Buy the Numbers

What good is a record quarter if you can't make payroll? It's an uncomfortable question, especially when your shop is busy, your margins are healthy, and your financial statements say you're making money. But you've already paid for the material, covered the labor, and shipped the parts. Your customer might not pay you for another 90 days. How much more business can you afford to take on while you wait? That gap between earning money and collecting it can put even a successful manufacturer in a difficult position. I've felt it firsthand. This year, payment-term changes involving four of my six largest customers created a seven-figure swing in cash flow. The work was still there. The bills were still due. But the cash we expected to collect was getting pushed further out. Forecasting gave me time to see the problem coming and work through solutions before we hit it. In this episode of Buy the Numbers, Andy Wiegand of Peninsula Capital joins me to walk through the 13-week cash flow forecast: what goes into it, where to start, and how to make it useful. We discuss tracking customer collections, vendor payments, and payroll, along with why an early conversation with your bank can give you options that a last-minute request simply can't. We also explore the decisions this forecast helps you make when things are going well. Can you afford that new machine? Should you pay down your line of credit? Is the business ready to fund an owner distribution—or does that money need to stay in the shop a little longer? Every one of those decisions affects your ability to meet the next obligation. If you're making them based on today's bank balance, how much of that balance is already spoken for? What's Covered in this Episode (0:00) Why bad news about a late payment never ages well (1:53) Andy Wiegand and the small manufacturers Peninsula Capital backs (3:54) Great margins and no cash: why revenue and profit don't pay vendors (5:09) Four customers changed payment terms this year, and what it did to my cash (9:10) How CLA helps you tap into millions in revenue and cost savings (9:49) What a 13-week cash flow forecast is and why it comes first (14:15) Breaking down the 13-week cashflow: collections, vendors, and payroll (19:59) Your buyers have technical questions. Navu delivers accurate answers at navu.co/makingchips (21:11) Debt payments that never show up on your P&L (23:30) Rent, utilities, property tax, and insurance, and when they actually hit (26:17) It's a living document that must be updated every week (27:34) Keep your spindles running with the Hennig Workflow automation system (28:24) What to do when the number goes negative: early pay, your bank, your landlord (35:15) Borrowing base, the 90-day exclusion, and getting carve-outs (39:13) How Kennametal helps manufacturers cut faster and run longer (40:02) Using the forecast to pay down your line, plan capex, and time distributions (45:49) Why 13 weeks is the right window for a manufacturer (48:26) Where to start: how shipments convert to cash Resources Mentioned Manufacturers can tap into millions in revenue and cost savings with CLA Give your website visitors reliable, accurate answers in real time with Navu Work ahead of your machine and keep the spindles cutting with the Hennig Workflow Automation System Cut faster, run longer, and get more out of every setup with Kennametal Connect with Andy Wiegand Peninsula Capital

Defense manufacturing is supposed to be a massive opportunity for American machine shops. The government needs more domestic suppliers, existing weapons systems need replacement parts, and emerging defense companies are looking for manufacturers who can scale production. So why aren't more shops jumping in? For me, the answer comes down to a question we ask all the time on Buy the Numbers: Does the opportunity actually make financial sense? In this episode, Jason Davis joins me as co-host for a conversation with Lana Smith, founder of The Oakley Office. Lana spent much of her career supporting the Army's industrial operations, from rebuilding M1 Abrams tanks at Anniston Army Depot to working at Army Materiel Command.  Today, she helps manufacturers navigate the defense industrial base, identify opportunities, and understand what it actually takes to compete for government business. And as someone who's been hesitant to pursue much defense work myself, I had plenty of questions. We dig into the financial realities that don't always make it into the conversation about strengthening American manufacturing. Between CMMC certification, ITAR requirements, cybersecurity investments, administrative overhead, and unpredictable order volumes, the cost of entry can be substantial.  