12 Questions to Ask a Manufacturer (Before You Decide)


CES, Crowdfunding, Product Development

Sourcing may be one of the most exciting pieces of the product development lifecycle. You’ve conceptualized a new design, created prototypes and now have your product ready for manufacturing.

What types of companies do they typically work with?Sourcing, a pivotal aspect of the product development lifecycle, can be nothing short of exhilarating. Once you’ve envisioned a groundbreaking design, crafted prototypes, and reached the stage where your product is poised for production, the search for the right manufacturer begins. This crucial step can undoubtedly determine the fate of your product’s success. Striking the delicate balance between selecting a factory that guarantees top-notch quality and efficiently managing logistical complexities, such as minimum order quantities, timelines, and shipping, poses a formidable challenge in the journey of bringing your creation to life. Adding to the complexity, the task of identifying suitable factories becomes increasingly intricate within today’s interconnected global economy.

In the forthcoming sections, we will delve into the intricacies of sourcing suppliers and pinpointing manufacturers. If you’d like to explore more about the broader realm of product development, you can find valuable insights in our comprehensive guide on [Product Development](insert link here) to help you navigate this intricate process effectively.

Pitfalls of Choosing the Wrong Manufacturer

Choosing the wrong manufacturer can have severe repercussions on your product and business. Firstly, it can lead to a compromised product quality, resulting in defects, malfunctions, or subpar performance. This, in turn, can tarnish your brand’s reputation and credibility, leading to dissatisfied customers and potential legal issues.

Secondly, logistical challenges such as missed deadlines, frequent delays, and inadequate communication can disrupt your supply chain, causing production bottlenecks and increased costs. Moreover, working with an unsuitable manufacturer may force you into unfavorable terms, like high minimum order quantities or unreasonable pricing, impacting your profitability.

Lastly, if your manufacturer is not aligned with your ethical and sustainability standards, it can harm your company’s image in an era where consumers increasingly value socially responsible practices. All these pitfalls can not only impede the success of your current product but also jeopardize your long-term business prospects. Hence, the choice of a manufacturer demands careful consideration and due diligence.

IDENTIFYING MANUFACTURERS TO WORK WITH

Begin by identifying a handful of factories to learn more about. Getting factory referrals is a great place to start. First contact the companies with products similar to your new product, and ask them who they use. This is a great way to learn more about them from the perspective of someone in your same position.

Generally, your goal at this point is to narrow down what you’re looking for, and identify a few manufacturers who fit this description. As you’re identifying factories to further investigate, here are some considerations.

They are interested in sourcing domestically or overseas

Ultimately, the answer to this question really varies; there are pros and cons to each, and it depends on what you’re looking to manufacture. As you’re deciding between foreign and domestic factories, keep in mind that you’ll likely need to balance cost, speed and quality. On top of this, keep in mind your needs; products with assembly will be cheaper overseas since labor rates are lower, but big parts that take up a lot of space in a shipping crate may be cheaper here. You also need to account for shipping and duties.

They have the choice to work with a broker or agent representing the factory in the US or engage directly with the factory

Again, this can vary greatly depending on your needs. If you work with the factory, you may pay less, and you’ll likely be more involved. If you go through a broker or agent, you may be less involved, but you’ll be working through someone who already has an established relationship with the factory. Ultimately it depends on what fits your situation best.

The factory’s capability to handle the specific type of manufacturing you require is a crucial consideration.

This may seem obvious, but get specific in this discovery and identification phase. For instance, just because a factory works with electronics, doesn’t mean they have the capability to manufacture your electronic product – there is a wide range of needs here, so make sure the manufacturers you are interested in meet your needs.

Questions to Ask The Manufacturers

As you progress in your search for the right manufacturer, it’s essential to broaden your perspective beyond the initial considerations. To further refine your selection and ensure compatibility, it’s time to delve deeper into various aspects. At this stage, reaching out to the manufacturers becomes crucial to gather comprehensive information before sending a formal request for quotation (RFQ). As you initiate communication with potential manufacturing partners, consider asking the following questions to help you narrow down your list even further:

What types of companies do they typically work with?

