How to Start a Small Manufacturing Business

How to Start a Small Manufacturing Business

Manufacturing businesses are usually considered to be more difficult to set up and maintain than customer service business. This is mostly because there are a lot of equipment and space needed in order to establish such a business. Such businesses also tend to take a longer time to start generating a profit because there are more parties involved. However, once you establish a small manufacturing business, it usually forms long-term partnerships within the community and stays lucrative for years regardless of the changes in the economy overall. Here's how to start a small manufacturing business:

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Plan your finance

Before you can start a manufacturing business, you need to make sure that you have the resources needed to get into such a large and complex endeavor. This is mostly done by taking out a loan that can cover the costs of starting and running a business for a few months.

Have in mind that a lot of times, the costs of actually running the day-to-day operations can be higher than those of purchasing the equipment. This is especially the case with manufacturing businesses because there are a lot of disposable materials involved. It’s best to take out a larger loan than you need or to establish a credit line.

Recommended reading: How To Finance Your Startup

Organise a workflow

Workflow patterns in a manufacturing business can be complex and can involve a lot of workers with different skill specialties. That means that there’s much more opportunity for shrinkage and general disorganization which can add up and put a dent in your bottom line.

Simple innovations in your workspace, such as pallet racking and hand-held barcode readers can help with these issues significantly and make the workspace safer and better suited to a variety of employees.

Location, location, location

It’s usually said that the location is the most important facet of a small business when it comes to retail and customer services, because these industries rely on foot traffic and banking institutions nearby. The same is true for a manufacturing business but for a different reason.

Transportation is one of the biggest concerns for a manufacturing business owner because it adds to the price of the products significantly and you need to make sure that your business is located in an area that’s well connected to urban areas, but still far away from them to follow the zoning rules in your city.

Recommended reading: 5 Ways to Reduce Your Business Fleet Running Costs

Start small

When you have enough funding and a system in place, it’s best to start production on a smaller scale than you initially planned. This is a financial setback at first, but it’s also a good way to test your new business and see what needs to be changed and upgraded without losing too much money or time.

It’s best to start with just one production line. That way you’ll produce a smaller amount of units but still be able to monitor the production from start to finish on a smaller scale. In case something goes wrong you can make adjustments before the production becomes too expensive.

Manufacturing businesses can be very lucrative businesses, if set up in a clever and planned way with workflow and organisation to make the company as productive and safe as you possibly can. 

Over to you now. Any other tips for starting a small manufacturing business? Tell us in the comments below. 


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Friday, 19 July 2019
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