Starting a manufacturing business is not as wild an idea as you might initially think. If you talk to manufacturers, you’ll quickly conclude that the idea of launching a factory is far from unrealistic.
While launching a new software idea may appear to be a tempting way to build a fortune in the 21st Century, there is always the risk that the concept may be too advanced for its time. Here’s the thing: For an idea to be commercially viable it has to be in the Goldilocks zone—one that’s neither too old nor too new. And many manufacturing ideas fall within that ideal zone.
While you need a large amount of money to start – we’re talking about paying for the high cost of men, materials, and machines—it’s not impossible to raise the funds from crowdfunding, banks, or investors if you’ve done your due diligence, researched the market, benchmarked what the competition has done, and come up with a business plan that is grounded in the reality of marketplace dynamics.
Here are some ideas to consider if you’re thinking of getting into manufacturing.
1. Use the latest breakthroughs in material science.
The right materials for your manufacturing processes can reduce downtime, prolong service life, and lower operational expenses. For instance, WellerWEARBLOCKS, made by A.J. Weller, will work perfectly if you need the technology to handle incredible amounts of abrasion and force. While it sounds like magic, wear technology is actually science. According to the manufacturer, “The mild steel component absorbs impact and vibration energy and creates a composite material that is more impact and abrasion resistant than any single material on the market.”
2. Research everything.
Instead of relying on your hunches or trial and error, make an informed opinion about everything such as purchase order requirements, competitors in your market, and so on.
- · Research business ideas
- · Research the difference between working with a manufacturer to produce something or starting up your own plant.
- · Research your partners.
- · Research exactly what your target market is looking for.
- · Research the difference between opting for a B2B or a B2C approach.
Fortunately, there is plenty of material available on how to do almost anything, and while you may not be able to find as much material as you had hoped for online, there is much you can learn from attending trade fairs and reading trade journals. The main thing is: don’t just try to figure out things as you go, but research what others have done.
3. Understand the legal side of things.
Manufacturing is heavily regulated and you want to make sure that you have all the right licenses and certifications. Find out what you need to know by going to government websites. If the information is vague or obfuscated by too much legalese, talk to the respective government agencies to find out exactly what you need to do to be in compliance when you set up shop.
4. Establish mutually beneficial relationships with larger partners.
In the beginning, you won’t be big enough to be taken seriously by larger manufacturers. As a result, you’ll only be able to handle a small number of orders. However, if you can create incentives that would make a larger manufacturer work with you, it will resolve start up problems. An incentive might be allowing the manufacturer to penetrate a new category in the industry. When looking for these partners, be sure to check references. You’ll have to do this the old school way as many manufacturers don’t have a digital presence. The last thing you want is to set up a bad alliance. After you’ve found a partner, go slow.
5. When you start, do it in small steps.
Small steps — that is also how you should start your own manufacturing unit. When you first start, you are too small, naive and vulnerable to have figured everything out. You will reduce the chances of making big mistakes when you start out small.
Here are 3 simple ways you can take small steps:
- · Rent or lease space.
- · Rent or lease equipment.
- · Rely on manual labor over machines
This is only in the beginning, of course, but if you start by crawling before walking, you’ll soon get enough knowledge and skills to be able to run. When you start small, you’ll come up with many clever ways to streamline your business.
6. Travel to meet overseas manufacturers.
Suppose you decide to work with a manufacturer overseas who can supply you with the raw or finished materials for your factory at a great price. Don’t just rely on phone calls, emails, and translators to get an impression of who you’ll be working with. Fly to the other country, visit the manufacturer, and work out all the details in person. Telecommunication is wonderful, but sometimes a dose of reality will prevent you from partnering up with people who know how to talk a good game but can’t deliver on their promises.
Barriers to Entry Lower
According Noramay Cadena, co-founder of a Los Angeles hardware-focused incubator space, “The barriers to entry for people looking to build a product are coming down – it’s faster to build a prototype, social media is making it easier to market your product, and crowdfunding is making it easier to raise that first lump of money.”