If compliance costs your shop $100,000 or more, how much defense revenue do you need just to justify the investment? And do you spend that money before the work exists, or wait until you have enough business to support it? But Lana also opened my eyes to opportunities I hadn't fully considered. From supplying replacement parts for existing weapons systems to helping newer defense technology companies move from prototypes into production, there's more than one way into this market.  We also discuss programs designed to expand domestic manufacturing capacity, the value of having someone help navigate the process, and what government incentives could make participation more realistic for smaller shops. I'm not against defense manufacturing. I'd love to support our country's national security and help strengthen our industrial base. But patriotism doesn't pay the bills.  The question isn't whether defense manufacturing is important. It's whether your shop can participate profitably, and what needs to change to make that possible. What's Covered in this Episode (0:00) The growing opportunity for machine shops in defense manufacturing (1:03) Welcoming Jason Davis back as co-host (2:00) Lana Smith's background and the mission of The Oakley Office (3:48) Rebuilding military equipment and the challenges of aging supply chains (5:54) How disappearing small manufacturers threaten the defense industrial base (7:07) Jason's experience supplying the defense industry (8:55) Why defense contracts aren't always as profitable as they appear (9:22) Navu can help answer your customer's questions clearly and quickly  (10:43) Identify government contracting opportunities (and the challenges that arise) (13:36) The true financial cost of CMMC, ITAR, and other compliance requirements (15:56) When does investing in defense certification make financial sense? (17:50) Finding additional customers for parts you're already manufacturing (19:57) The Civil Reserve Manufacturing Network and opportunities for domestic shops (22:01) Finding the right military customers, funding, and contracting channels (24:35) Technology readiness levels and SBIR funding opportunities (26:27) How government contracts can create serious cash flow challenges (27:54) The opportunity to help defense startups scale from prototypes to production (29:21) Increase your spindle uptime with the Hennig WorkFlow Automation system (30:12) Why navigating defense manufacturing may require outside expertise (34:46) How to determine whether your shop is ready for defense work (36:26) How military working capital funds operate (37:41) Kennametal tooling helps manufacturers cut faster and run longer (38:30) What government could do to reduce barriers for smaller manufacturers (40:49) Could tax credits make defense manufacturing more accessible? Resources Mentioned The Manufacturing Blueprint The Civil Reserve Manufacturing Network Defense Logistics Agency (DLA) DLA Internet Bid Board System (DIBBS) SAM.gov Cybersecurity Maturity Model Certification (CMMC) Small Business Innovation Research (SBIR) How to Connect with Lana Smith Connect with Lana on LinkedIn The Oakley Office

Nobody outworks me. If that's part of how you see yourself, this episode is going to sting a little. Greg Harrod's spent 30 plus years in and around manufacturing, and he coaches leaders who feel like everything still runs through them. His point is that the grit that built your shop is the same grit that eventually caps it. We spent a good chunk of this one on a distinction I hadn't thought about carefully enough. What someone is good at and what someone enjoys are not the same thing. You get rewarded for what you're good at, so you get handed more of it, and you can be sliding toward burnout in plain sight while everyone around you says you're doing great work. I told Greg about Miguel, who came to us pushing a broom, became an average machinist, and kept quietly fixing processes nobody asked him to fix. He's on our management team now as our lean champion. He hasn't touched a machine in a year, he's making more money, and our operations run better for it. That only happened because we paid attention and then had the conversation. If you've been sitting between a million and a half and two and a half million in revenue for a few years, Greg's first question isn't what to hire. It's whether you've actually optimized the people already on your payroll, and what you're optimizing for in the first place. Growth isn't automatically the right answer. Staying where you are is a legitimate choice, as long as you make it on purpose. We also get into org charts, why job descriptions go obsolete, how I've been mapping responsibility across our entire value chain, and the question Greg closed with that I'm still chewing