MD Jim Griffin reflects on 2020

As business owners in every industry look back over what has been a year like no other, it seems like a good time to give ourselves a collective pat on the back for getting through the challenges of 2020, whatever they may have been.

It’s nearly time for a well-earned rest, but with 2021 just around the corner, it’s also a great opportunity to look back on everything that has been achieved through resilience, hard work and creativity in 2020 and how these lessons can stand us all in good stead in the year to come.

Like many companies whose main source of income was almost switched off overnight back in March, at Interflex the main lessons we have learned this year have surrounded diversification. Here MD Jim Griffin reflects on some of the lessons learned during 2020.

Don’t put your eggs in one basket

Over the years, I’ve learned that relying on one market and a narrow cohort of customers is a high risk strategy for any business. That’s why, when I joined Interflex as MD earlier this year, one of my long term aims for the business was to look at ways of diversifying into new markets.

Little did I know this plan would have to be put into immediate action just weeks after I was appointed as it became obvious that the vehicle industry would be seriously impacted by lockdown.

An urgent need to diversify

Simply put, diversification seemed the only answer. Luckily, I’m experienced in entering different markets and setting up new production lines, having expanded into the flooring sector and the automotive markets in Sweden, India and Germany as CEO of my previous company. However, this time it was different; our need to find new markets was both essential and urgent.

However, even in normal times, this kind of scenario can be all-too familiar for businesses. This is because all too often diversification is hurriedly forced on a company as a last ditch bid for survival, when ideally it should be a carefully planned process with different markets carefully investigated and costed. But, like many other businesses, when the lockdown hit, we knew we had to move quickly and plan on the job.

What are your assets?

The first step was taking stock of our strategic assets in terms of the resources we had, both human and technical and our strengths as a company. As manufacturers of sealing solutions, we had the following strengths:

• Machines that could be adapted to manufacture other products.
• Experienced staff with the ability to operate the machines and the skills to make other products.
• Plenty space for storage and production.
• An East Midlands location with great transport links around the UK.

All of the above meant that we were in the fortunate position of having relatively flexible capability suitable for a range of materials manufacturing. The next step was to find a sector to diversify in to.

What’s in demand?

Back in the spring, the headlines were dominated by stories about the shortage of PPE. We quickly realised that the assets listed above could be adapted to the production of much-needed PPE.

With the luxury of time (which unfortunately we didn’t have), the preparatory groundwork for any kind of diversification should include the following checklist:

• Analysis of sales figures and projections
• Identifying which areas, products or customers are most profitable
• Ensuring that you have a balanced portfolio of clients
• Ensuring that you have a robust sales pipeline
• Ensuring that you have conduit for smaller customers

Getting these factors in place ensures an even spread of revenue, both reducing risk and preventing an overreliance on just a few customers.

Overcoming challenges

We were able to adapt the factory for PPE production quite easily, although there were a few challenges surrounding the paperwork and setting up a new company within the Interflex brand. We also had to invest in a new machine for the manufacture of face masks.

No matter the circumstances, diversification always has the potential for pitfalls and this even more the case when the circumstances involve taking action fast. It was a steep learning curve and inevitably there were moments when I wondered if we were doing the right thing. One thing that really helped in these moments of doubt was a commitment from the team that this was a challenge we were going to succeed with.

Safeguarding cashflow

At a time when the automotive industry had more or less ground to a halt, it was a challenge to find the cash to invest in the PPE side of the business. Due to the rapidly evolving situation we had to learn about both our new products and the expectations customers would have overnight.

Added to that, we had no existing contacts in this new sector, so it was difficult at first to source materials and ensure that we had a good ongoing supply in a market that we were unfamiliar with. However, our experience with complex automotive supply chains meant we already had lots of expertise in this area and were available to adapt quickly and stay afloat.

Timing is everything

Luck was also a factor. As part of our marketing throughout lockdown, we issued a news story about our potential capacity for PPE production which was picked up by the BBC national news. The story instantly gained traction and suddenly the phones went crazy.

So, from nowhere, we built on that publicity to grow a customer base while marketing the new products through e-shots and online e-shop as well as through our PR and networking.

We are still learning about this new market and adapting accordingly as we go. However, it was a fantastic feeling when we were able to bring all our staff back to work because we had filled the gap in our business with new PPE work. On a personal level I was very happy to be able to keep the promise that I had made when the staff were furloughed – that we would find a way to get them all back to work and that we would survive the pandemic.

Future-proofing your business

Although at first diversification was about survival, it has now enabled us to both maintain production and fill spare capacity. Indeed, it seems that the diversification is likely to have significant long-term benefits which will ultimately place us in a stronger position than ever.

We are yet to see how the economy will fare in 2021, but with two different production streams operating in two different markets, we are well placed for a good year. And as we understand our new market more, we are able to see new commercial opportunities.

However, although the future looks promising, enforced diversification has been neither easy nor ideal. I’ve learned a lot in 2020 and if I could pass on any key advice it would be:

• Research, research, research; talk to people already in the sector you want to go into and join the industry associations
• Expect big setbacks but keep going; it’s crucial to provide strong leadership even when you have doubts
• Never promise something before you know you can deliver it

Don’t forget your core business

As we set up in the PPE market, we knew that the automotive industry would bounce back at some point. It’s a resilient sector and so we worked hard during lockdown to stay in touch with customers and to keep the sales pipelines open so that they would return as soon as production resumed – which they have.

As a result of diversification, ongoing marketing and planning, we have managed to keep afloat, and future projections look optimistic. With all our employees back working on site, the automotive business is currently operating at 50% of its normal levels, with the PPE manufacturing operation supporting the other 50% of the business.

Although we believe that it will take 12 months for sales to return to pre-Covid levels within the automotive business, turnover projections look healthy. As we plan to keep PPE manufacturing operations running alongside the automotive side, we should see an overall increase in business.

All in all, it seems that the enforced diversification has given us valuable flexibility and will ultimately strengthen us as company.

Find out more

For more information about our PPE production, please visit www.pinnacleppe.co.uk. To find out more about our acoustic and insulation services for the automotive industry, please call us on 01949 861 494 or email sales@interflex2000.com.