Last updated on May 29th, 2018
Manufacturing is an important mainstay of business and it can cost a lot to set up manufacturing business that builds physical products. But, if this is done correctly, there is a higher financial reward at the end.
Most small-scale business owners don’t have the right approach towards the manufacturing process. If you are about to start a small manufacturing business with low investment, then below are some secrets of having a successful small manufacturing business with low investment and to have a higher profit.
Here are my 10+ Secrets of Small Manufacturing Business with Low Investment.
Grab a cup of coffee and enjoy.
#1 Mix with the right people
Manufacturing is a type of industry where you don’t want to “do it alone.” It is therefore important to have a strong network that will help your business grow. As we all know, networking helps us to improve the things we do and discover new sales leads. Networking and meeting the right group of people also allows you to create a support system for your business. For example, you could get help from third parties if you’re trying to break into a new market. One big resource you can add to your support network is your local Chamber of Commerce. You can also take your networking to the web to be a successful small manufacturing business with low investment owner.
#2 it’s all about the location
The location is one of the hidden secret to success if you are starting out in the manufacturing industry. The location of your small manufacturing business line is important to the success of your business. You need to find a location that offers excellent transport links and it should have good road networks accessible by vehicles of all sizes. You may, otherwise find it difficult to transport finished products to your customers. It should also be in an area easily accessible by your staff as your employees will like to travel by car or public transport to your industry.
Example is running a restaurant without having a car park in front of your restaurant. You will lose most of your customers to those who have.
#3 Embrace technology on the factory floor
It is a wide known fact that technology plays a vital role in the success of any business most especially manufacturing business. A manufacturing business owner must embrace the latest tech innovations; this will make the business to be leaner and more efficient. It will also grow at a more rapid pace. You can, however, embrace all kinds of technology in your manufacturing business.
The use of technology will help improve efficiency in your manufacturing business organization. Technology can help to monitor the work progress on the factory floor. Automation is an example of such technology as robots can help carry out repetitive tasks to almost military precision. This will help increase productivity and lower costs. Though you may have a small manufacturing business with low investment, you need to embrace technology to be successful.
#4 Don’t start manufacturing in the wrong factory
Many feel they can squeeze in all of their employees and equipment into a small building. We all know that doing so is both risky and dangerous. You should understand and consider the logistics of your operation before you establish a manufacturing business. Is it possible to construct new buildings on the same land? What extra space do you need for future expansion? And how much floor space do you need? These are some of the questions you need to think through before selecting a factory. Else, you could end up making an expensive mistake!
#5 Have the right team at your disposal
When you hire people, they will either make or break your business (depending on the type of people you hire). You should pay attention to the staff you hire if you don’t want to break your business. Make sure you know how passionate those people are about working for your firm even before the interview process! Hiring the wrong people to work at your factory should be the last thing to do. This is because it is expensive to keep hiring new staff to fill roles. Being a small manufacturing business doesn’t mean that you can do it alone, you will have to hire helping hands to be a successful small manufacturing business with low investment.
#6 Make sure you’ve got a solid business plan
Make sure you have a decent business plan in place even before you start making things. Business plans are not only to attract investors or borrowing money, it is the roadmap for your company. This is because the business plan outlines what your vision is for the business and it will show you how to get there and how soon you will get there. Always get back at your business plan if you find out that your focus is shifting. It will show you whether that shift is a good idea or not.
#7 Ask an expert
It is recommended that you have a good advisor to help you understand the risk and select insurance to protect you against that risk. Olmstead once said that “The world of commercial insurance can be somewhat complex.” To get the broadest selection of policies and coverages, it’s best to consult a licensed insurance agent and an agent who represents multiple carriers.
#8 Think about the types of risks you’ll be exposed to
You should learn about different types of risks attached to the business such as property loss. This include the loss of the building or business property such as machinery, equipment, stock and computers. Perils to property include fire, flood and the like.
#9 Carefully consider your liability
An example of this is that customers or other third parties might sue the business for property damage or injury caused by the business. Umbrella liability policies are one common solution to this risk. You can contact an expert advisor to help you on this and also help you tailor liability coverage to fit your circumstances. Another area of potential liability is injury to employees. To annul this, you can go for workers’ compensation insurance. There are some other risks and this depends on the business you are getting into. For example, there may be potential liability on a restaurant that serves alcohol if one of their customers is involved in an accident after leaving the restaurant.
#10 Wait until you have some operating account before you approach banks
Before a bank can decide to work with a new business, they will make sure the business is having sales. Start with a revolving line of credit, then pay back and earn the trust of the bankers until you qualify for larger loan.
#11 Be realistic when making projections
One of the frequent errors made by business owners when writing business plans is underestimating of expenses and over-estimating of revenue. You can improve your revenue by narrowing down your target market to a realistic niche and then interpret expenses and revenue in terms of the market. Start by the identification of potential customers and cut off those who aren’t ready to buy.
#12 Pay special attention to marketing
The first thing is to develop your goals and secondly, do a market analysis which include researching competition, identifying target market and assessing market trends. You can then prepare a market strategy which include promotions, press release, networking, approaches to sale, customer service, community building, among other marketing tools and channels. Develop plans to implement that marketing strategy and also include benchmarks.
If you are trying to start a small manufacturing business with low investment, then you should plan as if you have a large investment and stick to the secrets above to be successful. When managed well, your small business will surely become a large manufacturing business with a large investment.
Do you have others secrets to running your manufacturing business which is not listed above? Please share by commenting on this post. Your contribution is greatly appreciated.