on. How long should a dropped ball stay dropped before somebody picks it up? What's Covered in this Episode (0:00) How long should a dropped ball stay dropped before somebody picks it up (2:05) Greg's focus: helping leaders stop doing the work their team is ready to own (2:48) The grit that got you here is the same thing that turns you into the ceiling (4:31) Some of the work you do energizes you and some of it quietly drains you (5:56) You can stay on the shop floor and hire the business functions you don't enjoy (7:11) Separate what someone is good at from what they enjoy, before you lose them to burnout (12:13) Repeatability, accessibility, scalability and the rest of RASRAM work holding from SMW Autoblock (12:56) The best leaders are the most self aware leaders (14:28) The WIDGET framework: wonder, invention, discernment, galvanizing, enablement, tenacity (18:06) Don't tell me no, tell me how, and tell me what it costs to say yes (20:17) Get specific with your verbs, because own it can mean six different jobs (22:56) The simple signs that you have become the bottleneck (25:35) Lead with curiosity: have you actually optimized the people already on your team (29:34) Verdant Commercial Capital fits equipment financing to your goals and your cashflow at verdantcc.com/numbers (30:06) Give yourself permission to do the things that you enjoy (and delegate when you can) (32:33) Miguel went from saw operator to lean champion because somebody paid attention (40:12) Hire MFG Leaders is built by current and former shop owners at makingchips.com/hire (40:42) Job descriptions go obsolete—a shared language about how your team is wired doesn't (47:37) Mapping responsibility across the value chain from quote request to invoice (54:26) The person who brings the right answer instead of the first answer Resources Mentioned SMW Autoblok Verdant Commercial Capital Hire people who have actually run a shop with Hire MFG Leaders Find your own gap in about five minutes with the Leadership Clarity Scorecard The 6 Types of Working Genius by Patrick Lencioni The Five Dysfunctions of a Team by Patrick Lencioni Connect with Greg Harrod Greg's website Leadership Clarity Scorecard Connect on LinkedIn

Replacing an employee can cost anywhere from $10,000 to $40,000. But the real risk isn't just recruiting and training their replacement. It's everything that walks out the door with them. Jess Bird supports CAM software across the Midwest and hosts CNC Underground After Hours, giving her a firsthand look inside a lot of shops. Her test for whether a company has real systems is simple: Can it survive a vacation? If your best employee takes a week off and everything slows down, you don't have a system. You have a hero. We dig into the costs most shops never measure—not machine downtime, but the time spent waiting for answers, searching for information, and repeatedly solving the same problems. I share the simple math we use internally: one minute equals one dollar. Five people standing in a hallway for ten minutes just cost the company $50, even if that expense never appears on a report. That lack of documentation also affects what your business is worth. If the company can't operate without its owner or a few key employees, a buyer isn't acquiring a self-sustaining business. Every process you document and every piece of knowledge you make accessible reduces that dependency—and builds enterprise value. We also discuss why technology implementations fail, why support can matter more than the product itself, and how shops should approach AI without trying to transform everything overnight. As Jess puts it, start with the simpler applications and build from there. You're not training for the Olympics right out of the gate. What's Covered in this Episode (0:00) Replacing one employee runs $10,000 to $40,000, and tribal knowledge is what makes it expensive (1:02) Learn more about Jess Bird, CNC Underground, and the manufacturing community (6:36) Enter the MakingChips + DN Solutions + Kennametal machine giveaway (7:21) Overcoming hero culture and building systems instead of placing bandaids (10:16) If the business can't survive you, it isn't worth much when you go to sell (11:31) Calm versus chaos: Stop chasing the wrong solutions (14:35) Are you misdiagnosing the bottleneck(s) in your shop? Are you just fighting fires? (20:21) What can we automate or systemetize to free up machinists? (22:02) What is it costing you to avoid embracing AI? (24:44) How CLA helps manufacturers tap into millions in revenue and cost savings (26:16) How to get implementation right: leverage support and move slowly (32:33) Take your shop to the next level with DN Solutions (33:42) How to handle resistance to change in your shop (37:37) Machine