Business Start-UpGuide to starting a business to manufacture, distribute and sell your idea.
So you want to start a business to sell your great idea. Well there are lots of things to consider and this article only scratches the surface.
Commitment and motivation are vital, as is planning. Without a good business plan you could struggle to make a go of it.
There are many issues to think about:
- Where can it operate?
- Will I need premises?
- Do I need people to make it happen, or will I be going it alone for some time?
- Can I fund the business myself, or do I need financial support?
- How long will it take to get the business into profit?
- Have I got what it takes to make it work?
INITIAL ORDER - We suggest that before thinking about setting up a business, it is best to confirm at least one large order for your product. So get a professional standard presentation of your idea, see our section on product design, and take it to as many companies as possible until you have an order in writing for ideally at least one thousand. This should help give you the confidence to think about starting the company and getting the idea manufactured.
COSTS - You need to consider the costs to get the idea to the point of manufacture and also the cost of each product after that.
To get the idea to the point of manufacture you are going need a prototype. See our section on prototyping. Once you have a prototype you can use this to get rough costings from manufacturing companies for tooling. They will need to know how many you are likely to produce so have a quantity in mind. This might well be the quantity that you already have an order for. You may well need a design for manufacture stage after the initial prototype and this may involve a second pre-production prototype. If your product involves electronics then you will need to budget for the electronics development. The next cost is tooling if your idea is going to require a tool to make it.
TOOLING - Depending on your idea and how it is going to be made, you may well need to budget for tooling. Fabric products generally involve very little tooling cost but anything that is cast or moulded will require a substantial tooling budget. For example, if your product an small plastic widget then you will need to budget for a steel mould tool to make the product. Tooling is generally thousands of pounds depending on complexity and number of parts required.
UNIT COST - It may well be that the initial prototype can be used to get rough unit costs from manufacturers. They will want to know how many of your product you want to produce. Generally speaking the more you order, the lower the unit cost. A pre production prototype will be more developed and will give more accurate costings. Ideally the CAD files will need to be sent to the manufacturer along with engineering drawings with overall dimensions.
QUOTES - We suggest you get three quotes minimum. One of these should probably be a local company, one should be from a far east manufacturer, and one potentially from eastern Europe. A local company gives you the advantage of being able to keep an eye on the process, a far east quote will show potential cost savings even if this is only used at a later date and an eastern european quote is a balance between the two.
Remember to budget for assembly, packaging and delivery unless the company who have ordered already can provide that stage of the process. Assembly, packaging and delivery are likely to be relatively minor costs compared with the price of manufacturing your idea.
Write a Business Plan
Once you have prices from manufacturers detailing the unit cost and also your main product manufacturing costs it is time to write your business plan. There is a particularly good guide to writing a business plan here: Business Link: Preparing a Business Plan
Finally - Keep at it! Starting a business can be an expensive and time consuming process but focus on the goal of having a product you have thought of for sale in the shops.
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