7 Tips to Start Small Scale Manufacturing in 2021

While many industries are struggling in light of the Coronavirus pandemic, some have proven to be pandemic-proof. Many aspiring entrepreneurs are looking for avenues into these industries to secure employment and take control of their futures. 

Small manufacturers, designers, and producers are just a few of the areas of opportunity in the new world. Here are seven simple tips for starting a small-scale manufacturing operation in 2021. 

1. Validate the Idea

One of the key steps in starting any business is to validate the idea. Start by reviewing secondary research online to determine the nuances of the industry, what you might need to get started, and where they need for your services could be. Then, start with some primary research by reaching out to people who would use your service to determine what the baseline needs are and to identify any potential barriers to entry.

It can be beneficial to develop a simple questionnaire to send out to people or to ask through interviews with relevant potential clients and industry partners. This is the best way to see if your small-scale manufacturing business has merit without investing a lot of time or money on expensive equipment and getting set up. Once you validate the idea and understand the opportunity better, move on to developing your business.

2. Create a Business Plan

The next step in developing your small-scale manufacturing business is to create a business plan. This plan will ask you to establish your core mission, outline your target audience, include your research findings, and identify any potential financing requirements you have. This document can also outline your marketing strategy and long-term business goals.

It’s important to note that complex business opportunities require a business plan to outline all the integral steps and nuances of establishing your business. Banks and lenders will want to see a fleshed-out business plan before they agree to finance your operation. As your equipment may require long-term financing or leasing, this is a very important step.

Additionally, incorporating a personal finance app into your business operations can provide real-time financial insights, allowing you to make informed decisions about equipment financing or leasing options based on your current financial status and projections.

3. Figure Out the Legalities

Figuring out the legal aspects of your business generally happens around the same time as the development of your business plan. You’ll want to conduct research about regulatory and compliance within your area and industry to determine what steps you need to take to make your operation legal. The legal aspect of your business could range from in-depth compliance approval to very basic business regulations, depending on your industry and goals.

At this time, you’ll also want to figure out what your business structure will be. For a small-scale manufacturer creating signage and marketing tools with laser cutting for other companies with limited regulatory issues, a simple LLC may be sufficient. For higher-risk industries, you may require further levels of protection to ensure both your personal and business assets are protected. During this phase, you should also look into the various forms of business insurance that you will need to operate your small-scale manufacturing business safely.

If you’re forming an LLC, you need a registered agent who’ll receive legal documents on behalf of your company and ensure you maintain compliance with state requirements. For instance, choosing a reliable registered agent in California will help you handle these responsibilities efficiently if your business is in California.

4. Secure Financing

One of the biggest challenges that small-scale manufacturers face is financing their business. If you require any specialized tools, working space, or other setup requirements for your business, you may require financing. 

There are a few sources of financing for small businesses. You can apply for a loan or line of credit through a local bank or lending service. Alternatively, you can reach out to investors to finance your business for shares in the profit. Finally, you can look into local small business grants to determine if there’s anything your manufacturing company is eligible for.

There are pros and cons to each option. When you secure financing from a bank in the form of a personal loan or a business loan, you will be paying interest over time. However, depending on the situation, you may be able to get a low interest rate on a small business line of credit. The challenge with using investors to finance your business means that you give over partial ownership and don’t have autonomy in driving your business in the direction you want to go. Small business grants are a great opportunity; however, they aren’t always available. 

5. Invest in the Right Tools

Choosing the right tools can make or break a small-scale manufacturing company. Manufacturing requires nuanced and specialized equipment that will vary depending on the nature of your business. Whether you’re looking for a laser cutter, a 3-D printer, or some other highly specialized tool, it’s essential to do the recent research and find the right one for your needs.

Regardless of whether you’re selecting a basic safety locker or an advanced manufacturing machine, take some time to research the different brands and options available to you for your start-up. Determine what tools offer the best value for the money. It’s important to take a frugal (not cheap) approach to choosing the right tools. Find that balance between affordability and durability when setting up your manufacturing process. 

6. Create a Network

When starting a manufacturing business, it’s not just what you know; it’s who you know. The moment you start putting the framework for your business in place, you should start reaching out and building a network of vendors, suppliers, and potential clients.

7. Scale Over Time

Finally, if there’s one piece of advice to keep in mind when starting a small-scale manufacturing company, it’s to start small and scale over time. Don’t increase your supply in manufacturing capacity until demand requires it. By doing so, you’ll save money and create a sustainable business framework.

Conclusion

By starting with in-depth research, finding the right business structure, and prioritizing sustainable growth, you’ll be able to start a profitable small-scale manufacturing business in 2021. 

Written by DesignCrowd on Tuesday, June 1, 2021

DesignCrowd is an online marketplace providing logo, website, print and graphic design services by providing access to freelance graphic designers and design studios around the world.