monitoring looked like big brother until it turned into a coaching tool (39:37) Technology doesn't make you replaceable—It makes you more likely to get promoted (41:28) Building a culture around documenting and sharing tribal knowledge (43:33) It's called continuous improvement for a reason (46:09) Companies that outperform aren't okay with stagnancy, because a flatline eventually fails Resources Mentioned Enter to win a fully tooled SVM4100 from MakingChips, DN Solutions, and Kennametal at makingchips.com/giveaway Find out what your biggest headache is costing you with CLA Take your shop to the next level with DN Solutions Find the MakingChips recording studio in the South Hall Hennig booth at IMTS GibbsCAM CNC Underground CNC Underground After Hours Podcast ProShop ERP Connect with Jess Bird Midwest Cam Solutions Jess Bird on LinkedIn CNC Underground After Hours on Spotify, Apple, YouTube, and Amazon Music, new episodes every other week

IMTS is about a week and a half out. Most people heading to Chicago are showing up with a shopping list, and the ones who aren't will still find something on the floor that makes them start one. Either way, there's a question worth answering before you get there. What can you actually pay for? We've been trained to do this everywhere else in our lives. You don't tour houses without a pre-approval. A lot of us call our banker before we buy a car. Then we walk into a hall full of quarter million dollar machines and figure out the money on the drive home. Ty has been my equipment finance guy for about eight years, and he's the first call I make on any capital expansion. In this one, we walk through what the process actually looks like. The 15 minute screen. The application only path up to a million dollars. What comparable credit history really means. How soft costs, deposits, and long lead times get handled. And what a lender asks of you after the deal closes, which in his case is close to nothing. We also get into the part that matters more than the rate. A good finance partner tells you when you shouldn't buy the machine, or when someone else's captive group has a better number than his does. Ty does both, and that's why he sits on my trusted advisor list. What's Covered in this Episode (0:00) Don't underestimate your ability to negotiate when you already know how the machine gets paid for (3:00) Most people walk the IMTS floor with a shopping list—but could they buy that list? (4:20) What a pre-screen covers (and how a bank with no brick and mortar prices sharper) (6:29) You get pre-approved for a half million dollar house. Why not for a half million dollar machine? (8:03) Verdant Commercial Capital tailors equipment financing to your business, goals, and cash flow (8:34) Dealer and OEM finance options vs your own approval gives you something to compare against (12:11) The affordability gut check: do you need another spindle? (16:40) The application process: A one page app and a one to two hour turnaround (20:21) The Job Shops Workshop and networking reception is Tuesday, September 15th during IMTS week (21:59) What written assurance will you get back during the application process? (25:02) Don't underestimate the ability to negotiate when you know how you're paying (26:19) What gets required after the deal closes, and why most customers never talk finance again (29:37) Diversified lending power: Why Ty pushes it even when it costs him the deal (33:32) Soft costs financed at 10 to 20% above equipment cost: tooling, rigging, shipping, software, groundwork (36:41) Interim Funding Agreements bridge 8 to 12 month lead times so your cash isn't parked for a year (38:07) MakingChips, DN Solutions, and Kennametal are giving away a fully tooled SVM4100 (38:53) (40:08) IMTS main stage (Monday at 2:30 with CLA) + a happy hour in the MakingChips studio (41:21) What should you do right now to get pre-approved?  (45:12) The bass boat problem: machines advertised as a monthly payment instead of a total cost Resources Mentioned Equipment financing built around your business, your goals, and your cash flow with Verdant Commercial Capital Get in the room at the Job Shops Workshop and networking reception during IMTS week, Tuesday, September 15th Enter to win a fully tooled SVM4100 from MakingChips, DN Solutions, and Kennametal at makingchips.com/giveaway CLA joining Mike and Ty on the IMTS main stage Monday at 2:30 Connect with Ty Connect on LinkedIn Verdant Commercial Capital

