Some companies manufacture and distribute their own products, some companies manufacture under contract the goods that other companies design and distribute, and some companies do both. Regardless of your business model, establishing a manufacturing company requires careful planning and risk management because of the potential for worker injuries, toxic materials spills and product defects.

Plan Your Business

Research in detail the products you intend to manufacture so you will know as much as possible about the raw materials, specialized or hazardous materials, manufacturing processes and the vendors you'll be dealing with.

Research in detail the equipment you will need so you will know as much as possible about purchase price, cost of maintenance, the pros and cons of different models of machinery, installation requirements and which vendors will be the most helpful.

Make sure you know the zoning laws where you intend to locate your business, and develop a good relationship with your local planning commission so you will know whom to call with questions or problems before you make a costly mistake.

Write your business plan, fully describing what you intend to manufacture and how you will market your services or products, and include any information you have about hazardous materials requirements. Forecast your start-up costs, operating costs and expected revenues.

After you know your electrical requirements, zoning requirements for the use and storage of certain materials, building structure requirements and anything else that may affect your choice of location for your manufacturing facility, you are ready to begin working with leasing agents to find a building.

Tip

Take your business plan with you everywhere. Of course you will need to show it to your bank when applying for financing, but you may also need to show it to your prospective landlord, your prospective vendors and service providers such as attorneys and accountants. It is a useful document when recruiting employees, and it can form the basis for your website content and brochures.

Warning

The biggest and most common danger you will face when establishing a manufacturing business is signing a lease and only later discovering the electrical service needs to be changed, the floor must be strengthened, you cannot park your delivery vans on the property overnight or zoning prohibits use of certain materials or processes. Even if you require what appears to be simple electrical or plumbing work you may find yourself waiting six months for the necessary permits to be issued, a certificate of occupancy and inspections to be performed. During this time you may be prohibited from operating your business even though you will be required to pay the lease, insurance and utilities.