For companies involved in the construction, design or facilities management industries, the nature of business transactions often tends to be of fixed duration. However, with facilities management, there’s an ongoing nature to the business arrangement.
When transactions are singular or short-lived, it’s challenging for any business to sustain itself because it requires going out to find new clients or customers on a regular basis rather than retaining the ones they have already.
Extending Business Transactions as a Supplier
Companies that deal with the creation and management of facilities should look at ways to adjust their business relationships, so they are repeatable or ongoing arrangements. This provides far more opportunities to conduct new business or arrange the regular sale of products that are useful to corporate occupants of the property.
Reorienting in this manner makes the financial cashflow forecasts more predictable because of ongoing supply contract agreements for necessary chemicals and other materials used to maintain a property and its grounds to a high standard.
These types of arrangements are especially useful in industries that suffer through a peak and trough business cycle, where new developments only come along periodically with stark fallow periods. With regular sales of secondary products supplied through a long-term arrangement, this provides a much-needed buffer against a volatile cashflow statement.
Private Labeling – What Is It?
There’s a fair amount of confusion over what private labeling is and is not. So, let’s clarify that right now.
Every business has their areas of expertise, which they’ve built up over many years. If asked to start producing a product fundamentally different to what they have offered previously, the staff hit a major roadblock. They don’t know what to do or where to get started because the entire team probably lacks any working experience in another industry. This is even truer as products become more specialized. Equally, you have compliance and scientific standards to adhere to in the agricultural and health-care industries for example.
With private labeling, the idea is that a dedicated producer of excellent products in a certain category offers to provide a private label version for a customer. The product may be sold as is or adjusted to suit the customer making the order. The customer’s logo, brand, and other identifying information are printed on the label; as far as anyone else is concerned, the product came directly from the brand on the product label. Using private labeling, a company can expand its product range much faster.
Private Labeling – Why Does It Make Sense?
For companies wanting to sell additional product lines that do not have the funding, facilities or expertise in-house to do so presently, private labeling the product saves time. The product is made by an expert manufacturer that already produces a range of different products within the category, allowing the business to pick only the products most suitable for their customer base.
It isn’t necessary to invest in research labs, production facilities or a talented team to launch a new line of products at considerable expense and financial risk. This is already available through a private label arrangement, making it possible for businesses to expand into new product lines without significant capital investment. It also dramatically shortcuts the time that’s required to go from an initial producer of a product to providing a superior version; this typically requires experience, which takes years or decades to acquire.
One Example of Private Labeling
Facility managers may be dealing with a problem of extensive runoff water when it rains (or snow in the wintertime). Lawn care around a business property is a full-time management issue, but when rainwater comes down faster than the lawn can accept it, you get runoff water around the property.
Whether running a warehouse operation or an office complex, excess water is a dangerous thing. It can cause accidents and ultimately damage the foundations of building structures if not directed towards adequate drainage.
AmegA Sciences USA offers their Liquidium soil treatment product as a solution. It is available under a private label arrangement to be sold, for instance, to a property management company. What the product does is adjust the soil’s porosity. It also loosens hardened soil so that rainwater can seep through to the soil below and not flood the surrounding area. In gardens, the product is non-toxic, so vegetables and ornamental fruits are unaffected by the treatment protocol and keep growing.
Companies wanting to expand their product line or move away from seasonal business deals need to look at private label opportunities. Private labeling makes it possible for businesses to continue to meet expansion goals even while under financial constraints when investing in research and manufacturing facilities makes little sense. Return on invested capital metrics improves for businesses when they can expand without requiring excessive new capital or having to borrow to achieve the desired outcome. For businesses looking to grow in 2019, embracing the concept of private labeling perhaps opens doors that were previously closed to them.