There's $35.8 million sitting in a federal fund built to pay manufacturers for hiring and training apprentices, and most shop owners have never heard of it. It pays $3,500 per apprentice. It's first come, first served. And when the money runs out, it's gone. That's the American Manufacturing Apprenticeship Incentive Fund, or AMAIF, and it's what we dug into on this episode. Phil Hanke is back in the co-host seat and he brought Abby Mataya, who leads CLA's state and local business incentives team, to walk through exactly how it works. Here's the part I want you to hear. This is not a tax credit you'll see on a form next April. It's a pay for performance incentive payment. You hire an apprentice into a registered apprenticeship program in a qualifying advanced manufacturing occupation, you keep them 90 days, you do some light compliance reporting, and the money gets wired to you. It covers more than 120 occupations, it works for new hires and for incumbent employees you're upskilling, and there's no company too small. One apprentice qualifies. Phil ran the numbers, and at $30 an hour you're recovering roughly 5% of a year's compensation for a 90 day commitment. Ten apprentices is $35,000 straight to your bottom line, and if you're trading at a four times multiple, that's $140,000 of enterprise value you just created out of money you were spending anyway. A lot of these programs go unclaimed because nobody applies. If your tax provider isn't bringing incentives like this to you, that's a signal. Phil was polite about it. I wasn't. Go find a provider who will. What's Covered in this Episode (0:00) $3,500 per eligible apprentice, and why it's an incentive payment rather than a tax credit (1:25) Get to know Abby Mataya from CLA's state and local business incentives team (4:35) AMAIF explained: the American Manufacturing Apprenticeship Incentive Fund, backed by $35.8 million in federal funds (5:45) Registered apprenticeship programs: Build one in house or partner with a sponsor? (6:55) Why we created Hire MFG Leaders (and why you should use it) (7:24) More than 120 advanced manufacturing occupations qualify for the AMAIF (8:06) What do you get through AMAIF? How does the program work? (10:17) What recapturing $3,500 per hire does to your enterprise value (14:05) How to apply for the AMAIF and what you have to report (16:58) State workforce training grants and state run apprenticeship incentives (18:22) Why you should head to Elevate powered by AMT and WIM at IMTS (19:17) Stacking incentives: a state internship credit, a local workforce grant, and this federal fund on top (22:57) The "I'm too small for that" myth, and why some of this money never gets claimed at all (26:09) If your tax provider isn't bringing these opportunities to you, go find one who will (27:53) You've hit your 90 days with your apprentice: now what?  (29:54) Learn how Navu delivers reliable, accurate answers in real time (31:07) What turnover actually costs, from lost capacity to recruiting spend Resources Mentioned The American Manufacturing Apprenticeship Incentive Fund (AMAIF) State Apprenticeship System List Check out the Elevate conference powered by AMT and Women in Manufacturing Hire MFG Leaders Navu.co/MakingChips Explore CLA's incentives and tax credit resources at CLAConnect.com Connect with Abby Mataya and Phil Hanke Connect with Abby Mataya on LinkedIn Connect with Phil Hanke on LinkedIn Browse the CLA resources page for articles spanning incentives, tax, and manufacturing at CLAConnect.com

Almost every shop owner I talk to has told themselves the same story at some point: we are too small for a real ERP, so we will keep running the business on the old system and a pile of Excel spreadsheets. On this episode, I wanted to kill that myth, because the cost of believing it shows up in underpriced jobs, broken handoffs, and a value chain that quietly leaks money from quote to cash. To dig in, I brought in Jon Hughes, a CFO consultant and principal at CLA, and Brian Schoonover, corporate controller and acting CFO at Turfco, a third-generation manufacturer in Minneapolis. Brian is right in the middle of replacing a system that was implemented back in 1989, so he is living this decision in real time, and Jon sees the pattern across dozens of shops. We get into the question I hear constantly: am I too small for an ERP? Both of them land on fiction. The point is not that a two-spindle side hustle needs enterprise software tomorrow, it is that the moment you decide to scale, a system built around getting product out the door becomes one of the best investments you can make. Accounting should be the non-event at the end, not the thing the whole system was designed around. We also spend real time on build versus buy in the age of AI. Everybody has a story about vibe coding an ERP or an instant quoting tool over a weekend. It is impressive, but you give up industry best practices, and you take on security and vulnerability risk you can't even see. My take is simple: keep your core data secure