Starting a Manufacturing Company

The start-up costs can be high, but so can your return on investment
By Judy Artunian, Freelance Writer Launching a manufacturing company isn’t for newbies. If you don’t have personal experience in the field, consider partnering with someone who does. Grappling with the regulatory issues alone can be daunting, even for longtime manufacturers. On the plus side, you don’t have to be a major manufacturing powerhouse to thrive. According to the National Association of Manufacturers, today, more than 99 percent of U.S. manufacturers are small and medium-sized companies. 
 

Among the benefits and challenges you can expect in your company’s early stages:

1. Big manufacturers are increasingly turning to smaller companies to supply components.
2. Customers often seek out small manufacturers when they need a quick turnaround and personal attention to their needs.
3. One of the growing concerns facing small and mid-sized U.S. manufacturers: it’s getting harder to compete with overseas manufacturers.

Show me the start-up capital

If you need seed funding to get your business off the ground, should you take out a bank loan? Look for an angel investor? Borrow from relatives?
Try: Find expert advice in Inc. Magazine’s Guide to Raising Start-up Capital . At BusinessFinance.com.com and BusinessPartners.com you’ll find thousands of business-capital sources.

Have a plan

Investors expect to see a solid business plan. Even if you’ve already got your funding in place, you need a business plan to keep you on track.
Try: Check out the award-winning manufacturing-company business plans  from the Moot Corp. Competition, a program in which MBAs from the world’s top business schools present their business plans to actual investors. You can find more sample business plans at Bplans.com.When you’re ready to put your business plan in writing, use a program such as Business Plan Pro to give it a professional polish.

Lease a workable space

When evaluating potential facilities, consider every aspect of your business—from the amount of electrical power and storage space you’ll need, to whether drive-in truck access is important.
Try: CoStar Group  and LoopNet list industrial spaces for lease.

Mind your rules and regulations

According to the National Association of Manufacturers, manufacturers pay 81 percent more in regulatory costs than do other types of businesses. Before you set up shop, find out what you need to do to comply with national, state and local regulations.
Try: IndustryWeek magazine provides updates and analysis of regulations that affect manufacturers. The U.S. Occupational Health & Saftey Administration spells out safety guidelines for workers. If you have international customers or business partners, consult the National Association of Manufacturers International Standards and Regulatory Policy.

Equip your facility

New technologies are streamlining some processes and making others obsolete. If you aren’t sure what your plant needs, consult with a manufacturing engineer.
Try: Find equipment and supplies at BuyersIndex. Companies that sell engineering and manufacturing systems and services are listed on GlobalSpec. For strictly local suppliers of new and used equipment, consult an online directory such as SuperPages.com. Locate a manufacturing or industrial engineering consultant through an online service such as eWorkMarkets.

Hire a sales rep

If you can’t afford to hire a sales staff to contact and service your customers, consider contracting with independent sales reps.
Try: Check out the classified ads in Agency Sales Magazine for manufacturing agents who are looking for lines to represent.

Market your products and services

Promote your company on the Web and elsewhere by spotlighting the benefits you deliver to customers.
Try: Develop an appealing Web site with the help of a design firm such as Carazin Web Group , which has experience working with industrial companies. At B2B Online you’ll find links to business-to- business marketing resources, including a directory of advertising and public relations agencies and search engine optimization firms. Attend trade shows to connect with suppliers and customers. Get the scoop on tradeshows that serve your markets at BizTradehows. If you’re an outsourcer, make it easy for inventors to find you. List your company on ThomasNet.com, WebsterOnline.com and MacRaesBlueBook.com.

Hire skilled workers

Casting a wide net will improve your chances of landing the talent you need.
Try: Look for qualified workers by posting jobs and searching resumes on multiple Web sites such as iHireManufacturing, ManufacturingJobs.com and Career Builder.

Keep up with issues and trends

Nanotechnology and international trade may not affect how you do business today, but stay tuned. You can’t remain competitive unless you keep pace with the many forces that impact manufacturing.
Try: Manufacturing.net provides daily updates on matters that affect manufacturers. IndustryWeek’s Manufacturing 101 department examines the issues and provides resources such as a glossary of manufacturing terms.

• Protect your intellectual property. Ask contractors to sign a non-disclosure agreement. Also, don’t allow camera phones in the areas of your plant where proprietary processes or other sensitive information could be photographed.
• One way to reduce inventory costs is to conduct a make-or-buy study of costly parts. You might find that manufacturing some parts in-house would be more cost-effective than purchasing them.
• When looking for a facility, consider the location. Is it close enough to major highways for deliveries to get in and out with minimal headaches? Can workers conveniently access public transportation?