Every entrepreneur is passionate about their idea. The key for many is finding a manufacturer who shares that passion and has the ability to successfully bring a new product to life.
Startups face unique challenges when it comes to finding a manufacturing partner who can meet their needs. And, when the stakes are high, it’s that much more important to be informed. Our aim is to help startup entrepreneurs understand the process of engaging with a manufacturer, the considerations and trade-offs involved, and the associated risks.
Varying Levels of Engagement
A manufacturer should be willing and able to truly engage with a startup during the early stages of development. As anyone who’s worked tirelessly to bring a product to market will tell you, the more engagement in that regard the better. The level of attention startups receive, however, can vary wildly.
Finding a manufacturer is not difficult. But finding one with an engineering staff who will engage with and support your new business is another story.
An experienced partner with a focus on Design for Manufacturing and Assembly (DFMA) practices should be ready to work closely with your startup to see that product components are designed for optimal manufacture and assembly. If components do not meet these standards, the manufacturer should be expected to proactively bring forward design solutions to ensure they do.
Startups benefit greatly from the expertise of their manufacturing partners, so working with someone who shares your expectations about the collaborative process is key. In some cases a contract manufacturer may also be able to connect you with others who have significant experienced getting businesses off the ground, bringing products to market, and other efforts that require significant business acumen.
A proven track record of helping provide strategic manufacturing insights, and open communication about these expectations prior to signing an agreement, will go a long way.
U.S. or Abroad
It will come as no surprise that choosing a manufacturer at home or abroad is one of the most important early decisions a new business will make. What sometimes catches startups by surprise, however, is the weight that, in hindsight, many wish they would have given considerations other than price.
Price is of course always a factor, and for some businesses working with an overseas partner is successful. That said, new businesses sometimes fail to take the long-view when considering the many trade-offs associated with this decision.
One of the first things to consider is time to market. A startup looking to take a product to market quickly might face challenges when working with an overseas manufacturer. This is especially important from the point of view of a startup, where design and other changes can be expected, and should be accounted for.
Knowledge transfer between your team and the manufacturer is another consideration when looking at companies is the U.S. and abroad. With a close partnership from prototype to launch, important issues can be brought forward prior to scaling. This again is where, in most cases, close proximity and agility are a benefit.
As a whole, overseas manufacturers also tend to be larger, which can bring about some challenges startups should be aware of.
Large or Small Manufacturing Partner
Working with a large organization can be a strength for some established businesses seeking cost reductions at scale, with production runs large enough to get a big manufacturer’s attention. However, if you are looking for a partner who is nimble, can provide design and other insights based on years of experience, and essentially will work with you as an extensions of your business, a smaller partner can provide important benefits.
Initially many startups find comfort, and perhaps even a bit of perceived legitimacy, in working with a large manufacturer. However, the results can be spotty. Large manufacturers can be less flexible and, frankly, more bureaucratic, than a startup might like. As bureaucracy is never attractive or beneficial for a fast-moving startup, this aspect of the business-manufacturer relationship should be fully vetted during the decision making process.
A larger manufacturer may also farm out individual product components. Needless to say, the disconnect between the business, the manufacturer, and the manufacturer’s subcontractors, can be problematic. Instead of working directly with a team that understands your product, and is committed to its success, this diffuse approach can bring about communication and quality challenges.
Many startups instead choose to inquire about smaller partners’ ability to provide coaching and guidance. That type of collaboration can prevent communication headaches and quality issues, and bring forward insights that inform future product launches.
Finding the “Sweet Spot”
For most startups, the goal, ultimately, is to find a manufacturer who is in the “sweet spot.” This means finding a partner who is not so large as to be unable to give the business the attention they need, but not so small as to lack the full breadth of necessary skills and expertise.
In short, you should seek a manufacturing partner you can work with directly, who is easy to communicate with, who has a full range of skills to help launch your product, and who has the ability and agility to make changes when necessary.