I have been talking to quite a few small business inventors lastly, and the most common question that keeps coming up is how to find a manufacturer for your small business product. Most of the business owners in my network use foreign manufacturers, so that is where my advice is centered. Here are some tips I have gathered from interviewing a few successful entrepreneurs about small business manufacturing. They all made a few universal comments: Look for word of mouth recommendations from other small business owners. There are US companies who specialize in sourcing foreign manufacturers. Try to have a prototype built in the U.S. With a foreign manufacturer, you always want approaching them with a prototype.
Work directly with the factory. Try to remove the middleman. Working with an agent, representative or distributor is really a bad idea. Those people make 5%-40%, and it will slow down the decision making time and increase pricing. Keep in mind, you need to have certain dollar amount and quantity volumes to work directly with the factory as a house account. Factories are interested in producing 10,000 items at one time and not 300 pieces a month. They will try to push you to use a broker if your quantity is too small.
You must be prepared to be the problem solver. If there is a problem, the small business owner has to come up with a solution. All factories do is to make the products based on a pattern that is provided. It’s ok to send someone to the factory to get it right. A hands-on approach could be the best and only solution.
Do you homework on your manufacturing partner. Ask for client references and check them. Ask them for banking references as well.
Have someone on the ground doing quality control: You must have someone inspecting your merchandise! Make sure that damaged goods or incorrect items are not shipped to the you.
5 Key questions to ask a prospective manufacturer:
Can the manufacturer deliver on your timeline? You want to know up front that they have the capacity to produce your product.
What are the payment terms? How will they take the order, what percentage do they need up front? Who responsible for the banking fees? Many manufacturers require 30% down and full payment before shipment.
What are their quality control policies? You want to know what are their policies for quality control inspections, and need to understand a policy about returns.
Where is their factory located? You need to travel to see the factory in person.
Who is going to warehouse the goods? You need to know if the manufacturer will store finished goods or if you have to have a warehousing facility.
Partnering with a foreign manufacturer could cut costs significantly in your small business. Just be clear about your expectations, and make sure that you provide examples of everything you want them to do, and how you need the finished product.
Do you have any other tips for finding a manufacturer?
Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.