Your product design is ready, your prototype works and you want to hit the store shelves as soon as possible. But how?
Manufacturing looks easy on “How it’s made”, whether it’s a Ferrari FF or Jawbreakers, everything sold to consumers has been manufactured to some degree. While things run smoothly in established factories across the world, it doesn’t start out that way.
For a real-world entrepreneurial example, let’s take Pretty Knotty hair ties and look at the important aspects that allowed manufacturing as a bootstrapping startup. As hard as we have tried, you cannot plant a seed and sprout a tin of hair ties. If you know how to do this (and you’re not Edward Norton from The Prestige), hit me up. So, where did we start?
Mind Your Network
The best way to manufacture products is to find connections through networking. Go to local events, check with your uncle who’s always wrenching on Fiats or email your cousin who’s in a product manufacturing company. In our case, local events were very useful to determine what not to do and my contacts in manufacturing were very industry-specific. In other words, although it’s a modern-day trope, most sourcing can be done through Google for those of us who lack the aforementioned connections.
We had to source manufacturers for our custom hair tie design, and suppliers for metal tins for packaging, and three stickers and a thank you card. Most custom manufacturers don’t want to talk to startups, especially boot-strapping startups such as Pretty Knotty. The reasoning is simple, they want steady customers with large orders, so manufacturers can have reliable money to keep the lights on and a schedule that’s as smooth as possible. Because of this, many manufacturers have vetting processes to dissuade startups, such as requiring their business registration information and/or a high minimum order quantity (MOQ).
Mind Your Manufacturing Process
Before wide-scale 3D printing was as prevalent as it is today, I would say you have to wait until a custom manufacturer takes a chance on you before your product can be produced by hand and/or crowdfund to buy a custom injection mold. In the pre-3D printing days, you could also spend a lot of money to get a prototyper to make a one-off model, which probably doesn’t work or even appear to look the way you would like. Good thing that 3D printing is the most viable option for prototyping nowadays.
With 3D Hubs, Makexyz, Stratasys, Protomold and others, you only need a CAD file and a credit card. Solidsmack can easily help you find a free CAD program to suit your need and there are tons of folks to 3D model your product if you don’t want to yourself. A rule of thumb is this: the more complicated the model, the more high-end the printing will have to be. As you may know, the least expensive 3D printing is FDM (fused deposition modeling), where a layer of hot filament is deposited onto (preferably) a heated glass bed. As it gets more and more complicated, one of the most expensive types of 3D printing for plastic, metal, ceramic and other materials is SLS (selective laser sintering), where those layers are built up in a bed of dust zapped by a laser. There are many great guides to making 3D printing friendly parts. And, the community on 3Dhubs or Makexyz is glad to offer tips or edits for models.
After a lot of hustle by Shelly Nicholas, President of Pretty Knotty, we found a custom manufacturer who was willing to take us on as a client. We were unable to make the shape that we wanted at the quality we wanted through 3D printing. So, through our manufacturer, we were able to make our hair ties.
Mind Your Manners
One of the reasons we have a great relationship with our manufacturer is that we were upfront with them at the beginning of our needs. They, in turn, were receptive to what we wanted. If we were not specific or inflated our story to get in the door, I’m sure they wouldn’t work with us. On the other hand, if they had strong-armed us into an unreasonable MOQ, it would be a Pyrrhic victory for them as our business would dry up after the first order–if we even placed an order! In terms of supplier relations, manufacturers are doing a huge favor for you if they make your product, they have much more to lose than you do. Make sure to acknowledge them appropriately.
Our tins and paper were a different story. We searched online for what we wanted, talked to a few vendors and voila, there it was. We had been happy to discover that non-custom shelf packaging supplies are easy to find in almost any shape or size. Paper is also very simple. There are tons of printers that suit your every need, from going to the local Fedex Kinkos to Moo.com to the bespoke products offered on Etsy. But through it all, treat them as part of your company who values success for both and seek those with the same mindset.
Mind Your Inventory
The name of the game with products, packaging and paper is very simple, how many do you need? Our manufacturer would love it if we ordered hundreds of thousands of hair ties (and we are sprinting towards that number), the packaging company would love it if we ordered a pallet of tins and the paper company would love it if we bought umpteen pounds of thank you cards. Our bank account would love it too, as the cost per item goes down as the quantity ordered increased. With the success of bulk product stores like Costco, more always seems better, but this is not always the case.
On Shark Tank, entrepreneurs often complain that they have tens or hundreds of thousands of dollars of inventory gathering dust. Most of the time this is due to the profit margin and/or MOQ they needed to have their product made. Unless you can sell $50,000 of product in a reasonable amount of time and have a reasonable payment from your customers, don’t buy $50,000 of product. Many large retailers pay 30, 60 or even 90 days after delivering products, so you could potentially be $50,000 in the hole for 3 months. This outflow of cash wouldn’t matter to a large company such as Hasbro, but for a startup, all cash flow is critical. As long as you are not losing money, be critically aware of keeping as little money tied up in inventory as possible, This is how you produce a product for sale while bootstrapping your startup
If you are going the route of crowdfunding, this is a different animal altogether. I have some experience battling this beast, however, I want to know more about it before I give advice. If you’re looking for more insight into manufacturing as a startup and how we did it with Pretty Knotty, feel free to hit me up.