Forging a Good Relationship with a Manufacturer
Like forming any new relationship, figuring out what company is going to manufacture your new product can fill you with enthusiasm and make you feel you’re close enough to your market debut that you can taste it. But hold on: There’s a lot of work to be done once you identify your manufacturing supplier. And if you have hooked up with a company that has experience, savvy, and integrity, and you do things right, your manufacturer can be a great bonus to your own thinking in areas ranging from product-design improvements to line extensions for your brand. Here are three guideposts for getting the most out of this crucial relationship:
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Have a handle on your intellectual property Enter with high expectations. Don’t expect a turnkey solution
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Have a handle on your intellectual property
Before you meet with manufacturers, you need to make sure that they will be able to understand your actual product and its design. It’s vital to helping them figure out whether they can build it for you and how much it will cost them to do so. The more complex your product, the greater the chances are that you’ll actually have to pay someone to make engineering drawings for manufacturers. At the same time, you’ve also got to make sure that you’ve legally protected your design as much as possible through a patent or at least a trademark. Also, submit a non-disclosure agreement (NDA) to each manufacturer that is a serious possibility and to whom you’re going to submit the detailed information about your product. You can use our sample NDA, or have an attorney craft one for you. If a potential supplier won’t sign an NDA, walk away. And because even the best NDA won’t protect you from a manufacturer that is determined to steal your idea, be crafty in your evaluation stage with what information you show to whom.
Enter with high expectations
You should feel a strong sense of partnership with whatever manufacturer is actually making your wares. Ask for references just as you would before hiring any significant business partner; if the manufacturer hesitates to give you any, citing confidentiality arrangements or some other excuse, that’s a red flag. Once you’ve selected a manufacturer, you should be able to obtain a non-compete agreement with them, stating their promise not to manufacture other products that are even vaguely competitive with yours. Tina Aldatz, founder of Foot Petals, a Los Angeles-based startup that retails stylish insoles for women’s shoes, even got her manufacturing supplier to promise not to make any other product in some of the colors that she uses for Foot Petals. For her, such a gesture was just part of the great fit that she felt with her manufacturer. “This company was excited to work with me,” Aldatz says. “They thought Foot Petals was unique and wanted to be a part of it. They even invested at least $10,000 in their own time and people to help me develop the product.”
Don’t expect a turnkey solution
The process of striking a deal with a manufacturer can include many steps-- especially because no one has ever made anything quite like your product before! And you’re going to have to take most of those steps yourself. You’ll probably have to fashion your own prototype, for example, or find someone to do it for you. Local technical-college design departments or commercial design schools might be helpful in that regard; they can make your prototype a student project! “The benefit of this process is that it makes you aware of all the costs that are going to go into each step of manufacturing your product,” says Missy Cohen-Fiffe, founder of Babe Ease, a Pelham, N.H., company that manufactures quilted sanitary products for babies, such as covers for restaurant high-chairs. “You’ll really get a good handle on your pricing!”
Our Bottom Line
If your startup is product-based, a good contract manufacturer can be the single most important business relationship you form in the early going. By protecting your interests and forging a true partnership, you can make sure this relationship is an advantage to your startup rather than a drag.
You’ll probably have to fashion your own prototype, for example, or find someone to do it for you. Local technical-college design departments or commercial design schools might be helpful in that regard; they can make your prototype a student project! “The benefit of this process is that it makes you aware of all the costs that are going to go into each step of manufacturing your product,” says Missy Cohen-Fiffe, founder of Babe Ease, a Pelham, N.H., company that manufactures quilted sanitary products for babies, such as covers for restaurant high-chairs. “You’ll really get a good handle on your pricing!”
Our Bottom Line
If your startup is product-based, a good contract manufacturer can be the single most important business relationship you form in the early going. By protecting your interests and forging a true partnership, you can make sure this relationship is an advantage to your startup rather than a drag.
Source: www.startupnation.com
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