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How to start a manufacturing business

24th March 2021 Print

Starting a manufacturing business can be tough, since you may need to purchase expensive equipment and venture into uncharted territory by producing something entirely new. However, with the right approach, you can make your entrepreneurial dreams a reality.

Key Challenges for Manufacturing Businesses

First, let’s take a look at the key challenges that stand between you and a successful manufacturing business. 

- Funding. Depending on what type of manufacturing company you want to start, you’ll probably be facing steep startup costs. Even an inexpensive manufacturing business will cost you at least $275,000 to launch, with bigger operations costing millions of dollars. You’ll need to buy or build a sizable factory, and possibly a warehouse, and fill it with expensive equipment to make what you need to make. Most of us don’t have a million dollars sitting in the bank, so you’ll need to come up with some kind of plan to get the funding you need to move forward. 

- Demand. Your manufacturing business won’t get far if you don’t have a long line of customers waiting to buy from you. There are many different options available for manufacturers; you can sell to other businesses and have them resell your product on store shelves, sell direct to consumers, or both. But whatever you decide, you need to design a product that generates significant demand. Your product needs to serve some specific need or solve a specific problem, and do it well, if people are going to buy it. 

- Competition. You’ll also need to consider your competition. You may be able to get your manufacturing plant up and running, churning out thousands of copies of your core product – but what if one of your competitors is able to do it cheaper? Assuming your products are nearly identical, most people will gravitate toward the less expensive option (or the one they’re already familiar with). What are you going to do to distinguish yourself from the competition? 

- Consistency and safety. It’s important for manufacturing entrepreneurs to think carefully about the consistency and safety of their business. You’ll need to use equipment to visually inspect pipe tubing, casing connections, and other thresholds to ensure that your products are well within allowances and that your equipment is in solid operating condition. You’ll need to create solid QC and QA teams, dedicated to ensuring that every product that leaves your business is up to your quality standards. You’ll need to provide safety equipment to all your team members and design a set of procedures and protocols that keep them safe during operations. It’s a lot of work upfront – and you’ll need to be consistent with it for years to come. 

- Scale. Finally, you’ll need to think about how you want to scale (or if you want to scale). Eventually, you may want to open another plant in another city, or expand your operations to produce new things. Either way, your bottom-line goal is growth. How are you going to grow your business? How are you going to fund and sustain that growth? Can you grow in a deliberate, controlled manner? 

Writing a Business Plan 

One of the most important steps you’ll take in creating a manufacturing business is writing a business plan. This is going to serve as an outline of the business you want to build, and a blueprint you can follow when making your ideas a reality. 

You’ll need to research a great deal of topics related to your business, including your target demographics, your position in the market related to competition, the price you can charge for your products, the cost of manufacturing, and of course, your initial startup costs. In essence, you’ll use your business plan to address all the key challenges in the previous section – and you’ll use hard facts and research to back up your ideas.  

Finding Partners and Mentors

It’s tough to build a manufacturing business on your own, especially if you have minimal experience. That’s why it pays to find partners and mentors who can help you succeed. Start networking if you don’t have contacts in the industry and ask people for their advice for a new manufacturing entrepreneur. If you’re lucky, you could find someone willing to join up with you and improve your chances of success. 

Acquiring Funding 

The last major hurdle you’ll face in the early stages of developing your business is acquiring funding. Fortunately, you’ll have many options to consider, such as venture capital, angel investors, and even crowdfunding. 

Getting into the manufacturing game is hard, but once you’ve got the first few pieces in place, everything else will begin to come together. From there, it’s a matter of keeping the business running, learning through experience, and making adjustments to perform even better.