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:
- Have a handle on your intellectual property
- Enter with high expectations.
- Don’t expect a turnkey solution
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.