Generally, you’ll want to choose a manufacturer who works with companies similar to yours. For example, if you’re a large company specializing in household appliances, you’ll want a factory who tends to work with large companies specializing in household appliances. If you’re an entrepreneur creating a new tech product, you’ll prefer a factory that typically works with entrepreneurs who are creating a new tech product. Make sure it’s a good fit by looking at who the manufacturer has worked with in the past.

Will they sign an NDA or NNN?

Protecting intellectual property (IP) is paramount, especially when dealing with manufacturers overseas, where IP theft is a prevalent concern. Establishing trust and safeguarding your proprietary information is crucial throughout the manufacturing process. An effective way to do this is by having manufacturers sign a Non-Disclosure Agreement (NDA) or a Non-Compete Non-Disclosure Agreement (NNN) if you’re concerned about potential IP leaks.

An NDA serves as a legal contract that prohibits the manufacturer from disclosing or using your confidential information for their benefit. It’s a critical tool in safeguarding your innovative designs, trade secrets, and processes. If a factory refuses to sign such an agreement, it’s prudent to remove them from your list of potential partners to mitigate the risk of IP theft.

However, it’s essential to recognize that even with an NDA or NNN in place, the risk of IP leaks, especially overseas, still exists. Enforcement of these agreements can be challenging in international jurisdictions, and some unscrupulous entities may attempt to violate them. This is where having a patent filed in your primary market becomes crucial. A patent provides you with legal protection and leverage against both domestic and foreign infringements. It grants you the right to take legal action against any party, including competitors, who unlawfully use, copy, or replicate your patented product or technology.

Additionally, when dealing with overseas manufacturers, it’s essential to be aware of the limitations and options available if your IP is violated. The legal recourse and protection mechanisms can vary widely depending on the jurisdiction. It’s advisable to consult with legal experts who specialize in international IP law to understand your rights and potential courses of action in case of IP theft or competition issues abroad.

In summary, an NDA or NNN is a critical tool for protecting your IP when working with manufacturers, especially overseas. While it provides a layer of defense, having a patent filed in your primary market is essential to strengthen your position and deter potential IP violations. Additionally, understanding the legal landscape and seeking expert advice on international IP protection can further safeguard your intellectual property rights.

Who is responsible for landing this finished product in the U.S.? Who is responsible for shipping the finished product to the U.S.?

If a factory you are interested in doesn’t handle shipping a final product to the U.S., it shouldn’t necessarily be a deal breaker, but keep in mind that you’ll need to line up a shipping company. Consider asking the factory if they have shipping partners they recommend, or do a web search for logistics firms domestically. You may also way to call a port to get leads.

Note: This is where working with a sourcing professional can especially pay off. The sourcing team at Enventys can take care of finding a shipper, getting the products through customs, paying duties and making sure you don’t end up paying fines. Contact us to learn more.

What is their minimum order quantity (MOQ)?

There is no hard and fast number we recommend here, but keep your profit margins in mind. You’ll need to be able to pay for your order regardless of whether you sell all units. It is very common to see price breaks at higher volumes, so it is a good idea to inquire about what volume will trigger a reduction in part cost.

What is their sample pricing?

Most factories will provide a sample of existing products as long as you pay the shipping and customs fees, but make sure you’re comfortable with the manufacturer’s sample pricing structure before settling on them. Note that pricing for a custom product often requires that the customer pay 50-100% for tooling.

What is their turnaround time?

What is your turnaround time, and do you have the capacity to meet tight deadlines? If you require a specific delivery date, it’s crucial to partner with a manufacturer capable of working within your timeframe. Remember to account for shipping in your scheduling considerations. For a first order involving a new product and factory relationship, it’s advisable to build in extra time for potential delays. Additionally, smaller partial shipments can often be airfreighted ahead of boat shipments to expedite the fulfillment of smaller orders or samples.

Furthermore, it’s essential to delve into their capacity and expertise. Ask questions such as, ‘What is your experience in manufacturing my product type and materials?’ and ‘Can you provide references for other products you’ve manufactured?’ Assess how they manage their quality standards, as this directly impacts the final product’s integrity. Lastly, inquire about their labor policies and practices to ensure they align with your ethical considerations and values

What are their payment terms?

Most factories require a down payment of sorts before beginning a preproduction run. Tooling is usually 50% deposit and then 50% on completion. However, if a factory asks for 100% payment up front, this could be a red flag.

How do they handle delays?

