A Comprehensive Guide on How to Start a Manufacturing Business

how to start a manufacturing business manufacture products

The manufacturing sector made up only 11% of America's GDP in the second quarter of 2019. While this statistic shows a dwindling trend in the industry's contribution to the national economy, manufacturing is still a significant economic driver.  

Today, they're over 569,902 large, medium and small-sized manufacturing businesses in the United States. These numbers are, however, still insignificant considering the existing skills gap in the sector. Are you looking to start a manufacturing business soon?

This might be a perfect time to venture in, given the current push to buy American. The manufacturing sector is at the core of the American economy with an evergreen market. As such, venturing into the industry presents guaranteed growth revenue-wise.

Are you raring to dive into the manufacturing business? This comprehensive guide provides a blueprint for navigating your way into one of America's top sectors.


Do Your Homework

While the manufacturing sector is rewarding, it can also be frustrating if you venture in blindly. Research is essential when trying out any startup business. If you don't understand the market, you won't conceptualize the dynamics in the sector.

It would be useful to consider diverse research on the competition, gaps, and customers in the market. What value will you be adding to the market that will differentiate you? What subsector in the industry will you be focusing on?

Such questions help you conduct a comprehensive review of the industry before taking a deep dive to start a manufacturing business.  Your research will provide the information you might need to make critical decisions. Trade journals and exhibitions might be a perfect place to begin your research.


Location Is King 

Location is one of the most important considerations before you start a manufacturing business. Your decision might need to capture a link between the market, the raw materials, and the production process. Before settling for a location for your manufacturing business, it would be wise to consider the inherent infrastructure.

You also need to ensure that there's easy access to raw materials to ease the production process. Finally, the distribution channel right into the market should be flawless. This will ensure consistency and efficiency in the business.

Further, consider the restrictions related to residential areas before selecting the best location for your manufacturing company.  You might be working on a budget, but don't compromise your choice of the location at all costs.


Consider Laws and Regulations

The legal process, when starting a manufacturing business, is complicated. You might need to consider creating an LLC or corporation to ensure that your business is a separate legal entity. You should then register your business and apply for the requisite federal tax and the state tax numbers.

Your next task is to get the required business permits and licenses. The laws and regulations differ depending on the state. However, it would be best to have a general business operation permit when starting a manufacturing business.  It would help to apply a zoning and land use permit for your manufacturing endeavor.

Most states require individual health and fire department permits before you commence operations. All these licenses and permits are critical to ensure that you run your business without any legal concerns.

You need to be aware of other laws such as the P65 warning Act under the Office of Environmental Health Hazard Assessment. Such laws often determine your company’s compliance with the set-out conditions for operation. Please read here for more on the P65 warning. 


Capital 

This is often one of the major concerns when starting a manufacturing business. The manufacturing business venture is capital intensive, considering the need to cater to the production process. Whether you opt to set up your production factory or outsource these services, you might still need to consider the cost implications.

When starting your manufacturing company, the cost burden includes the fixed expenses such as the purchase of machinery.  You might also need to consider other recurrent costs.

Drawing up a budget of the capital needed will ensure that you understand what's required when you finally venture out. The good thing with manufacturing is that you can opt to outsource certain services at the initial stages of operations.


Build a Team Before You Start a Manufacturing Business  

The process of manufacturing is complex and engaging. You'll not successfully meet the demand unless you have a team of dedicated staff. Production is a team effort that starts right from sourcing for raw materials until the delivery of the finished products in the market.

It would help to incorporate a team of highly skilled employees. Most manufacturing businesses fail right from the hiring stage. You might need to take your time with the hiring process to ensure that you get the best in the market. Ultimately, the quality of production depends on the experience and qualifications of your team. 


Focus on Quality Control 

Unless you're venturing into a virgin subsector, which is rare, you'll compete with established companies with years of experience. The only way to beat the competition is to ensure quality control. You might need to put in place quality measures before starting the manufacturing business to ensure that you have a set standard of operations. 

Achieving the highest levels of quality control might require the acquisition of high-tech machinery. You might also need to consider all the set quality control standards by the relevant authorities. Quality can be a vital differentiation factor for your business. 


Adopt a Business Model

Now that you have made all the necessary plans towards venturing out, the last thing in your mind should be a business model. You might need to assess most of the existing manufacturing businesses and their business models. Consider your competitor's market mix, sources of revenue, and customer base.  

Adopting a business model provides not only direction for your business, but also an opportunity for modification. Your business model can also help guide your future decisions on strategic partnerships. 


Start Your Manufacturing Business Now 

The manufacturing industry is one of the evergreen economic sectors with rewarding results.  Do you want to start a manufacturing business soon? You might need to consider a few issues, including location, financing, legislation, staffing, and quality control. 

Once you understand the manufacturing sector's operational environment, you only need to consider the laws and regulatory context such as the P65 warning, and you'll be good to go. With this guide, your desire to start a manufacturing business is viable. 

Was this article on manufacturing startups useful? You can read more on bootstrapping manufacturing startups with a broad range of content on starting a business from scratch in our subsequent blogs.

Bootstrap Business Blog Newest Posts From Mike Schiemer, Partners, & Blog Outreach Services