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Micro-Manufacturing

By Dr. Profit (aka Bill Erichson)


Dear Dr. Profit,

I have invented a product that reduces a hazardous substance before it enters the sewage system. This is a specialty product, especially designed for an industry I am not at liberty to name. The demand for the product is still low at this time, however, there are legislative changes that will make may product invaluable to the users.

At the present time I hand make each product and sell the to those users who are environmentally sensitive or are getting a head start on the legislation. There are competitors in the marketplace, but as more jurisdictions change their regulations the demand will grow incredibly. What is my next step?

Ivan the Inventor


Dear Ivan;

You are in a situation very common to all small-scale manufacturers. At the current time, you are “crafting” every product. Don’t confuse this term with art items. In this case crafting is building one product at a time or to build by hand. This is a great way to build prototypes, but a difficult way to make a profit. Here’s why:

Building one at a time or even small run “micro manufacturing” increases the time it takes to make each item. Not only does this increase the unit cost, but it also reduces your productive capacity – the total number of items you can make. To allow your business to grow, you must find a way to increase the number of units you can product, while at the same time keeping your costs down. Here are some ways you might consider increasing capacity:

· Sub-contract the manufacturing to somebody with much higher capacity. Your minimum orders may go up, but the costs will drop and, because you are using the capacity of others, you will necessarily have a higher capacity. (This is great in plastics based manufacturing.)
· Sub contract components. For example, if you are currently hand cutting wood or plastic, purchase this material pre-cut to your specifications. It costs more than the raw material on its own, however the money spent will save time, thus increasing your capacity.
· Have other people do some of the low skill assembly work. This keeps you doing the higher skilled work and reduces the cost of the manufacturing – when you account for your own time.
· Create jigs and moulds to improve your efficiency. Then you can work on ten items at a time rather than one unit at a time. You turn yourself into a one-man assembly line.

You need to think of new ways of achieving the same objective, in this case your product. If you do not change, you will fall into a common trap into which many inventor / manufacturers fall. You cannot produce enough units to cover your overhead expenses without having such a high price no one will pay for your product. Good luck, and let me know how it goes.

 

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Copyright 2006 SOHO Business Report
a Dream Launchers Partner






SOHO Business report magazine, a Dream Launchers project publication, helps Small Office / Home Office Entrepreneurs succeed. We help home-based business and small business with free articles, multimedia (audio, video & interactive), tools and tips. Topics for home business and small business include business planning (e.g. business plan and marketing templates), strategy, guerrilla marketing, Internet marketing, publicity, project management, importing, exporting, taxes, finance, trade shows, technology, negotiation, consulting, sales techniques and tactics, work life balance, growth management, profit optimization, team work, leadership, human resources (recruiting, hiring, training & firing) and network marketing (referrals and contact building). SBR can help you start your home business or small business and give you the management tools and resources to succeed by making a business plan or marketing plan with expert input. All of that without getting an MBA, going through training or school. Start increasing your profits, improving your cash flow and building the business your entrepreneurial aspirations demand.