Ideally, the factory would be proactive when it comes to avoiding delays and the contract would include a penalty clause you feel comfortable with. However, this can be harder to enforce with vendors overseas. Additionally, if the MOQ is not that big, it can be tough to negotiate a penalty clause.

How do each of these factories compare to each other?

As you’re answering each of these questions, be sure to compare answers from each factory in order to choose the best fit. One factory might have lower sample pricing, but also have a reputation of delays. Another factory might have a low minimum order quantity, but higher prices. It’s important to consider each of these questions individually and holistically as you’re narrowing down your choices.

After you have answers to questions such as these and have identified a handful of factories you feel would be a good fit, you’ll want to begin requesting quotes. As you are comparing quotes, take a deep look at what is included. Are the quotes for the same order quantity? Do the quotes include shipping and other associated fees? If shipping is included, is it for delivery to a port overseas, or delivery to the U.S.? At this point, you should have enough information to source a factory and begin production.

 

In conclusion, the significance of thorough due diligence before selecting a manufacturer cannot be overstated. Your choice can profoundly impact product quality, supply chain efficiency, and even your brand’s reputation. Ensuring that the manufacturer aligns with your needs, standards, and ethical values is paramount for long-term success in the competitive market.

At Enventys, we understand the complexities of sourcing and manufacturing. Our expertise and extensive network of industry connections can greatly assist you in making informed decisions. Whether it’s finding the right manufacturer, managing logistics, or ensuring ethical production practices, our comprehensive services are designed to streamline your product development journey and maximize your chances of achieving success.

Making an appearance on ABC’s Shark Tank can be a great opportunity for companies selling a physical good that need extra capital. Wondering how you can get your product in front of the Sharks and pitch your product to the Sharks like these two companies and many others?

If you’re hoping to get a spot on the show, you’ll need to do the following:

  • Start with a good product
  • Begin selling or pre-selling your product, and make a high amount of presells
  • Pitch your business in an email to the show, or attend an open call
  • Be ready to answer questions about your business and financials

We’ve put together a guide below to help you get started, including how to prepare for a Shark Tank appearance if you are chosen to pitch your product to the Sharks, and what to do if you don’t get a chance to be on the show.

Landing a Spot on Shark Tank

Launch a good product. If you don’t have a good product, you won’t earn a spot on the show – it’s as simple as that. This is more complicated than it seems at face value, though. Start by understanding your target customers, know who they are, what they like and dislike and what pain points you’re trying to ease. As you create your product and improve upon prototypes, make sure you’re consulting your target audience and getting their feedback. Launching on a crowdfunding platform such as Kickstarter or Indiegogo can be especially helpful because it’s a way for you to get your target market involved and help them feel like a part of the process, which results in them rallying around the product and helping make it successful.

Ultimately, to ensure you have a good product that people are actually interested in purchasing, you’ll need to get as much feedback as you can and build up a vocal community who loves your product.

Make a high amount of pre-sales. Investors want to see social proof before they invest their money. This is why pre-sales are important – not only do they reduce risk when it comes to minimum order quantities, but it also proves to investors that people actually want your product.

Once again, crowdfunding on Kickstarter or Indiegogo is extremely beneficial here. A successful project not only gives you social proof, but it also brings you a large quantity of customers who helped create your product and are therefore emotionally invested and want to see it be successful.

Pitch your business in an e-mail or attend an open call. Regardless of which option you choose, you’ll have about one minute to sell your product, so make sure you’re prepared to make a strong statement in a short amount of time. Your pitch needs to be compelling, needs to show off your product well and needs to convince investors why your company is worth their investment of time and money.

To get started, we suggest downloading an application and thinking critically as you go through and answer all the questions.

  • How much money do you need and how much equity are you willing to give up?

  • How can you describe your product or business in great detail in the shortest amount of time? What does it do?

  • What will you do with the funds you receive?

  • How long have you been operating? What stage is your company in?

  • How much money have you invested in the company so far?

  • What are your total lifetime sales?

  • What were your gross and net incomes last year?

  • What are your sales projections?

  • Why do you want to pitch your business to the Sharks?

  • What is your unique selling proposition?

  • How did you come up with your business idea?

  • What are the biggest hurdles you’ve overcome?

