- Manufacturing is a complex process that you'll need to hire a factory to do.
- By registering a patent, copyrighting your work, or trademarking your name and logo, you can protect your intellectual property.
- Be sure to understand your potential manufacturing partner's proficiency by scrutinizing their experience, technical capabilities and reputation.
- This article is for any small business owner that needs to have their products manufactured but don't know how to find the right partner for the job.
Developing an idea for a product is meaningless if you can't adequately produce it. Properly manufacturing your product requires an understanding of the design, materials and budget. For most businesses trying to turn ideas and prototypes into a tangible product, you'll need the help of a manufacturing facility, especially if you're trying to produce in bulk. Here's what you need to consider as you search for a factory to produce your product.
Preparing for manufacturing
Before you hire a factory and start producing your product, you need to take care of a few beginning steps.
- Market research. Avoid manufacturing the product if customers aren't willing to buy it. Look at competitors in the industry and understand how your product provides additional value to your customers. If you're creating a worse version of a competitor's product, you're unlikely to be successful.
- Licensing. The next step is to decide whether you want to produce and sell the product yourself or license the idea to a company with the means and experience to handle it. Licensing is sort of like renting your idea. The company handles everything – the manufacturing, marketing, distribution – and then pays you royalties based on sales. No upfront investment is required. Many large corporations license ideas, as do designated licensing companies. [For more information about licensing, read this article.]
- Build and test a prototype. If you go the solo route, you'll need a sample or prototype to make sure the product can be made to your specifications in a factory. Opinions from experts vary on how to go about this. You can make your own, if possible. This step may take several iterations and many, many months to complete. Learn more about producing a product and testing it here.
- Protect intellectual property. You might also want to protect your intellectual property. You can register for a patent, copyright your work or buy a trademark.
Your job will be easier if you check those boxes before seeking a factory. Once you find answers to those questions, you're ready to bring your product to life.
Key takeaway: By taking some preliminary measures, you enter negotiations armed with more knowledge about your product and your target market, and you can protect your company against IP infringement.
What risks should you consider when choosing a manufacturer?
When selecting a manufacturing partner as a small business, certainly you want to get your product on the market as soon as is feasible. Yet, it's important to make sure the company you work with reflects your values and goals. The following are some of the potential risks you could face when entering into a manufacturing agreement:
Poor labor practices
If your company espouses that it cares about its employees, you should make sure this value extends to your manufacturing partners. Failing to do so will, if nothing else, pose a PR risk. When choosing a manufacturing partner abroad, find out how well the workers are compensated, how safe their working conditions are, and if they're compliant with existing regulations.
Protect against fraud
Some foreign manufacturers are in countries where corruption is rampant, so it's imperative to do your homework. Ask to look at a potential partner's finances, and request references from their other partners. By seeking out only experienced manufacturing companies and regularly conducting audits, you can vet your partner to see whether they are acting in good faith.
Your company's intellectual property (IP) is important. It's what makes your product unique and sets you apart from your competitors. Unfortunately, there are countless stories of foreign companies improperly using a company's IP. To protect against this, you can do things like using multiple suppliers to source your materials, only trust companies you already have a relationship with, and ensure your legal protections like contracts, patents and trademarks are ironclad.
Consider U.S. factories over foreign factories
Your decision as to whether you manufacture your products in the U.S. or overseas comes down to personal preference, budget, the type of product, and your patience.
If your product can be made in the U.S., you should consider that some audiences respond better to products made wholly in the U.S. In addition to the personal connection to your products, the following benefits can also help you decide:
U.S. manufacturers can accommodate smaller batches.
Another advantage of American factories is that they let you order small batches of a product, whereas overseas factories tend to require large minimum orders, said Tanya Menendez, co-founder and former CMO of Maker's Row and current co-founder of Snowball Wealth.
It's easier to monitor the manufacturing process.
Checking in at your manufacturing plant isn't much of an issue when it's within 100 to 200 miles, but if your plant is on the other side of the world, logistics can prove difficult. This can cause problems if the quality of your good isn't produced to your standards.
"If you have manufacturers outside of the U.S., quality control is definitely something you want to keep an eye on," said Sabrina Hartel, creative director and CEO of Sabrina Hartel Home. "I have known entrepreneurs who had manufacturing facilities in China, and quality control was a constant issue. It's very expensive to visit China every few weeks."
