When you are looking to start a manufacturing business it helps to have a leg up on the process to keep you on task and moving in the right direction. It is never a breeze to start any business, and manufacturing businesses are no exception. Any business worth starting is going to require patience and effort, but you can do it and be successful if you budget your time, money and energy appropriately.
Learn Your Market
Knowing your market is essential to starting your business. Once you’ve chosen your product, you need to be clear about the market demand for your product. This requires research and a strong business plan. In order to be successful, it helps to know who your competitors are and
how much of the market demand they supply. If you have a true niche market and there are no competitors offering the same product, look for a similar product in order to get a good idea where you may stand.
It helps to have a market already available so that you won’t have to build a market from the ground up. If the market for your product is petering out, you will need to decide if you want to take on the risk of manufacturing that product or not. You’ll need to decide if you are going to manufacture your own product or if you are going to manufacture the products your clients require. If you are going to be producing to the specifications of your clients, you will need to draw up legally binding contracts that ensure your business interests as well as the clients.
Financing and Capital
There is a lot of capital required to start a manufacturing business and there are several ways to go about getting the necessary monies. One of the more common routes to take is to take out a business loan. A business loan usually comes from the bank, whichever banking institution you choose. You can also fund your business with venture capital or investors. There are also angel investors who are individuals who provide capital for startup businesses. These investors usually want higher equity in your business than a venture capitalist.
A lot of this money is needed to purchase the necessary equipment to manufacture your product. If you don’t have the money up front, you may want to consider financing your equipment. When you finance your equipment you are freeing up some of your startup money.
You will need a place to manufacture your product. And more often than not, manufacturing business require specialized facilities. You want your facility to be well equipped to handle the needs of your business. This includes having floors that are strong enough to bear the weight of
your machinery and equipment, having ample space to store your raw materials as well as your finished materials, having a location that is zoned for the type of traffic, parking and type of material you will be processing, and that the structure is able to meet the electrical needs of
your business, or whatever will be powering the bulk of your production.
One thing that producers sometimes overlook is the ability to check the quality of their product in the same facility the product is produced. This can save valuable time and allow you to provide a well made, quality product to the consumer. Storage areas are another must, whether it is for the finished product or the raw materials needed to produce the product, the ability to have everything in one location makes things so much easier and can increase the efficiency of your business. You also need to make sure that your landlord approves of your use of the space.
Make sure that you cover all of your bases legally as well. Visit local government websites to find out what specific certifications, licenses or permits you will need to conduct business. You don’t want to move forward without this component in place, because not having these things in place could jeopardize your business before you get established. You may be assessed large financial penalties or lose the ability to manufacture for a period of time.
Any lease that you sign is a legal agreement, so make sure that you fully understand any leases that you sign, whether it be with your landlord or finance companies. The last thing you want is to be tied into an ironclad agreement that is costing you money, time or another valuable asset.
Hire a Team
Running a manufacturing business out of a factory will undoubtedly require employees. Whether it’s 2 employees or 50, you want to make sure that you are paying competitive wages that make your employees want to work for you and with you. You want to have a positive working atmosphere and incentives to go along with your production goals. Some positions that may need to be filled include managers, an accountant, and machinists. Make sure that your employees are skilled and dedicated to the standards your business has set.
Decide on how you will get your product to the consumer. Do you want to sell directly to the consumer, and if you do, how are you going to get it to them? You can do it online, over the phone or through a brick and mortar store. If you want to wholesale your product, what channels will buyers need to use to contact and purchase from you? Will you be selling large quantities to stores? This option can free you of the responsibility of marketing to individual consumers and having to store products for extended periods of time.
This guide can help guide entrepreneurs who are looking to start a manufacturing business. Manufacturing takes a lot of organization and planning to get started and to run smoothly. It helps to find someone or an organization that is willing to mentor you or help you navigate the
business. If you can avoid making some of the same mistakes as someone else has, then you may be able to grow your business a lot faster or bigger.