Preparing for a Shark Tank Appearance

Once you’re accepted, you’ll have to prepare the pitch and presentation before standing in front of the Sharks. In some ways, this may be where the hard work really begins. Below are a few things to keep in mind as you’re getting yourself and your business ready to be on the show.

Watch and learn. One entrepreneur recommends preparing for a Shark Tank appearance by watching as many episodes as possible, noting tough questions and taking notes on entrepreneurs who perform exceptionally well. The show is filmed live, and you need to be completely prepared for any situation that could arise.

KISS. Keep it simple, stupid. Don’t use abbreviations or jargon in your pitch to the shark. Rather, keep it short, sweet and simple. Use everyday language to describe what the product is, why it will make money, how much you want from the Sharks and how much equity you’re willing to give up.

Your mom doesn’t count. Test your pitch in the real word, with people who aren’t biased. Turn to objective clients, acquaintances or even strangers to see if they’re interested in what you’re selling. Then, after testing your pitch and your product with them, get their feedback. What would make your product better? What would make your pitch more compelling?

Make it interesting. At the end of the day, ratings are what the producers care about. Therefore, make yourself shine. Be quirky, enthusiastic, funny or even weird – just don’t be boring. Regardless of how good your product is, you probably won’t make it onto television if your pitch isn’t compelling and interesting.

Keep it real. Focus on your successes in your pitch, but don’t try to hide your failures. Generally you’ll find more favor in the eyes of the Sharks if you show how you learned from your failures than if you cover up your mistakes. In fact, Daymond John has said that pretending you’ve never seen hard times is the most common mistake he sees from companies on the show.

If You Aren’t Selected

Unfortunately, not everyone who wants to be on the show gets chosen to make an appearance. However, just because you aren’t chosen to be on Shark Tank, doesn’t necessarily mean your product isn’t worth an investment. Keep in mind that the producers are focused on ratings first and foremost; you may have an amazing product that just won’t resonate as well with the show’s audience.

If you don’t make it on the show but still want to make money off your product, consider some or all of the following ways to gain capital:

  • Run a campaign on Kickstarter or Indiegogo. Crowdfunding your product is a great way to gain press coverage, expand your network of early adopters, get to know your market better, gain feedback for improving your product and make enough sales to cover the cost of production. If you’ve already run a campaign but need more exposure, consider crowdfunding a new version of your product or an accessory product.
  • Commercialize your product. Companies like Edison Nation help inventors and product creators connect with some of the leading brands to turn concepts and ideas into a profitable product. If you’re interested in licensing your product to another company or turning it into the season’s biggest “As Seen on TV” hit. You can submit your company here.
  • Use equity crowdfunding to raise capital. If having the capital needed to expand your brand is more important than pre-selling product or licensing your idea to a bigger company, consider running an equity crowdfunding campaign. Equity crowdfunding is an exciting new method to gather smaller investments from both accredited and unaccredited investors, so it may be the ideal way for you to gain both capital and a group of people interested in furthering your company’s success.
Making an appearance on ABC’s Shark Tank can be a great opportunity for companies selling a physical good that need extra capital. Wondering how you can get your product in front of the Sharks and pitch your product to the Sharks like these two companies and many others?

If you’re hoping to get a spot on the show, you’ll need to do the following:

  • Start with a good product
  • Begin selling or pre-selling your product, and make a high amount of presells
  • Pitch your business in an email to the show, or attend an open call
  • Be ready to answer questions about your business and financials

We’ve put together a guide below to help you get started, including how to prepare for a Shark Tank appearance if you are chosen to pitch your product to the Sharks, and what to do if you don’t get a chance to be on the show.

Landing a Spot on Shark Tank

Launch a good product. If you don’t have a good product, you won’t earn a spot on the show – it’s as simple as that. This is more complicated than it seems at face value, though. Start by understanding your target customers, know who they are, what they like and dislike and what pain points you’re trying to ease. As you create your product and improve upon prototypes, make sure you’re consulting your target audience and getting their feedback. Launching on a crowdfunding platform such as Kickstarter or Indiegogo can be especially helpful because it’s a way for you to get your target market involved and help them feel like a part of the process, which results in them rallying around the product and helping make it successful.

Ultimately, to ensure you have a good product that people are actually interested in purchasing, you’ll need to get as much feedback as you can and build up a vocal community who loves your product.

