Category: ManufacturingListed here in this category are financial model templates specially designed for Manufacturing businesses and related sectors. The models are ideal for either business planning, financial planning, inventory or stock management, tracking, etc.
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A versatile template to forecast out a manufacturing or retail sales business that is built around customer re-purchases.
Manufacturing is the core activity of the industrial sector. Every year tons of goods are being produced and consumed. The backbone of the manufacturing industry is the factories. Setting up a new factory is a bigger project, as normally a lot of capital is required.
Manufacturing Industry of Today
The process of transforming the materials or components into something new and finished product is what we know as Manufacturing. The finished products are usually distributed and sold to either bulk distributors or directly to the marketplace. Due to the advancement in technology, it caused changes in the economy such as preferring to offering services rather than producing goods. But still, this didn’t stop the manufacturing industry to keep on striving and even growing. The manufacturing industry is considered as one of the largest sectors that exist today, thus, many are not discouraged at all when it comes to entering this industry.
Starting a Business in Manufacturing Industry
As a manufacturer, you will be creating physical goods which varies according to what kind of industry you want to start as. Manufacturing industry as a whole covers a wide range of industries under it. The following are the categorized know industries that are a part of the manufacturing industry.
- Apparel Industry – manufacturing clothing and fabricating products either by cutting or sewing except those who do customized products
- Chemical Industry – manufacturing basic chemicals and other products using chemical processes except the mining of natural chemicals nor engaged in the packaging process for chemical products
- Electronic and Electrical Equipment – manufacturing machinery, apparatuses, supplies for different applications in electronics and equipment utilizing electricity, except the industrial machinery and equipment powered by built-in or detachable electric motors
- Fabricated Metal Industry – fabricating ferrous and nonferrous metal products
- Food Industry – manufacturing or processing food, beverages, and other related products for consumption, this doesn’t include the chemical sweeteners added though
- Furniture and Fixtures Industry – manufacturing furniture and fixtures for offices, households, buildings, etc., but this does not include the industries that do the millwork or lumber works, stoneworks, medical fixtures, and beauty or barber furniture
- Industrial and Commercial Machinery Industry – manufacturing industrial and commercial machinery, equipment, and computers, including the ones with built-in or detachable motors
- Leather Industry – manufacturing leather products which involve tanning, currying, finishing, etc., processes of leather, hides, skins, and other related materials
- Lumber and Wood Industry – manufacturing lumber, wood, and its finished articles but doesn’t include the manufacturing of furniture and fixtures
- Measuring, Analyzing, and Controlling Instrument Industry – manufacturing tools/instruments for measuring, testing, analyzing, controlling, sensors and etc.,
- Paper Industry – manufacturing pulps from wood, cellulose fibers, rags, paper and paperboards, paper packaging such as bags and boxes but doesn’t include abrasive paper nor carbon, photosensitized, and blueprint papers
- Petroleum Refining and related Industry – manufacturing paving and roofing materials, engaged in petroleum refining, compounding oils, greases, etc., but the distribution of gas to consumers is not a part of this industry
- Metal Industry – manufacturing metal products while engaging in different ways to process ferrous or nonferrous metal such as smelting, refining, rolling, drawing, alloying, casting, etc.
- Printing and Publishing Industry – manufacturing industry that engages in printing, bookbinding, plate-making, publishing, etc., but this doesn’t include the printing for textiles or fabrics, nor the printing different products for advertising
- Rubber and Plastic Industry – manufacturing rubber and plastic products but doesn’t include the manufacturing of synthetic rubber and plastics for it belongs in the chemicals industry just like how the manufacturing of tires is part of this industry except for the process of recapping and retreading tires
- Stone, Clay, Glass, and Concrete Industry – manufacturing products by processing glass, cement, clay, concrete, stone, and other related products
- Textile Mill Industry – different from the apparel industry, here, they engage in the preparation of fiber, woven fabrics, knitted products, and other related products
- Tobacco Industry – manufacturing of consumable tobacco products such as cigarettes, cigars, smoking or chewing tobacco, snuff, and other related products, but manufacturing nontobacco cigarettes are also considered as part of this industry
- Transportation Equipment Industry – manufacturing equipment for transportation for users either by land, air, and water but doesn’t include mobile homes nor equipment used for moving materials on farms, mines, construction, plants, etc.
As you can see, though the demand for providing services is more trending compared to producing products, it still a huge industry that will always stay booming. Especially for certain industries that do manufacturing are more popular and continuously growing, but this also raised the competition to be even harder.
There are four primary types of manufacturing processes that are used commonly nowadays.
Some manufacturers use materials that start out in liquid form, so they made use of the molding process to give shape to the products. A popular type of molding is casting which involves heating the material until it turns into liquid and then placing it into a mold to cool down and take shape. Casting is used in many applications for different kind of materials such as plastic, rubber, metal, and other related materials. There are also other types of molding such as the more advanced injection molding to create 3D products; blow molding used for products with hallow air within such as bottles, pipes, etc.; compression molding for large-scale products like automobile tires; and rotational molding used mostly for furniture and shipping drums. In this kind of business, the demand for large equipment is critical, as well as well-trained personnel.
