Guide to Starting and Running

parts or finished products, wholesale or retail, 
inputs and outputs. And financing such a large 
startup operation requires in-depth planning 
and plentiful resources. In addition, this industry 
tends to be heavily regulated by govern-
ment authorities. These are just some of 
the special considerations of manufacturing
businesses that will be outlined in this 
Guide to 
Starting and Running a Manufacturing Business
, 
brought to you by BizFilings and Business 
Owner’s Toolkit®.

---

– 3 –
Join the wealth-producing sector of the economy. 
Welcome to the world of manufacturing — the wealth-
producing sector of our economy! Potentially the most 
complex of all commercial enterprises, manufacturing 
starts with raw materials or pieces or parts that may have 
little value in and of themselves . Through processes 
of fabrication and assembly, these pieces and parts 
are converted into useful products that, hopefully, will 
benefit many . 
Starting a manufacturing business is not a decision to 
be taken lightly . It involves a substantial commitment . 
Often, manufacturing calls for a heavy up-front financial 
investment for specialized facilities, complex equipment 
and raw materials . Workers with special skills may also 
be required . You must ready yourself for a broad array of 
responsibilities to effectively coordinate the many steps 
of the manufacturing process .
Obviously, manufacturing processes come in all shapes 
and sizes . You may be able to gather all the necessary 
materials and fabricate them into a new product all by 
yourself using your hands and/or small hand tools . But 
you may require substantial machinery and equipment 
for various steps in the fabrication process and trans-
portation equipment to move work-in-process inventory 
from step to step in the process . The size, complexity, 
and aggregate number of products you want to manu-
facture will all affect the way you plan your entry into the 
world of manufacturing .
What do you need to know before you begin?
Before 
starting a manufacturing enterprise, you need to give 
careful consideration to a variety of concerns . You may 
have come up with a great product, but the choice to 
become a manufacturer involves a lot more than having 
the perfect product . You need to think through a whole 
series of related decision points . Ask yourself several 
questions to assess your readiness to move forward:
• Do I have what it takes to be a manufacturer?
• What product will I manufacture?
»
How will I protect my rights to the product?
»
What is the most effective method to manufacture 
my product?
»
How much will it cost to produce my product; how 
much will my product sell for; what is my profit 
margin? 
»
What is the market for my product; who will buy it; 
how will I market my product?
• How can I finance my enterprise?
• What are my tax obligations and can I get incentives 
or tax breaks for starting my business?
• How will I protect myself and the business from liability 
risks?
• What other sources of information are available for 
manufacturing business owners?
Special Considerations for Starting Your Manufacturing Business

---

– 4 –
Do you have what it takes to lead a 
manufacturing business?
 
Because a manufacturing enterprise requires such a 
commitment of time and energy and resources, you 
need to have confidence going into it that you have 
what it takes to succeed in the business . Your personal-
ity and skill-set must be geared toward effective leader-
ship in the manufacturing environment? You must have 
the financial wherewithal to make the substantial capital 
commitment at the front end of the process while waiting 
for the payoff at the back end .
So you will have to ask yourself some questions before 
choosing to jump into starting and owning a manufac-
turing business . First, and possibly most important, are 
you an inventor/developer or a manufacturer/producer? 
Perhaps you have created a great new product, and you 
want to see it mass-produced . Do you need to be the 
one to produce it? Maybe your gift and passion is for 
invention and innovation . If so, maybe you want to seek 
out someone else with the gift and passion for manufac-
turing to produce your creations for you . Don’t be a round 
peg trying to fit into a square whole . Don’t let your pride 
tell you that you have to be the producer, too . There are 
easier ways to achieve your goal than becoming a manu-
facturer yourself .
If you are suited to be a manufacturer, consider this: Do 
you have the requisite administrative and managerial 
skills to coordinate the many people and processes that 
constitute a manufacturing enterprise? The skill set for 
manufacturing can be very different than the skill set for 
inventing . Make sure that you feel comfortable with the 
change in roles you will have to make as you transition 
into manufacturing .
Finally, do you have the financial resources — or access 
to the financial resources — necessary for a business 
that typically calls for a major, up-front investment in 
machinery and equipment and raw materials, and can’t 
pay off until the manufacturing process is finished and 
the products can be sold? Preparing for this inevitable 
cash flow challenge is essential to the ultimate success 
of the enterprise .
Manufacturing product issues for 
startup businesses
Almost presumptively, if you are thinking of starting a 
manufacturing enterprise, you likely have a pretty good 
idea of what you want to produce . The product idea 
might be the driving force behind your starting a manu-
facturing business . Maybe you created the product, in 
which case you already know the product inside-and-out . 
Or maybe someone else created it, in which case you still 
need to be fully informed about it to have a chance for 
product success .
But just knowing the product may not be enough . Before 
making a significant financial commitment, you need to 
know that others will want to buy it . You may want to 
seek third-party evaluation of your product early in the 
development stage in order to provide evidence that the 
product is feasible .
You can contact others in the manufacturing industry 
or technical experts, and they can provide advice and 
consultation on your product . But be sure to protect the 
intellectual property rights of your product when sharing 
it with others .
You can also contact marketing firms to get market 
research done on your product and the market for it . You 
will need this information when executing your business 
plan, getting financing and generating sales .
A big part of your financial commitment is going to 
wrapped up in the actual manufacturing process—the 
facility, equipment, materials and labor required to get 
a finished product . You have many options available 
when choosing your manufacturing production process . 
Making the right choices will be vital to your business’s 
bottom line .
Finally, to recoup that startup investment in your manu-
facturing business, you will need to properly price your 
products . But in order to do that intelligently, you need 
to understand the various inputs into production costs . 
Manufacturing is a highly complex process with many 
steps to account for . Without an accurate per unit cost 
for your products, you can’t make wise pricing decisions . 

---

– 5 –
And understanding the individual costs of the various 
inputs of that overall per unit cost will allow you to 
engage in continuous improvement processes with the 
manufactured product and the manufacturing company 
as a whole .