Tips on Starting a Factory

Manufacturing is an essential part of a developing economy. And with more and more Americans starting businesses it has become even more important to make early stage product development and production accessible locally. Creating a manufacturing company is no easy task, it takes a lot of capital, expertise, and strategy to become successful – but it can be done. We talked to 2 experts, Irene from Cross Country Box and Greg from International Sublimation, in the industry for some tips to get started on the right foot.

Coming Up With a Name

This is one of the most important decisions you will make in your early stage planning. Your name is how your customers will identify you and distinguish you in your market.  Make sure your business name is memorable, available, and describes or hints to the services your business offers. Lastly, be sure to test it – ask people what they think of it before you even explain what your business is.

How did you come up with your factory name?

Irene: “We wanted to express what we do and how wide we wanted to be able to service, so we knew we needed to put the word Box into our name and express that we go across the whole country, hence Cross Country Box Company!”

Greg: “We wanted a pretty self descriptive name (it was the 90s) and at the time we were designing concepts for different product categories.”

Legal and Logistics

US Small Business Administration offers a list of resources for starting a manufacturing company. Unlike starting an apparel or tech company, there are many safety regulation to be aware of. Greg and Irene recommended leaving the legal business to the experts:

Irene: “We got a good business lawyer and a good business accountant.”

Greg: “Registered in the state of CA as LLC and hired a lawyer to draft our operating agreement and Service Agreement.”

Launching

After solidifying your business plan and some initial logistics, you’ll be thinking about marketing and sales. As a entrepreneur, hustle and being your best sales rep is going to be essential.

How did you initially market your factory and how do you market it today?

Irene: “Phone calls, reaching out directly to targeted companies, and professional directories then and now play a big part of our marketing, but we have added new directories like Maker’s Row. We use to send mailings out, now email blasts have taken the place of the post office.”

Greg: “Word of mouth never goes out of style, no matter what way that word goes out. We were one of the first factories to offer services online, so besides the recommendations we often get from clients, our marketing has evolved from a simple one page website to a searchable website with price calculator for development and pre-production services.”

Now with an established business, referrals and leads come from two main platforms. Irene shared that a lot of her new clients ‘just go on the internet, google the keywords that matter to them, and find us’ but ‘directories on line like Maker’s Row, play a big part as well. Greg was able to identify a clear divide: 60% client recommendation, 40% find our website.

Pricing

Your pricing is going to be determined by your costs. And in the beginning your costs will be high. Greg recommends to find a niche or specialty because starting a manufacturing business in this day and age would take a large amount of capital.  Profitable Venture released a list of 50 Small Scale Manufacturing Business Ideas to consider.

How did you determine your pricing?

Irene: “You need to know your costs, what the market is, and what profit margin you want. In the end, it is just math.”

Greg: “Experience!… I’ve been in the industry for 25+ years, so I know how long it takes to draft a pattern, cut and sew a sample and for production we run a time cost analysis based on the sample approved.”

Most Importantly!

This is not an exhaustive explanation on starting a factory from idea to launch, but an effort to help you better navigate the process. We recommend getting a mentor, partner with experience, or joining a professional organization for individualized help. Irene and Greg gave so much advice but want to make sure the essentials were known.

What are the most important thing to know when starting up?

Irene: “The location you pick and accounting for all costs and then some are both very important. Are you choosing a location where you will able to find a good workforce? Are there are any economical advantages to being in that particular area? Is there easy access to major highways, enough parking and a decent docking area for deliveries and loading? Are there safety features, like a fire sprinkler system, fire alarm system, etc.? When you lease, who is responsible for heating/air conditioning, lights, etc.? If it is you, be sure you do your due diligence on what those costs are going to be. Be sure there is good lighting and plan carefully to use the lighting and the most efficient arrangement possible for your machines before you bring them in. Plan it all out, to scale, on paper first.”

Greg: “Gain enough experience in every area of owning a factory to understand what is required for each position and be able to make good hiring decisions as you grow. Have a realistic understanding of your limitations and don’t try to be all things to all people.”

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