Make a high amount of pre-sales. Investors want to see social proof before they invest their money. This is why pre-sales are important – not only do they reduce risk when it comes to minimum order quantities, but it also proves to investors that people actually want your product.

Once again, crowdfunding on Kickstarter or Indiegogo is extremely beneficial here. A successful project not only gives you social proof, but it also brings you a large quantity of customers who helped create your product and are therefore emotionally invested and want to see it be successful.

Pitch your business in an e-mail or attend an open call. Regardless of which option you choose, you’ll have about one minute to sell your product, so make sure you’re prepared to make a strong statement in a short amount of time. Your pitch needs to be compelling, needs to show off your product well and needs to convince investors why your company is worth their investment of time and money.

To get started, we suggest downloading an application and thinking critically as you go through and answer all the questions.

  • How much money do you need and how much equity are you willing to give up?

  • How can you describe your product or business in great detail in the shortest amount of time? What does it do?

  • What will you do with the funds you receive?

  • How long have you been operating? What stage is your company in?

  • How much money have you invested in the company so far?

  • What are your total lifetime sales?

  • What were your gross and net incomes last year?

  • What are your sales projections?

  • Why do you want to pitch your business to the Sharks?

  • What is your unique selling proposition?

  • How did you come up with your business idea?

  • What are the biggest hurdles you’ve overcome?

Preparing for a Shark Tank Appearance

Once you’re accepted, you’ll have to prepare the pitch and presentation before standing in front of the Sharks. In some ways, this may be where the hard work really begins. Below are a few things to keep in mind as you’re getting yourself and your business ready to be on the show.

Watch and learn. One entrepreneur recommends preparing for a Shark Tank appearance by watching as many episodes as possible, noting tough questions and taking notes on entrepreneurs who perform exceptionally well. The show is filmed live, and you need to be completely prepared for any situation that could arise.

KISS. Keep it simple, stupid. Don’t use abbreviations or jargon in your pitch to the shark. Rather, keep it short, sweet and simple. Use everyday language to describe what the product is, why it will make money, how much you want from the Sharks and how much equity you’re willing to give up.

Your mom doesn’t count. Test your pitch in the real word, with people who aren’t biased. Turn to objective clients, acquaintances or even strangers to see if they’re interested in what you’re selling. Then, after testing your pitch and your product with them, get their feedback. What would make your product better? What would make your pitch more compelling?

Make it interesting. At the end of the day, ratings are what the producers care about. Therefore, make yourself shine. Be quirky, enthusiastic, funny or even weird – just don’t be boring. Regardless of how good your product is, you probably won’t make it onto television if your pitch isn’t compelling and interesting.

Keep it real. Focus on your successes in your pitch, but don’t try to hide your failures. Generally you’ll find more favor in the eyes of the Sharks if you show how you learned from your failures than if you cover up your mistakes. In fact, Daymond John has said that pretending you’ve never seen hard times is the most common mistake he sees from companies on the show.

If You Aren’t Selected

Unfortunately, not everyone who wants to be on the show gets chosen to make an appearance. However, just because you aren’t chosen to be on Shark Tank, doesn’t necessarily mean your product isn’t worth an investment. Keep in mind that the producers are focused on ratings first and foremost; you may have an amazing product that just won’t resonate as well with the show’s audience.

If you don’t make it on the show but still want to make money off your product, consider some or all of the following ways to gain capital:

  • Run a campaign on Kickstarter or Indiegogo. Crowdfunding your product is a great way to gain press coverage, expand your network of early adopters, get to know your market better, gain feedback for improving your product and make enough sales to cover the cost of production. If you’ve already run a campaign but need more exposure, consider crowdfunding a new version of your product or an accessory product.
  • Commercialize your product. Companies like Edison Nation help inventors and product creators connect with some of the leading brands to turn concepts and ideas into a profitable product. If you’re interested in licensing your product to another company or turning it into the season’s biggest “As Seen on TV” hit. You can submit your company here.
  • Use equity crowdfunding to raise capital. If having the capital needed to expand your brand is more important than pre-selling product or licensing your idea to a bigger company, consider running an equity crowdfunding campaign. Equity crowdfunding is an exciting new method to gather smaller investments from both accredited and unaccredited investors, so it may be the ideal way for you to gain both capital and a group of people interested in furthering your company’s success.

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