Manufacturing companies are the backbone of most economies, but unfortunately, they’re notoriously difficult to start. That said, the inherent challenges of manufacturing make it a promising industry for aspiring entrepreneurs – because it’s challenging to start a manufacturing business and because manufacturing is still in high demand, you can minimize your potential competition and end up making a lot of money.
But before you can do that, you need to know (and have a plan for) the key challenges in your way.
The Biggest Challenges in Starting a Manufacturing Business
These are some of the biggest challenges in starting a manufacturing business in the United States:
High startup costs
For the most part, it’s expensive to start a manufacturing business in this country. The equipment necessary to manufacture items at a large scale may cost hundreds of thousands or millions of dollars. You’ll also need to buy the real estate where your manufacturing setup will be and face high regulatory costs before you even begin your first run.
Complex (and changing) regulations
Speaking of rules, legal restrictions can bog your manufacturing business down from the very beginning. Manufacturing regulations are complex and constantly evolving, so you’ll need to stay on your toes and work with a good lawyer to make sure you remain in compliance.
Overseas competition
Overseas competition and offshoring have been significant threats to the manufacturing industry for several decades, as foreign countries offer lower prices to customers worldwide. It is one of the most complicated challenges to address, though rising wages and rising costs in these countries provide an opening for domestic manufacturers.
Worker shortages
It doesn’t help that there are significant skilled labour shortages in the United States. Depending on what you’re manufacturing and the level of skill necessary to oversee your operation, you may find it practically impossible to find the people you need. Welders, programmers, and technicians are in short supply.
Reliable tracking and analysis
Every manufacturing business needs a reliable system for monitoring and analysis – otherwise, the entire company could fall apart. Thankfully, manufacturing inventory management software has come a long way in the past few years, and it’s easier than ever to track and analyze your inventory needs.
Rapid technology evolution
Technology changes quickly, and it’s already significantly advanced. Today’s manufacturing businesses need to think about how they will integrate automation and AI into their business models. But if you make too big of an investment in a technology that will be obsolete in a few years, you could be setting yourself up for disaster.
Security issues
A single security flaw in your organization could have catastrophic and devastating effects. Because your entire manufacturing business will rely on automation and software to remain up and running, a single weak password could spell your doom.
Better informed customers
Manufacturers also suffer from better-informed customers. Your customers can get what they need from your business – but before they make the purchase, they’re going to study similar manufacturing businesses from around the world, shopping for the lowest possible price.
Tips for Getting Into Manufacturing
If you are still undaunted by the idea of starting a manufacturing business of your own, you can follow these tips to maximize your chances of success:
Find a mentor: Mentors will be able to help you refine your business idea, provide you with advice on how to develop that idea, and even connect you to the resources you need to make that idea a reality.
Start small: If possible, start small. The high startup costs and high risk of manufacturing businesses here scare many people away, but you don’t need to purchase a multimillion-dollar factory to get started. Instead, thanks to 3D printing technology, you may be able to create a small manufacturing setup in your garage.
Target a niche: To maximize your chances of success and find a stable customer base, it’s a good idea to target a particular niche rather than a broad audience. It will limit your competition and make your marketing much more effective.
Find willing investors: If you feel confident, you can invest your own money into the project, but you can minimize risk if you find a willing investor. Look for angel investors, venture capitalists, and other willing contributors who can mitigate your risk by volunteering their capital.
Final Thoughts:
Despite all these challenges, it’s still very possible to start a manufacturing business that is not only profitable but lucrative for the entrepreneur who created it. If you’re willing to tackle challenges like increased overseas competition and evolving technology head-on, you’ll have a significant chance of making a fortune with this approach.
