What do I need to start a manufacturing business in a small factory?
I'm curious about how to begin and what I'll need to start a manufacturing business, as well as, the permits or permissions required. Anything helps.
Have a good day and thanks for your support!
All business ventures start with a credible business plan that contains an in-depth market analysis (product, price, promotion, place evaluation), competitive analysis (who is marketing the same or similar products), target market segmentation (who will buy your product and why), product differentiation, geographic reach (local, national, global), sales goals and objectives for at least three years and a breakdown of the direct and overhead costs to realize those sales and produce a targeted net profit.
You need to determine the start-up funding that you require to invest in equipment, tools, space rental, legal fees for incorporation or registration of the company. Above all, you will need help to develop a realistic cash flow projection for the first year to determine the working capital needs and deficits, which will have to be covered by the initial investment.
Once you determine the start-up costs, you have to define where and how you will raise the necessary funding. Banks will normally not support a start-up, so you will have to finance this from your own savings or through loans from friends, relatives, and angel investors. At this stage, you should have enough information from the business plan to decide whether it is worth taking the financial risk and the safety net of a regular job. Remember that 33% of small business start-ups fail within the first two years.
A good place to learn more about entrepreneurship, start-ups and financial planning is to visit https://gsmbizsystem.com, a website dedicated to helping young entrepreneurs as you get better acquainted with what it takes.
I'm not sure what products are you going to manufacture, do you have experience in manufacturing this product? Did you work in manufacturing before as you will need such experiencing to start? Have you done enough research that manufacturing by yourself is actually going to work and be profitable within 1-2 years? Do you have extra enough funding to support this manufacturer as cash flow for the first 2 years?
You need to answer these questions first:
1- Who are your competitors and why customers will buy from you not them? Keep in mind you are a new manufacturer and they are not.
2- How are you going to find your customers?
3- Do you have a business plan for the first 5 years? Is it really feasible?
4- Is it really workable that you are better off starting a manufacturing facility or can you operate as a consultant first with other similar manufacturer and work with them first to see what is working and not working with them first? You could possibly work as an independent contractor for other "what will be your competitors" for now and learn the game and see the problems they are facing and also dig deep in that industry to get more insights if this type of manufacturing is workable or not.
The most important thing in starting new adventure in business is NEVER EVER using your savings, 401k, retirement money or even refinance your house or take a 2nd loan or even dream of getting small business loan or even getting a bank loan, this is best advise you can get from someone who has done it all :).
Ask yourself: if you are REALLY ready to give it all and work 14-16 hours per day and be profitable in 2 years and if after all the work, is this going to be worth it, financially, relationship/family wise...?
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You need a good team. You must also be materially strong. Even if the job fails, you must have a program that can compensate it. You must also be open to planned and innovative.