12 Traps to Avoid When Finding a Manufacturer

Many entrepreneurs seek out manufacturers to get their products to market; here's how to find one

The barriers to entering the market with a new product aren’t as tricky as they used to be. You no longer need to get an International Business degree, learn the language, and make several expensive trips back and forth from the country of the factory to seal the deal. While there is some benefit to meeting with your suppliers and makers face-to-face, the average small start-up might not need to ever leave home.

 

(Image: iStock/monkeybusinessimages)

 

Manufacturing marketplaces are designed to provide most of the info needed to make a wise production decision, provided you don’t make these common mistakes.

1. Not Knowing the Difference Between Companies

Would you know if a company was a manufacturer, just by their web description? You should. There are many trading companies marketing themselves in the same space as true manufacturers. It’s wise to know the signs for each to ensure you are getting a truly personalized product. If a company sells itself as a manufacturer but describes its business as “Import/Export,” for example, then it is likely not a true factory or maker.

2. Not Understanding your Niche

Tech gadget companies are going to have completely different needs than businesses specializing in eco-friendly socks. The best way to get off to a good start is to really read up on manufacturing in your specialty. There will be best practices and guidelines for your product that you’ll want to adhere to, concerning everything from what materials will meet state and federal safety standards, to how many prototypes you will need to provide the manufacturer. Try to find a trade magazine or industry organization that covers your niche, and subscribe for updates specific to your business category.

3. Being Afraid of the Competition

If you’re selling the next best laptop stand, don’t expect the leading office supplies company to give you the name and number of their manufacturer for something that will be a direct competition to their brand. If you’re in a loosely connected niche, however, it’s more than appropriate to give a company a call and inquire about who makes their stuff. In fact, many companies will be more than happy to make a referral, especially if they’ve been working with the manufacturer a long time. There may be a bonus in it for them!

4. Only Thinking Overseas

International manufacturing has opened the doors to many companies who haven’t traditionally met the buy-in requirements for creating a custom product. They can be cheaper and offer more options than domestic partners. This doesn’t mean you should ignore your local options, however. Many U.S.-based manufacturers outsource components or even portions of the assembly, so you may still get the best of both worlds by simply asking around. Additionally, super heavy or custom-made items are still likely to be less logistically challenging when done here in the States.

5. Assuming Web Content is Updated

Manufacturers make stuff, so this is generally their focus. This means that their website may be woefully outdated, lacking their most recent product info, services, or pricing. Likewise, they may have something listed that is no longer available. Don’t ever base your buying decision on web content alone. Be sure you are reaching out directly to a live human for the most up-to-date process, product, and pricing info a manufacturer offers.

6. Not Properly Accounting for Time

You may be thrilled that a company can make your designated widget and have it shipped to you within 4 weeks of order. This should be the minimum expected time to receive your product, however. Communication errors, shipping delays, or even poor product quality are all common reasons that most shipments arrive much later than the contract states. While you may be able to get a discount for the tardiness of your wares, there really is no way to make up for lost time. Always give a generous cushion for unforeseen issues when choosing your manufacturer.

7. Being Ignorant of Cultural Differences

Steve Chou of MyWifeQuitHerJob.com has been in the linen business for years, and has seen first-hand how Chinese manufacturers operate. Because the Chinese people don’t feel comfortable asking for clarification or correcting others, they may not speak up if they aren’t clear on your requests. Likewise, contracts are treated differently in their world; Steve has experienced days spent negotiating and agreeing on pricing and terms only to have things change the very next day. If you’re concerned that cultural issues may prevent you from getting the best deal, speak to someone with industry experience that can help.

8. Going with Your First Choice

There is no reason to commit after only seeing one manufacturer sample. In fact, if you’re not sending out for at least two requests for proposal, you are selling yourself short. There are wide variations in the quality, price, and timeliness of often identical factory offerings. Allow extra time to go through the complete vetting process with two or more vendors to ensure you are choosing the most appropriate partner for your business.

9. Assuming the First Sample is the Final Product

There are very few times more exciting than when you open up the box containing your first manufacturing sample. This is, however, not the time to rest easy. In fact, it’s not a good idea to assume that the sample is 100% representative of the product you’ll be getting in the future. This is the sample designed to get your business and much care has gone into making it. Future shipments should always be checked for strict quality standards, and product should never be shipped out to your customers without inspecting it first.

10. Failing to Listen to Your Customer’s Values

Is your customer base big on organic, BPA-free, recycled materials, or American-made? By truly understanding the values that drive them to purchase, you are in a better position to partner with just the right manufacturer. Just be sure you know what product characteristics are non-negotiables for your customer and choose your vendor accordingly. Many small businesses think they know what these traits are, but have never really asked. A quick customer survey can give insight and help you avoid costly manufacturing mistakes later.

11. Not Checking Your Business Credit

How are you going to pay for your newly-minted wares? This is where credit comes in. Many companies have a minimum order requirement that could put you on the hook for thousands or even tens of thousands of dollars. You will have to pay for at least half of that up front, and the more favorable your business credit profile is, the more likely you can finance the manufacturing with low rates – either directly with the manufacturer or through a line of credit. Waiting until it’s time to place your order is too late to negotiate; get a look at your history at least 6 months before you plan on making a major purchase to give you time to clean up any issues and get back into prime borrowing terms.

12. Not Regularly Doing Quality Checks

Remember that sample we talked about? It doesn’t matter if you’ve been doing business with a manufacturer for 10 years—or 10 days. Your manufacturer can always go through changes, including quality adjustments. Your partnership is tenuous, at best, and it’s wise to do checks on every shipment you receive from them. It’s also not a bad idea to have a second company in mind in the case that your quality suffers too much to be able to salvage the relationship. It sadly happens more often than people expect.

Starting a venture with a new manufacturer can be overwhelming, and there quite a few moving parts that you’ll need to keep track of. By pacing your expectations and being open to communication, however, you’re far less likely to make costly errors. The good news is that, with so many manufacturers available and competing for business, the right one is certainly out there.

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This article originally appeared on Nav.com.