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Becoming a manufacturer can open up new business opportunities and allow you to be your own boss. Maybe you have an idea for a product that requires a manufacturing set up in a warehouse. Or maybe you want to manufacture items for other companies locally, nationally, or even internationally.
Whatever the case, starting your own manufacturing business has a lot to offer. There are, however, a number of startup needs and costs to consider. First and foremost is funding of course.
You need money to make money, and starting a manufacturing company isn’t exactly cheap. That being said, it is also not insanely expensive to get a manufacturing business up and running.
The following can serve as your guide to starting a manufacturing business, finding a suitable factory, building a team, and choosing a location to facilitate business growth and success. Let’s dive in!
- Where to Start
The best place to begin is on paper. What do you want to manufacture? Is there a market for your product? What equipment do you need? These are only a few key questions to brainstorm answers to. You’ll also want to employ a bit of online research.
This is all part of building a manufacturing unit. Building a manufacturing unit is like building a home. It is an exciting, challenging, and very rewarding moment if done right.
Things to consider when building your manufacturing unit are equipment, raw materials, labor needs, and even special skills if your machinery is supported by computers.
For instance, you may want to go with used machinery rather than new to cut startup costs. “Most used machinery is available at relatively low prices. It enables firms to avoid applying for costly loans,” MachineryNetwork.com explained. “Even if you take a loan, you will get a low-interest rate that you can easily repay on time.”
- Research and Develop a Business Plan
The research you do is important, and will lead you to the type of product you plan to manufacture. Your research will also help you develop a business plan moving forward.
Once you know there is a market four the product or products you plan to manufacture, you need to think about the team you’ll need to get operations underway.
Another key factor to consider when doing due diligence is funding options. “In the idea/experimental stage, use your own financial resources, such as money from a savings account or careful use of personal credit cards,” Alan Hall of Forbes noted. “Wise deployment of these precious dollars is critical.”
Will you bootstrap your manufacturing business, or will you be seeking financial backing from friends, family, banks, or private investors?
If you are planning to manufacture a once obsolete product, you may be able to get funding via a crowdfunding platform if the product had a strong following when it was on the marketplace.
- Finding the Right Location
When starting a new manufacturing business, it’s best to not overextend your budget by renting more space than you need. Are you thinking of purchasing a factory? Don’t! You still haven’t tested the market with an actual product yet, so don’t commit to a location by taking a mortgage.
“Consideration of cost components such as labor, taxes, real estate and utilities are the key measures most companies use to decide where to locate plants,” Adrienne Selko of IndustryWeek said.
Cheaper the better when starting out, but be sure to still have a strong infrastructure n place for your production operations and client reach. For example, your location should be close enough to connect with potential clients, as well as vendors and outsourced workers.
Where are you sourcing your raw material? How much will shipping costs be to your manufacturing factory’s location? How about pick-up and other distribution costs? These are all important questions to ask when choosing a location for your manufacturing business.
Other vital aspects to consider when it comes to location are taxes and laws for manufacturing in that area. Federal and state policies may require certain permits, certifications, special factory safety practices, and more. Be sure to check all of this prior to signing a lease.
- Building Your Manufacturing Business Team
Starting a manufacturing business is certainly not a sole endeavor. It takes a dedicated team of skilled employees to develop and produce a product that solves a solution for B2B or B2C. This makes building a powerful team an essential element to your success, both short-term and long-term.
To attract the most knowledgeable and skilled team members you’ll need funding in place to offer desirable salaries. You’ll also want to have a health program and safety training in place to let your team know you truly do care about your team’s well being in and outside of work.
Employing highly skilled managers is another important component to building a powerful team for your manufacturing business. Without highly motivated and skilled managers, you’ll find yourself on the factory floor more. This isn’t bad, but you also need to be on the go meeting clients and closing deals as the face of your company.
Wrapping Up . . .
The above tips for starting a manufacturing business can serve as a quick guide for entrepreneurs or those in the manufacturing industry ready to strike out on their own. From location to equipment, one of the most important aspects of success is staying within your startup budget, giving you capital to build upon.