and built on best practices, then point AI at that data to do the heavy lifting. I used it to crunch a thousand work orders down to the twelve that actually needed my attention. Then we walk through the part that scares people most, selection and implementation. Brian shares how he built his own RFP, made vendors sell themselves to every department, and started the demo at the back of the building instead of the accounting office. And we both get honest about change management, the ROI math, and the surprise that the real resistance often comes from the front office, not the shop floor. What's Covered in this Episode (1:00) Meet the guests: Jon Hughes of CLA and Brian Schoonover of Turfco (4:08) Buying Hill Manufacturing in 2018 and inheriting a homegrown Access and Excel system (5:55) Turfco's system from 1989 and the transition to an ERP (8:21) ERP is not an accounting system: the QuickBooks misconception (10:34) How CLA helps manufacturers tap into millions in revenue and cost savings (11:12) Selling an ERP change to ownership when they are happy with what they have (15:11) Mike's broken Excel quoting template and the underpriced jobs it caused (17:29) Fact or fiction: I am too small to have an ERP, and why both guests say fiction (20:33) Acumatica, NetSuite, and Intacct: strip the labels and they are the same class of software (22:14) ProShop ERP paid for itself in weeks with per-user pricing. Book a demo at ProShopERP.com (23:50) Vibe coding and the security considerations of a homegrown, AI-built system (30:38) Using AI on top of a secure ERP to crunch a thousand work orders down to the twelve that matter (32:57) Brian's selection process: building an RFP, starting at the back of the building, and narrowing to four (39:49) Check out the Job Shops Workshop and Networking Reception at IMTS (42:15) Implementation at the halfway point, and mapping what each department actually does (45:43) The ROI math: save an hour per person per month and the SaaS pays for itself (51:03) The biggest surprise: the real resistance came from the front office, not the shop floor Resources Mentioned CLAConnect ProShopERP IMTS Acumatica Learn more about Brian's company, Turfco, at Turfco.com Connect with Jon Hughes and Brian Schoonover Connect with Jon Hughes by email at [email protected] or find him on LinkedIn Connect with Brian Schoonover by email at [email protected] or find him on LinkedIn Explore manufacturing resources from CLA at CLAConnect.com

You spend money on a website, LinkedIn posts, maybe some email and a trade show booth, and then you ask the question every owner asks: is any of this actually working? For most of us the honest answer is a gut feel. The machines are cutting chips, so marketing must be doing its job. That is not data, and on this episode I wanted real, practical advice on how to know. So I brought in Brendon Forrest from Gorilla 76, cohost of The Manufacturing Marketer, to walk through it with me. Brendon's whole world is building and running marketing programs for manufacturers, and he came with a list of nine metrics that turn marketing from a guessing game into a set of numbers you can manage the same way you manage scrap rate or on-time delivery. Along the way we get into the difference between a marketing qualified lead and a sales qualified lead, why you should probably count deals instead of dollars, and how to back into a marketing goal from your growth number. I also come clean about something a lot of you will recognize. For years my CRM lived in my head, and that is exactly why good opportunities slipped through the cracks. Brendon makes the case for getting that out of your brain and into a system, and explains why speed to lead matters so much: the shop that follows up first almost always wins the deal. We close on the metrics that do not matter, the vanity numbers that make you feel good but never tie back to revenue, and a simple five-step framework you can start using today. Set a goal, capture the data, analyze it, then execute. Same as everything else we talk about on this show, because the math does not lie. What's Covered in this Episode (0:15) Welcome to Buy the Numbers, and why even a one-person shop is already a marketer (0:53) Brendon Forrest joins the show for the first time, from Gorilla 76 and The Manufacturing Marketer (3:42) The real question every owner asks: I'm marketing, but is it working? (5:01) IMTS Job Shops Workshop and Networking Reception, Tuesday September 15, a half-day built for shop pros. Register at IMTS.com (5:57) Marketing is just data gathering: It's another business function you should invest in (7:01) How marketing and sales work together as one funnel (8:48) Pipeline metrics: new contacts, marketing qualified