Reading news articles this year, you might be under the impression that there is no longer any money in the manufacturing industry. Establishing a startup in this industry might appear to be like running straight into a brick wall. Before you even get started, you’ve already got plenty of problems and issues that you’ll need to deal with. That’s true, but that doesn’t mean a savvy business owner couldn’t make a fortune in this industry. Particularly, if they have a little experience with how things work on this side of the market.
Before we get into that, let’s get one thing clear. There are probably a lot more manufacturers than you realise. You don’t have to own a factory or work in one to be a manufacturer. You just need to produce a product and sell it on to clients who want it on their shop floor. In this sense, anyone creating an original product could be a manufacturer. Whether you’re making original children’s headbands or producing parts for cars. Both sellers would fit into the same category, earning a living in this industry. Now, can both types of business owner still make money in this market? Yes, they can. They just need to avoid the pitfalls that people tend to fall into when setting up a business like this.
1. Heavy Costs
One of the biggest issues that manufacturers face today is a high level of costs. In fact, costs of setting up and running the company can be so expensive; it can be difficult to make any profit. True though this is, there are ways to cut costs right down and make it easy to get the money you deserve.
Your first step is to look for a supplier selling at the right price. You must shop around and make sure you find the best supply chain on the market. If you don’t do this, your high costs are your own fault. The market is flooded with supplies who sell materials for every type of product. If you don’t find the right price, you are immediately ensuring that your bottom line is high.
Next, we’ll think about production costs. The cheapest way to fix production costs is to use automated machinery. Rather than hiring workers or staff to make the product for you, buy the tech. Investing in expensive tech will make your business stronger in the long run. You will avoid the issues and expenses that come with hiring a full team. It is possible these days to run a manufacturing business with one person at the controls. Any other parts of the process can be outsourced.
Outsourcing is another way you can keep your costs under control. Rather than taking on the costs of your company, you can pass them on to another business. In the manufacturing industry, an example would be transportation. You will need to transport your product to shop floors. If you arrange this yourself, you’ll have to hire staff, buy vehicles and the list goes on. Outsource the issue and you just pay one fee to one company. The issue is simplified, and your business is streamlined. You won’t have to worry about heavy expenses making it difficult for you to make a profit. Although, heavy costs aren’t your only problem as a manufacturer.
3. High Levels of Competition
If you’ve taken the above advice, you have already controlled your running costs. That’s a great start, and it will make it easier to keep your business in the green. There is, however, another problem. You’re still going to be facing a lot of competition. Some of these competitors might be able to bring their costs lower than yours. Due to this, they can afford to sell their product at lower prices. In doing so, they could price you out the market entirely. Don’t panic yet though because you have an ace up your sleeve.
A lot of these companies believe in quantity over quality. You should, of course, be focusing on the exact opposite idea. Quality is the name of the game, and there are plenty of ways to make sure you are delivering a superior product to your competitors. Let’s say that you are making steel equipment in your factory. Now, there are countless other businesses across the world making exactly the same item. However, they don’t have a supplier of superior flat washers. Any manufacturer will tell you well-made washers can make all the difference with a product. Particularly, if the parts used by other companies are not the exact right size. As such, just be using the right supplier, you could gain the upper hand. Customers and clients will notice the difference in quality and build.
Since we’re talking about suppliers, there’s another factor you may want to think about as well. You may want to consider the location of your supplier. We know what you’re thinking. In a world where the industry is truly international it doesn’t matter, does it? Well, yes and no. No, because you can get parts no matter where you are. However, the delay in supply and production is sure to be greater. That’s why you should use a local supplier. It’s another way you can gain the upper hand over the competition. While they’re waiting for parts, you can happily sell to their customers.
Of course, if you want to make sure you win against the competition, there is a better way. Just make sure that there is no one to compete against you. You can do this by delivering a specialised product, and there are plenty of different routes to take here. You can sell to a specific client interested in your stock. Having a loyal client like this will always guarantee you have the income needed to keep your business profitable. You can set up as an outsourcing service yourself. Rather than making an entire product you will produce the parts that another company needs and get paid for this service. Doing this, you can guarantee there is always a demand for what you are supplying.
You see, it is still possible to make high levels of profit in the manufacturing industry. Now you know how this business sector works; you should have no problems at all with your startup.