3 Small Business Manufacturing Tips

By Pedro Hernandez | Posted January 07, 2013

What started as a doodle spawned your next big idea, and you've turned it into a functional prototype. It's a great milestone, but it won't help your bottom line until consumers can order the product on Amazon. How do you get your product made?

For many small businesses, getting their goods into the hands of shoppers means delving into the world of contract manufacturing. It's typically the most cost effective way of producing things like electronic gadgets, toys and household items in volume.

After all, someone else built and staffed the factory so that you don't have to. All you have to do is sign on the dotted line and pay up. If only it were so easy.

Let's get started. Here are some tips to help you find the best deal in manufacturing for your small business or startup.

Small Business Manufacturing Tips

1. U.S.A. or Overseas?

Generally, you'll get a better bargain if you contract overseas -- Asia typically -- for the types of low-margin, mass-produced goods that you see in stores like your local Target or Walmart. Simply put, labor costs are so low and the competition is so fierce that even the cost of shipping your product from half a world away makes it worthwhile.

But don't count out the United States. If you specialize in niche products, high-end accessories or even clothing, you could be better off contracting with local manufacturers. The efficiencies of staying local, like rock-bottom shipping costs, local service and support, and even the ability to take a short plane ride to visit the manufacturer could tilt the economics in your favor.

2. Start with the Internet, End up a Pro

Unsurprisingly, contract manufacturers have an online presence, even some remote marketplaces. It's hard not to be wowed by the products that they can pump out at such low cost.

AlibabaThomasNet and Global Sources are some popular examples of contract manufacturers. A quick Google search yields a staggering number of results. However, most experts warn not to base your decisions on the Internet alone -- a lesson that applies to many facets of life, come to think of it.

Network with friends and colleagues, seek testimonials and advice, and engage your local small business associations and solicit their feedback. Perform a thorough evaluation of agents, representatives, companies and manufacturing facilities.

You improve your chances of finding the right fit by narrowing your search to firms that have earned a reputation for delivering quality products, especially of the type that you'll be selling.

Yes, it requires some legwork, but many a road to financial ruin is paved with suppliers that failed to live up to the pretty pixels and tempting terms that litter their websites. Seek value, but don't let those jaw-dropping prices alone guide your decision.

3. Dueling Quotes

Two (or more) enter, one leaves. In other words, narrow your choices and request quotes. It's a tried-and-true method of getting the best terms in all types of business transactions. Make it work for you.

Mind you, as a small business you don't command the buying leverage of Apple, for example. But don't let that dissuade you. Cutthroat competition means that many manufacturers give small companies the big-business treatment.

And remember -- let them earn your business on your terms.

Pedro Hernandez is a contributing editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @ecoINSITE.

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