What You Need to Know About Launching a Manufacturing Business
With an influx of new technology, today’s products are paving the way for new manufacturing businesses and opportunities. Enterprising manufactures are necessary for growing product-based businesses to succeed—and there’s always a need for a reliable manufacturing plant. However, this doesn’t mean starting a manufacturing company is easy. On the contrary, manufacturing businesses are heavily government-regulated. And there are plenty of moving parts involved, literally and figuratively. However, although it requires a great deal of energy and resources, it can be highly lucrative. Here’s what you need to know about starting your own manufacturing business:
Choose a Competitive Niche
In order to run a successful company, you need to understand the market. There are several key manufacturing segments (such as food and automotive)—you should choose an area that demonstrates future growth and that you’re passionate about. Take a look at what’s trending and start considering what you can provide in that segment. For example, the food kit industry is booming. Companies like Blue Apron and HelloFresh are dominating the fresh food delivery service, and many more have followed in their footsteps with niche products. You can penetrate this market by working with organic companies that hope to break into this space.
Think About Financing
Financing a manufacturing operation takes a lot of money. Chances are, you don’t have the cash on reserve to throw into the business right away. You’ll need a hefty upfront financial investment to get up and running. You’ll need money for equipment, labor, the facility, and materials.
Start by investigating different financing options. The majority of states have an economic development department that offer a wealth of public resources, such as loan and grant programs. Local manufacturers’ associations can also assist with financing opportunities and economic development. Incubator programs and traditional bank financing are also viable options.
Take Care of Your Equipment
As a manufacturing business, your equipment is crucial to your bottom line—and ultimately your success. Whether you’re purchasing new or used machinery, how you handle your maintenance can cost you. There are many ways to handle machinery maintenance. Some companies will utilize a machine until it runs to failure and can no longer operate. However, you could lose money by not capitalizing on repairs with a preventative strategy. Some manufacturers avoid this by running scheduled maintenance, regardless of the machine’s condition. This also costs money in unnecessary maintenance costs.
To bridge the gap between these two methods, consider different vibration sensor types. Vibration sensors monitor the flow of a machine’s sensors to determine its health. It’s important to understand the concept of vibration sensor vs accelerometer: an accelerometer measures the acceleration of a machine, while a vibration sensor measures the acceleration quantity. However, accelerometer is actually a type of vibration, and is one of the most effective types to keep all machinery in good working order.
Consider Strategic Partnerships
As a new business, competing against bigger manufacturers in your industry isn’t always feasible. Because of this, it makes sense to start planning strategic partnerships. You can partner with curated manufacturers to outsource various phases of your operation. For example, as you build your brand, you might want to outsource some of your manufacturing needs to an overseas company.
As you start talking to other manufactures and exploring these opportunities, it’s important to refrain from over-indexing on a manufacturer’s capabilities. When you choose a business that can do more than what you need them to do, you can actually lose money—especially as a small startup manufacturing company operating on a lean budget. Furthermore, when you choose large manufacturing companies in hopes that they’re the best of the best, your small business might actually end up falling lower on their totem pole of priorities.
Choose the Right Plant Location
Location is everything. Your plant should be situated in a place that supports a healthy infrastructure. There should be solid, reliable transportation links to get products out the door and to your customers quickly, as well as receive raw materials from your suppliers. While new businesses might be tempted to search for cheaper options, this could only hurt you in the long-run. Remember, every purchase you make is an investment. Logistics also matter. Is there enough square footage to accommodate everything you need, and will it be able to scale you grow? Is the floor able to withstand pallet trucks, machinery, and heavy foot traffic? These are all questions you should be asking yourself.