Without machines to help with manufacturing difficult to process materials, it takes a lot more time and resources. Nowadays, most manufacturers and producers are very dependent on machines to work efficiently and with better quality. Along with the rise of technology, using machines to process materials became easier, faster, and more precise, especially that it can be connected to computer programs today. Since these machines can be complicated to operate, there is also a demand for professionals or experts that will be assigned to manage the machine and the process to ensure the output’s quality.
Molding and machining can only go as far as shaping materials and processing it into products that can be also just parts of a whole final product. Thus, the joining process is utilized. Without joining, the products that get distributed will be in many separate parts which will take up more space, packaging, and time, for those who have to assemble the whole product. With joining, you’ll be able to put multiple parts into one whole finished product. It uses processes such as welding and soldering that utilizes heat to combine the materials, and adhesives for bonding or fasteners to keep things stuck together.
- Shearing and Forming
There are two processes that manufacturers utilize to shape metal - shearing and forming. Shearing is used to deal with sheet metal by using cutting blades to make precise straight cuts. It is also known as die cutting used on aluminum, brass, bronze and stainless steel. Meanwhile, with forming, it uses compression or other ways of stress to move materials into the desired shape. Forming is usually used for shaping metal, but it is also possible to apply in other materials like plastic.
These processes are just a few of the several ways that manufacturers use in manufacturing products from different materials.
Manufacturing Industry Financing Options
It is undeniable that the manufacturing industry helped economies prosper due to a large amount of money they gathered, but nowadays, the industry has become too flooded with multiple competitions, that some startups can’t last long at all. Instead of the manufacturing industry growing, if startups can’t make a stand on their own, it might cause a decline in growth. That’s why in some cases for other nations, the economy proposed to help the manufacturing industry strive and continue to prosper by giving them financing options.
In this financing option, it is mostly created particularly for small and medium-sized enterprises to help them stay afloat and be able to grow in the industry. The financing came in a form as an Annual Investment Allowance. It’s when the enterprise invests for a new plant, machinery, or anything that would help them grow, are given tax relief with their purchases. Aside from the government, the local banks also aid manufacturers with their funding. Thus, a partnership relationship is usually made between the government and businesses in this kind of financing option for manufacturers.
For the smaller firms or startups, manufacturers trading in different areas, and short in funds, businesses not accepted by banks, alternative financing is the most suitable option for them. In this option, it engages in peer-to-peer lending, supply chain finance, and bridging loans.
The most popular one to manufacturers is peer-to-peer lending since gathering the funds is faster and more convenient where the funds came from a pool of lenders using an online platform instead of going through banks or other financial institutions. Another term used to describe it is crowdfunding which delivers funds very fast once enough information has been provided to back up the borrower. Plus, everything is handled online so it is very convenient.
In supply chain finance, for those reliant on international or global suppliers, this option utilizes the newly emerging online platforms which are offering cross-border pre-approved credit facilities to pay the bulk amount or transaction ahead of time and letting the borrower pay for it at a much later date instead.
While in bridging loans, these are catered more for when manufacturers to take advantage of time-sensitive opportunities or whenever they encounter cash flow issues. The funds can either be used for raising capital, payment for unexpected expenses, equipment repairs, or for financing the acquisitions.
But of course, this type of funding option can’t be given easily, as long as the enterprise can present a solid financial model, it should help as a deciding factor to be granted the funds. Though usually, this kind of option is more ideal for a project-by-project basis.
Also known as asset-based lending which came into two forms – factoring or invoice discounting. Though both works the same way where they make use of the outstanding invoices as security against an upfront loan which can go up to 90% more of the value of the invoice. This option is designed which can be utilized as an aid for growth and an alternative when the loan limit is maxed out.
Factoring is especially suited for smaller businesses where the lender takes over control over the outstanding debts in the invoice, while in invoice discounting, the same loan principle applies but the borrower gets to retain control of its credit management.
This financing option has been mostly used for complex transactions and very risky since the lender can take hold of the borrower’s sales ledger.
Manufacturing is a very costly business, thus the needs for financing are numerous and constant such as equipment financing, plant expansions, asset replacements, new products or service deployment, etc. It’s a good thing that it isn’t impossible to gain funding from other sources but still, to ensure that one will surely get the chance of getting funds, building a financial model is the best thing to do.
Manufacturing Financial Model Templates
The financing of new factories is one of the key challenges when setting up a new production plant. Banks and investors all want to see and understand the financial feasibility first before they approve funding in manufacturing financing. Experienced project managers know, that this requires a careful study and also to present the investment case in a way which banks and investors will understand. So, you will have to develop quite an extensive financial model to be prepared for such a discussion.
The valuation of a manufacturing company depends on the industry, the type of activity and future prospects. A common way to value a manufacturing company is by using the Discounted Cash Flow method where you discount the expected Free Cash Flows to Firm to their present value. You will need an Excel valuation model template to perform such analysis.
Whether it is to perform a valuation of a manufacturing company or figure out the financial feasibility of a new plant, we got you covered. Here, we are offering a range of very useful financial model templates for manufacturing companies in Excel. The financial plan templates provide a framework to forecast volumes, prices, costs which are then used to prepare the financial forecast of manufacturing companies. The Excel models provide a framework and template to perform your own financial analysis and can make your life so much easier. Don't waste more time developing financial models from scratch, simply download one of our manufacturing financing or valuation templates in Excel and get started today!
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