The initial days of starting up are mostly spent on researching the market, benchmarking competition and seeking funding from friends and family. When you start searching for manufacturers and talking to them, it all starts to feel real. But finding the right manufacturer is not easy.
The entrepreneurs I interviewed for my book, “How We Did It : 100 entrepreneurs share the story of their struggles and life experiences” either owned their manufacturing center or had years of experience dealing with third party contractors. Here is their advice for avoiding pitfalls in the transition from idea to product for sale:
1. Set-up a mutually beneficial partnership. As a start-up, you may not taken seriously enough by the big manufacturers. The volume of business you bring to their table is not significant either. Consequently, it is imperative for you to create an incentive for the manufacturer to work with you.
George Burciaga, CEO of elevate DIGITAL, contended with this exact situation while starting up his business building interactive touch-screen based digital displays. His assembler was fairly large but did not build products in this particular category. Burciaga persuaded them the partnership would be mutually beneficial since the assembler would expand into a new category.This is a strategy that is absolutely necessary at every level of growth.
2. Check references. Finding the right manufacturer is difficult, said Kevin Lavelle, the co-founder and CEO of Mizzen+Main, an innovative men's lifestyle brand. Unlike programmers, few manufacturers have a digital presence. Checking for references is paramount.
“It’s important to check out their references,'' Lavelle said. "Take small steps when first working together. You won’t regret it!”
3. Take baby steps. Setting up your own manufacturing unit takes a lot of time and money. You cannot afford mistakes. Cricket Allen, founder of The Perfect Snaque, a nutritious snack company, said entrepreneurs must avoid risks in the initial stages by leasing or renting space and equipment instead of buying them immediately. Depend more on manual labour and low-investment tools in the first few months since the product will undergo several minute changes in that period. “Our mantra in manufacturing, and overall, is crawl, walk, run,” she said.
4. Research. Regardless if you are looking for a manufacturer or setting up your own manufacturing unit, you need to do extensive research before you make a decision. Trade journals and fairs are good avenues to research and connect with manufacturers.
“Research the people you want to do business with and don’t settle for the first one you find. Make sure you have options,” said Lawson Nickol, co-founder of All American Clothing.
5. Have multiple open partnerships. Have multiple reliable options, rather than zeroing in on just one good vendor. Mary Apple, founder of Pretty Pushers, a firm that makes special labor gowns for women, advised having a list of good vendors and alternating among them for risk diversification and competitive pricing.
“Your once grateful vendor might ignore you when he’s got a bigger customer, or your timely guy might have a factory fire and go out of business for a few months,'' Apple said. "I mean, these scenarios are endless. The key is having a handful of good, or OK, vendors that you can bounce between.”
6. Get the legal details sorted out. Myra Banks of HerbanLuxe advises business owners to visit local government websites and talk to people in the know about the kind of licenses and certifications required to set up shop. Once this is done, you can confidently go ahead with buying equipment and hiring employees for your business.
7. Know the people you work with. Your manufacturers are critical to your business. It is imperative that you know them well before working with them. This is true regardless if your manufacturers are in the neighborhood or another country. Nick Paradise, CEO of ThreadBuds, said that it is a good idea to use emails, phone calls and translators in the initial stages, then visit personally to iron out the details.
“I bought a flight and went overseas to see the machinery we’d invest in and to meet the factory owners and workers,'' Paradise said. "It also allowed me to feel very comfortable about who I was partnering with on this venture.”