business that is a short flight (~1hr) + a medium drive (~1.5hr) from my home base. I haven't had a chance to vet, but the company has a sales leader and what sounds like a mfg leader that runs the "day to day." My thinking is that for the first few months, I'd fly in for 2wks/month and focus on sales - which ironically, my home base is an untapped target. Otherwise, I'd conduct statuses and such via Zoom.

I'd appreciate any perspective on folks that might have done something similar. I know I've seen some posts on remote franchise ownership but haven't been able to find anything on mfg. Thanks in advance for your perspective.

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Reply by an investor
in Boston, MA, USA

My two cents based on experience in small manufacturing environments and the limited information provided: Proceed with caution. I don’t recommend this approach and instead suggest a significant full-time commitment to the business to learn about how it operates, form relationships with your team, build trust/respect, and establish yourself as the new leader. The most important to time to do this is immediately after closing.

Manufacturing businesses – especially small ones – inherently demand the physical presence of the people building the products and their cultures tend to be formed around that dynamic. This culture transcends communications and real-time decision-making that require immediate, accurate information and timely responses. You may find yourself uninformed and out of touch with the realities taking place on the floor when you need to be aggressively educating yourself about how things work.

The seller’s departure will create a void in leadership, a power vacuum if you will, that will somehow [hopefully] be filled one way or another and you’ll be limited in your ability to control that process with intermittent visits and Zoom calls. If the current owner is ultimately calling the shots and making business-level decisions beyond routine “day-to-day” tasks, will the sales and manufacturing leaders – two roles potentially operating in silos, with interests that are often at odds with one another – be the right people to make these decisions?

If you’re going to develop the business beyond the status quo, it may require cultural or structural change that the existing staff simply isn’t interested in, equipped to handle, and will likely resist on some level. How are you going motivate them and drive change if they perceive you as partially engaged/committed to the business while they’re subject to the daily laborious grind with on-site managers who, being in the trenches together, will effectively determine how the business operates at least half of the time? Not to mention the confusion and frustration that results from delayed, inconsistent, and conflicting communications that can occur in a remote configuration. This can have a negative impact on morale and productivity and I wouldn’t underestimate the level of disruption it may cause.

On a personal level, buying and assuming responsibility of a business you’ve never worked in before will be a stressful endeavor and you’ll have a lot on the line. Just my opinion, but I wouldn’t want to introduce yet another risk and the associated stress as you attempt to manage a semi-split life. I’m not sure what’s compelling you to remain in your current location, but if it’s family, they will also shoulder some of the stress in a new demanding circumstance. Try to be honest with yourself about whether or not this is the right decision or if you’re rationalizing it because you’re blinded by the pressure of closing a deal.

I’d obviously suggest exercising caution here, but take it all with a grain of salt as I don’t know anything about the progression of your search, deal structure and return profile, nature/scale of the business (production mix, velocity, OEM vs. upstream contract manufacturing services may make a difference), autonomy and stability of the existing management team, and the current owner’s level of engagement.

Feel free to DM me if you’d like to discuss it further.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great question. I would start off by first finding out how involved the seller is in the day-to-day operations of the business. If the seller is more hands off, this approach may be more viable. But if the seller is currently involved in many of the business operations on a day-to-day basis, this strategy might not work so well. Some teams need the leader around and are not empowered on their own. That is not to say you cannot get them trained up to a point where they would be empowered, but in theory if the seller is really involved you should plan on being more active in the business to start until you get comfortable the staff has the confidence to operate without you onsite every day. The good news is you are a reasonable drive away, so you could go out there at any moment to assist. I have run into plenty of buyers who hope to largely operate remotely and very quickly find out after acquisition they need to be onsite even more than they originally planned. There is a lot that can go wrong in manufacturing that can sometimes require someone to be more often onsite. Examples are a machine breaks down, a production run is not correct, a project is bid wrong, etc.

From a lender perspective, it is likely lenders are going to want confidence you do plan to be onsite. With the reasonable distance you have from the site it should not be hard to convince them, but still something you will want to keep in mind.

I hope this helps. If you would like to discuss further you can reach me here or directly at redacted Good luck with the decision and opportunity.

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