So, you’ve had a great idea for a business, but when you investigated the possibility of putting your idea into action in your own country, you quickly came to realise that the cost of manufacturing there is just too high. If you want acceptable profits, you’ll need to get your product made abroad.
Outsourcing manufacturing is certainly possible, but there are a few things you’ll need to consider if you want things to go smoothly. This article will highlight some of the more common pitfalls, and explain what you can do to avoid them.
If you’re getting something made in a foreign country, it will be difficult for you to monitor the factory, and keep an eye on the quality of the products. Some people get around this by hiring a quality control manager in the foreign country, while other business owners fly out to visit the plant periodically.
It’s important that you do something to monitor the quality of the product – especially if you’re shipping direct from the factory to the buyer. Your buyers don’t know that it’s a third party making the product, so if it falls apart a few days after they buy it, it’s your reputation that’s on the line.
Taxation is a minefield at the best of times, but when you’re importing products it can get even more complicated. Speak to your accountant to determine whether or not the items you are importing will attract import duty. The last thing you want is to think you’re getting a great deal, only to find out while filing your tax return that import duty or other taxes eat more of your profits than you expected.
Protecting the Products
If your product is fragile, then you’ll have to think carefully about how you will ship it to the UK. Granted, bubble wrap rolls aren’t exactly expensive, but they are something else to think about. I’ve read many sad tales about people who imported inexpensive but fragile items from abroad, only to find that the manufacturer shipped them loose and unprotected in cardboard boxes. Getting your money back from an overseas supplier who was negligent on shipping can be a difficult proposition, and you’ll be the one responsible for explaining to your buyers why the products are late. Those problems could be avoided with judicious use of bubble wrap rolls or styrofoam, so it makes sense to clarify even small details of the shipping process before you sign any contracts.
The Language and Time Zone Barrier
Many businesses outsource their manufacturing to plants in Asian countries. From a financial point of view, this makes sense, but if you’re a small business owner you might find that the time zone difference causes problems, and you may need to do some work at odd hours just to keep in touch with your contact at the plant.
Another issue is the language barrier. Most companies in Asia will have a few employees that know enough English to get by, but you will hit some cultural differences and have some misunderstandings. If you plan on dealing with non-English speakers a lot, you’ll either have to hone your communication skills, or hire a translator.