leads, and sales qualified leads (12:34) MQL-to-SQL conversion rate (and what a low number tells you) (14:21) Revenue metrics: opportunities opened and what matters most long term (17:03) Count deals or dollars, and the lead-time problem that a CRM solves (23:14) Mike's growth math and backing into how many MQLs a month you actually need (26:38) Pinpoint whether you have a lead-gen problem or a closing problem (27:34) ProShop ERP: implement best practices shop-wide and see fast ROI (29:11) Efficiency metrics: cost per opportunity, web traffic, and how AI search is changing it (35:19) The qualitative story: green, yellow, red tracking of lead quality and why the trend matters (39:13) Verdant Capital: get pre-qualified for equipment financing before IMTS, application only, good for 90 days (40:08) CRMs: Why Brendon recommends HubSpot for small shops (45:31) The metrics that don't matter: attribution, open rates, and the 3,500 dollar IMTS badge scan (50:49) The 5 steps you need to take to hit your goals Resources Mentioned IMTS.com ProShopERP.com Verdant Capital The Manufacturing Marketer, Brendon's weekly show Industrial Marketing Summit HubSpot, the CRM Brendan recommends for small shops Connect with Brendon Forrest Connect with Brendon Forrest on LinkedIn Listen to The Manufacturing Marketer

Most shop owners believe the number on their business is locked in by their earnings. It isn't. Two shops with identical profit can sell for wildly different prices, and the gap almost always comes back to one question a buyer is quietly working out in their head: does this thing run without you? For this one I brought back Phil Hanke from CLA and added Heather Parbst, who leads CLA's owner transition advisory team, to dig into the owner bottleneck. Not the operational kind everybody talks about, but the identity kind. The traits that built your shop—the grind, the "I'll just do it myself," the standards nobody else can hit—are the same traits that keep you buried in the day to day and cap what your business is worth. We get into the math, too. In precision machining, a business that leans entirely on the owner tends to trade around two to two and a half times earnings. Take the owner out of the critical path and that same business can fetch five, six, even seven times. Same earnings, double the value. Inside a three-year window your earnings are what they are, but the multiple is still yours to move, and the multiple is really what this conversation is about. We also get honest about the part nobody plans for: what happens after. Heather walks through why owners have to uncouple their identity from the business years before they sell, and what it feels like when the social equity you built over decades disappears the day you hand over the keys. If you've ever answered "what do you do?" with "I own a shop" and felt that was who you are, this one lands close to home. Whether you're one year or fifteen years out, the move is the same. Start now. Build the team, install the culture, and get clear on what you love and what you should hand off. I close with the simple four-bucket exercise I use to decide what stays on my plate and what goes. What's Covered in this Episode (0:00) The four-bucket exercise: keep what you love and do well, hand off the rest (0:52) Phil Hanke returns and introduces Heather Parbst, who leads CLA's owner transition advisory team (2:44) Two kinds of bottlenecks: operational problems versus identity beliefs (5:40) CLA helps manufacturers unlock revenue and cost savings. Hear real stories at claconnect.com (6:17) The traits that grew your shop are the same ones now trapping you inside it (9:17) When the business becomes your whole identity, and nobody does it your way (11:25) Build a culture of continuous improvement so the team carries the load, not you (13:20) Servant leadership: setting the vision, clearing hurdles, and allowing the team to fail small, without blame (18:26) Mike's email example: coach the team to your standard, then step out (21:28) Navu adds AI chat to your website so buyers get accurate answers fast. navu.co/makingchips (22:40) Does company size decide when the bottleneck bites? Assets versus real enterprise value (25:07) The $1.5M to $2.5M, twelve-employee shop where the owner does everything (27:13) The owner bottleneck: how holding every relationship discounts your multiple, and where to start (30:30) Shift from operator to architect: build leaders and ask questions instead of giving answers (32:37) The real work: uncouple your identity and self-worth from the business (36:01) Heather's hometown social equity vanished the day she sold her business (37:45) You can only golf so much: finding sustainable purpose after ownership (39:24) Hire MFG Leaders is