Both U.S. and overseas options come with logistical challenges, said Edward Hertzman, founder of Sourcing Journal. Due to globalization and the number of American factories that have declined he past few decades, it's not always possible to find a U.S. factory that can make the type of product you want, he said.
Research comes first when deciding whether to manufacture in the U.S. or abroad. Look at your customer base and find out if manufacturing exclusively in the U.S. matters to them. You'll also want to research the price and quality of the goods produced at different manufacturing plants that you're considering using. By conducting extensive research, you'll reduce the chances of getting blindsided by a factory that overpromises and underdelivers.
Key takeaway: By manufacturing within the U.S., you can produce your products in smaller quantities, you can monitor the production process, logistics may be less complex, and consumer perception of your brand may be stronger.
Resources for finding a factory
Once you're ready to hire a factory, start with these online sources to find a good match for your product.
- Maker's Row. If you're looking to hire a factory in the U.S., you may want to investigate Marker's Row. Menendez and her business partner launched Maker's Row in 2012 after realizing how difficult it was for clothing makers to find American factories. This service connects you with state-side manufacturers. You can also pay for one-on-one guidance through the manufacturing process.
- Global Sourcing Specialists (GSS). This website can match you with a compatible manufacturer from anywhere in the world. GSS works with startups that need mass production or smaller-scaled manufacturing. This is a great resource if you want to hire a factory overseas.
- Alibaba. Alibaba is another excellent resource if you're looking for factories outside the U.S. You can navigate the website by industry to find a match that's best suited for your business.
- MFG.com. You can use this resource to not only find a factory anywhere in the world, but also to track the progress of your projects, make lists of parts to use with CAD files and more.
- ThomasNet. This service features more than half a million commercial and industrial suppliers. It can not only help find custom manufacturing and fabricating companies, but it can also simplify the process of finding raw materials.
- IndustryNet. Users of IndustryNet gain access to suppliers of more than 11,000 services and products that stretch across the entire supply chain. On this site, you can find a supplier and get a quote.
- JobShop.com. If you're looking for contract manufacturers and skilled craftsmen based out of North America, JobShop is a good source. The site claims to have more than 2,100 contract manufacturers and more than 300,000 skilled craftsmen to search from.
What to look for in a factory
According to the experts we interviewed, when choosing a factory to partner with, you should look for the following attributes:
- Demonstration of knowledge and experience. You want a factory that answers all your questions and guides you through the process. If you're making a food product, can the factory recommend a good food chemist? For clothing, can it offer advice on the sourcing of materials?
- Technical capabilities. The factory should already be producing goods or products that are very similar to your own. This ensures that they understand your market and what it takes to succeed.
- Reputation. Does the factory do work for major brands or retailers? Does it have any sort of regulatory fines or infractions? If it's overseas, what are its labor policies, and how high is the turnover rate? It's paramount to find a factory you can trust.
Marco Perry, founder of strategy, design and engineering firm Pensa, advised looking for a factory that not only has the tools you need, but also operates as a partner to help you make a great product.
"More often than not, the factory is going to assist in many other aspects of production than just making and assembling parts," said Perry, who has more than 20 years of experience as an inventor. "For that reason, as much as possible, you should look for a factory that makes products in the same category. General-purpose factories are not as knowledgeable in the nuances of what makes a product great."
Questions to ask a potential partner
Because so much can go wrong, the vetting process is crucial when you're choosing a factory. Here are some important questions to ask:
- What kind of experience do you have in this industry?
- Who are the clients you're currently working for?
- What is the turnaround time to produce my product?
- What are your minimum order requirements?
- Can you provide recent proof of inspections or third-party audits?
- Do you subcontract work to other factories, or is all the work done in-house?
- What are my payment options? Is a deposit required?
- Do you make materials in-house or outsource?
- Can you handle the sourcing of materials, or do I need to provide my own?
With as much value as you place on your products, it's vital that you find a good manufacturing facility. Doing your research and vetting potential manufacturers to find the facility that's right for you leads to a better finished product.
Additional reporting by Andrew Martins, Jill Bowers and Ashley Smith. Some source interviews were conducted for a previous version of this article.