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Hidden Costs New Manufacturers Must Consider

As an entrepreneur, you’ll want to consider all the options on the table when it comes to launching new companies and ventures. Becoming a manufacturer is an excellent move because you stand to make a fortune if you get things right. Of course, it’s sometimes challenging to plan your startup budget because there are many different costs and expenses you’ll need to cover. With that in mind, there are some hidden costs mentioned within this post that should help to ensure you leave no stone unturned. So, take a moment to read through this post and then make sure you think about the expenses mentioned here today when organising your budget.

Essential Equipment

There is no getting away from the fact that all startup manufacturers have to spend a lot of money on equipment during the early stages of their operation. There are a few different options on the table, but most people will choose to either hire the items they require or purchase them outright. The former solution is usually wise if you’re just starting out and you don’t have much cash in your accounts. Of course, it all comes down to how you presented your business plan when you visited the investment manager at your bank, and how much capital they released. If you have lots of funds then purchasing equipment outright is the best option because you will save a fortune in the long run.

Tools Maintenance

The equipment and the tools you use will need maintenance to ensure they remain in working order for as long as possible. That could mean paying for regular testing and assessments. It could also mean prolonging the life of your tools by using various techniques to protect them. For instance, you might choose to get in touch with powder coating experts at some point. Just ensure you select a brand that offers a full range of colours RAL & BS 4800. Powder coating can double the lifespan of metal tools, and so it’s something you should never overlook. You might use powder coating services during the manufacturing process, and so adding some extra jobs isn’t going to break the bank.

Marketing & Promotion

Advertising your manufacturing firm is essential if you want to obtain lots of orders and make a lot of money. Of course, in most instances, you’ll want to push your brand towards other businesses. That is because most manufacturers choose not to deal with the retail side of things. They tend to work with middlemen who will put their items in the best places. So, when it comes to marketing your products, it’s wise to get in touch with the buying department at the most suitable stores. Ideally, you should create a press release and arrange as many meetings as possible. You can also use Google Adwords and social media websites to reach and impress the right people.

Some savvy entrepreneurs choose to outsource marketing and promotion to specialist B2B advertising agencies. If you have enough money in your accounts, that is a sensible move because it will save you a lot of time and hassle and ensure your firm benefits from the skills of experts.

Insurance

All manufacturers will have to pay for various insurance policies. You need those in place to protect your company in case something goes wrong. You never know when an employee will injure themselves on the job. If that happens and you don’t have insurance, there is a reasonable chance you’re going to get into trouble. If you need to reduce spending and save as much cash as possible, then it’s wise to use the same brand for all your insurance policies. Just obtain a few quotes from different specialists and then use those figures to negotiate the best possible price. At the very least, you’re going to need:

  • General Liability Insurance
  • Property Insurance
  • Worker’s Compensation
  • Personal Indemnity Insurance
  • And much more

Employee Salaries

Every business owner will have to employ staff at some point. While you might manage to use the goodwill of friends and family members during the early stages of your company, there is a decent chance you will have to hold job interviews at some point. It’s critical that you ensure the salary you offer is competitive for roles within your industry. That is how you will attract experiences and committed workers who are willing to go the extra mile for your brand. The average person working in the manufacturing industry in the UK today earns somewhere between £16,000 and £22,000 per year. Some earn more based on their skills and expertise. Make sure you consider that and try to work out how much it’s going to cost to get the employees you will eventually need.

Transport & Deliveries

Manufacturers often forget about the cost of transport and deliveries. While you might produce your goods in-house, there is a decent chance that your customers are not going to pick them up from your premises. So, whatever you decide to make in your factory, it’s vital that you work out the cost of transport and deliveries. In many instances, you will have to invest in some lorries and trucks if you choose not the hire them. You will also have to deal with vehicle insurance and finding the money to pay a driver’s wage. As your company grows, you will need to invest in more transport, and so you need to ensure that your venture is scalable for the best outcomes.

Now you know about some of the hidden costs new manufacturers must consider; you should find yourself in a much better position to succeed. As with any business idea, there are always risks involved, and things could go wrong at any point. However, information is the key to prosperity, and those who conduct the most research give themselves a fighting chance of making a killing. Whatever happens during the next few months, make sure you keep your eyes on the prize and continue to move in the right direction. Hopefully, your brand will become a household name within a few years. Good luck!

About the author, Mark

Mark Asquith is a serial entrepreneur who has built globally successful design, marketing, software and digital businesses since he quit his real job in 2005.

A passionate podcaster, global keynote speaker and helpful bloke, Mark is the co-founder of Podcast Websites and the creator of Excellence Expected. He has a terribly embarrassing beard.

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