Manufacturing is not as sexy and exciting as product development, but not understanding production will cost entrepreneurs plenty of time and money.
Entrepreneurs typically do a great job of visualizing finished products, dreaming of them artfully arranged in shop windows, mail order catalogs or point of sale displays. But most don’t have the background to visualize the ins and outs of manufacturing and distribution. However, what you don’t know —and can’t anticipate—about the production process, could cost you both money and time.
To illustrate: Finding a publisher didn’t seem like it would be that difficult for Aziz Makhani, who developed the soccer board game KickShot (Turning Your Idea into a Market-Ready Product). The names of publishers were inside the packaging of popular games, but when Makhani called them, he hit a brick wall. KickShot was just too small a job to interest them. He needed only a thousand copies or fewer, but major game publishers typically published hundreds of thousands of units at a time. Makhani’s had approached publishers who specialized in long production runs rather than companies that handled short-run jobs and prototypes. Find the right kind of vendor cost Makhani valuable time during the development of KickShot.
What you don’t know— and can’t anticipate — about the production process, could cost you both money and time
Here are some of the things that Makhani learned about the world of manufacturing that every entrepreneur bringing a product to market should know.
1. Find your manufacturer/publisher as soon as possible
- Schedule time in advance when possible. Production slots can be spoken for many months in advance in some industries. Plan ahead, especially if you’re a small customer.
- Find a vendor that fits your product and the size of your production run. Manufacturers specialize, owning equipment that fits their customer needs and niche in the market. One size does not fit all in manufacturing.
Use manufacturers as advisors to avoid building costly mistakes into your product design
2. How do you find the right manufacturer?
- Call, email or visit industry trade groups. In Makhani’s case, the tabletop game industry’s GAMA might have been a good place to start. GAMA also sponsors trade shows, where one can make valuable industry contacts.
- Attend trade shows. Manufacturers will attend national trade shows in order to locate new business. Retailers, designers, consultants and entrepreneurs with new products also attend. One or two days at the right trade show should give you all the contacts you’ll need to get started
- Federal and State Agencies. State and federal agencies such as the Department of Commerce, the Small Business Administration, and the Chamber of Commerce are also sources of vendors, and will often help entrepreneurs by doing research for them.The Idaho Department of Commerce matched Makhani with an overseas manufacturer in Taiwan that turned out to be eager for his business, and able to handle small jobs at relatively inexpensive rates. Furthermore, Makhani was able to handle all transactions quickly via email. No international travel was required.
3. Avoid on-the-job training; learn manufacturing during development
- Identify key costs variables and trim away unnecessary fat. Each part of the product, whether its made of paper, wood, plastic or steel has a cost in raw materials, manufacturing, and ultimately, a cost to ship the product to the consumer. The more you learn in the early part of the development process, the better you can design your product, eliminating waste and excess weight. After Makhani sent his game his final prototype to Taiwan, he learned they needed far more detailed specs, such as the basis weight of the paper and card stock, industry standard ink specifications for colors such as the greens needed for his game board. The biggest issue was weight: the weight of the box, the playing cards, the game board, the poker chips, and even the die-cut interior of the box which held all the game elements. Heavier materials were more expensive to source, and they made KickShot more costly to ship to the United States, to truck to distributors, and more expensive to mail to consumers from online retailers such as Amazon, as well.
- Call upon your development partners and vendors for help with manufacturing. Ideally, you should consult with them during the development process. Makhani got invaluable aid from the graphic artist that illustrated KickShot.
- Network with other entrepreneurs. Others have already dealt with the same problems, and will be happy to share what they’ve learned. Visit Immpreneur’s SOUK to contact other Immigrant entrepreneurs.
4. International shipping.
Most consumer products destined for the United States are manufactured overseas and compete for increasingly scarce container space on international ships, especially leading up to key selling seasons such as Christmas. A futures market now exists for container space, making it more difficult for small players to book space.
- Plan backwards from selling season to your manufacturing cycle.
- Makhani learned that he needed to plan seven months ahead to be in stores for Christmas. While he was able to make the holiday season, he had to air freight a portion of his initial production to the United States to meet an obligation he had made before he fully understood the production process.
5. Finding a competitive, but profitable price point.
- Benchmark competitive products. You do not want to price yourself out of the market
- Capture all costs in determining price. Makhani initially set an aggressive price of $19.95 for KickShot, but once he factored in shipping, distribution and mailing costs, he was losing $5 a game. He changed pricing accordingly, but was careful to stay within industry guidelines.