Every great product first starts out as an idea. After a lot of trial and error, you’ve developed your first prototype! But after a little bit of testing, you realize it’s time for a little more trial and error to get to your second prototype. Repeat this process until you have a functional and well-tested prototype. Congratulations! You’ve made it this far; the next step is to consider the manufacturing process and how you can continue to make your dream a reality.
Location, Location, Location
When we think about manufacturing our prototype, the very first thing we consider is how much it’s going to cost us. A big part of that cost is associated with the location of your manufacturer. First, create a list of ideal locations, then compare the costs associated with each place, including rent, wages, etc. Whether you are considering a compliance management company for Mexico manufacturing sites or a location within the USA, having a vast selection to compare will be your best bet.
Pricing to Your Benefit
Often supplies and labor are considered into the price of a product, but it doesn’t stop there. Overhead costs go beyond direct materials. You must consider professional fees (legal team, accounting, consultations), advertising, insurance, interest, rent (if applicable), repairs, supplies, taxes, loans, and utilities. These are costs that have an impact on your profit margin and without proper planning, you can find yourself taking much longer to break even. It’s normal for a business to run on a loss for the first three years. After that, the business should have improved enough to start seeing some sort of profit. Lastly, consider the value of your product in the pricing module. Some products, such as fire protection type products, will have an intrinsic value that can be considered.
Managing the Delivery
The most successful endeavors in manufacturing are going to have a good grasp on project management and the product delivery. Project management is at the forefront to creating a good relationship with your customer base. On-time delivery will nurture that relationship. You need to have that core group of project managers who know how to speak to your customer base and deliver what they need while meeting the goals of the company. Take your time and really cultivate that team; it’s what sets precedent! Researching vendors that provide delivery services will be the next step to success. You want to pay the lowest price you can, without sacrificing quality, to increase your profit margin. Make sure you have realistic goals and that you have delivery resources that can meet your needs. Then haggle the price to something that is affordable and honors your relationship with the vendor. Make sure you settle on a vendor who can handle your growth in the future!
Finding the Financial Base
No matter how far you have come in the process, you will need to finance your endeavor, and you’re probably going to need help at first. Researching grants and loans are a big help for figuring out the funding aspect. You can also look for small business incubators that can help you find the funding you need. One of the easiest ways to fund your new product is to find investors who believe in you, are excited about your product, and are able to financially invest in your business.
As with all new business ventures, putting everything to paper to get a clear picture is a fantastic way to really “see” what you are about to take part in. Consult with others in your field, ask for a financial assessment from a trusted CPA and check in with the lawyers on the legalities of opening this manufacturing plant. If you have a product that will withstand the test of time, you’re well on your way to having a successful business!