built by shop owners, not just recruiters. makingchips.com/hire (39:53) Letting go: the "launch the kid" analogy for a business that runs without you (42:55) Mike's four-bucket matrix for what to keep and what to hire out (48:19) Closing advice from Heather: start early, don't wait until you're burnt out (49:38) The multiple is easier to change than the earnings, so remove yourself and double the value (50:48) How to reach Heather and Phil at CLA Resources Mentioned CliftonLarsonAllen (CLA) Give buyers reliable, accurate answers in real time by adding AI chat to your website with Navu Hire MFG Leaders Connect with Heather Parbst and Phil Hanke Connect with Heather Parbst by email or call her direct line at 407-244-9385 Connect with Phil Hanke on LinkedIn Follow CLA on LinkedIn for weekly manufacturing articles, worksheets, and resources

Most shop owners never sell a business before the day they actually sell theirs. You build something for thirty years, then one phone call later you're trying to figure out what it's worth, what the buyer is really paying for, and why the number in your head doesn't match the offer on the table. The fix is simple to say and hard to do: start thinking like a buyer long before you ever plan to sell. In this episode I sat down with the deal team from CLA (Phil Hanke, Erin Mickels, and Brady Paschke), to walk through what actually moves the value of a manufacturing business. We're in the middle of a massive wave of baby boomer owners heading for the exit, and a lot of them show up ready to be done today, with no runway and no plan. That's rarely the best place to sell from. We get into the math and the art behind it. Your shop trades on a multiple of adjusted EBITDA, but where you land in the range, anywhere from two times to six in precision machining, comes down to the stuff that doesn't show up on a single line: how clean and consistent your books are, how concentrated your customers are, and how much the whole operation depends on you. If a buyer thinks they're buying a job instead of a business, you get discounted. Then there's the part that wrecks more deals than price ever does: structure. Net proceeds, not the headline number, are what actually land in your account. We talk through purchase price allocation, working capital, earn-outs, and seller financing, and why you want those conversations on the table at the letter of intent stage, not six months into diligence. And we don't skip the human side. This is usually the largest and most emotional transaction of an owner's life. We get into legacy, the arrival fallacy, and why knowing your why and your next chapter matters as much as the wire that hits your bank account. If you're anywhere from one to fifteen years out from a transition, there's something in here for you. What's Covered in this Episode (0:00) Meet the CLA crew: Phil Hanke, Erin, and Brady join Mike (3:34) Why now: a wave of boomer owners retiring with no succession plan (5:18) Readiness: a 3 to 5 year runway beats selling off a triggered event (6:40) What a buyer actually buys: your earnings, not your new machines (9:17) Cleaning up the financial house: add-backs, owner comp, related-party items (11:20) The owner-reliance question: can the business run without you? (13:40) Messy books get discounted; clean books are step one (14:52) "Am I buying a job or a business?" The buyer's real worry (18:03) The range in precision machining: 2x to 6x, and what moves it (20:02) Why size matters and enterprise value basics (23:14) The three-year rule: What you can still move late in the game (25:51) How Factur helps suppliers build a consistent sales pipeline (27:00) Step two: personal financial planning, know what you need to net (30:45) A client story: net proceeds, not headline price, got the deal done (32:34) Where deals break: purchase price allocation and working capital (35:43) Earn-outs and seller financing: bridging a valuation gap (40:50) How to get started: reflect on internal vs. external options (43:21) Build your advisor team, starting with your most trusted pro (46:53) Let Navu answer the hard questions for you (48:07) The emotional side: selling your life's work (53:36) Define your purpose before you sell Resources Mentioned Build a consistent sales pipeline with targeted outreach and a free custom report from Factur Add AI chat to your website so buyers get accurate answers in real time with Navu Explore practical manufacturing insights from CLA on profitability, automation, growth, and more at CLAConnect.com/makingchips Connect with the CLA Team Connect with Phil Hanke on LinkedIn Connect with Erin Mickels on LinkedIn Connect with Brady Paschke on LinkedIn Reach the full team and browse their resources at claconnect.com