Given the recent growth of the manufacturing sector in the UK, it came as something of a surprise that output fell suddenly by 0.7% at the beginning of October. Economists had forecast a 0.2% increase for the fourth financial quarter, and were caught unawares by an unexpected decline in computer and electronics manufacturing.
This minor issue aside, there is little doubt that the manufacturing sector has been one of the shining lights for the British economy in 2014. Not only did October’s figures represent the most significant decline since May, for example, but the manufacturing sector was still 1.7% up when compared with the corresponding figures from last year.
How to Build an Independent Manufacturing Business
In addition to this, it is also worth noting that British manufacturing still accounts for one-sixth of the overall economy and employs an estimated 2.5 million workers nationwide. These figures not only underline its level of influence, but it also offers an insight into a potentially lucrative sector where small business start-ups can thrive. If you are considering establishing an independent manufacturing business, consider the following ideas:
Focus on the Detail: Establish a Clearly Defined Product Idea and Route to Market
While the largest manufacturing companies from the UK and around the globe may generate billions in annual turnover, this is often achieved through mergers and the acquisition of established brands. This is not an option for small, independent start-ups, however, which must instead look to focus primarily on their output manufacture a core product that provides them with a route to market.
By developing a viable and simple product concept that can be manufactured affordably and sold for a profit, you can begin to build revenue while also maximising profitability. This will lay the foundation for larger-scale manufacturing operations, before product ranges are diversified and additional brands are integrated into your firm.
The Importance of Logistics and Distribution: Think Strategically when Choosing Locations
On a fundamental level, there are two pivotal aspects of your manufacturing business. These are the production of products and their distribution, and each of these tasks will require specific locations and a clearly defined logistical process. Determining where to manufacture your products is the easiest place to start, as start-up ventures can operate from a single location which is a suitable size and leased on a flexible, rolling contract. You may also want to factor in considerations such as the raw materials used to manufacture your products, as these may be exclusive to specific regions and operating from premises close to these will help you to reduce shipment costs.
From here, you can determine how and where you will sell your products. Developing an online presence may suit business owners with minimal budgets, as they need only invest in self-storage costs and a purposeful fleet of delivery vehicles to meet their demand. Selling through retail stores requires a little more forethought, especially if your intend to establish an independent store rather than license your products to established outlets. If you do choose to establish a branded retail outlet, start with a single store and look to expand your venture organically, while you may also be well served by capitalising on the prosperous self-storage industry and leasing mobile units that can help you to manage your stock-holding in a flexible manner.
Become a Strategic Leader: Focus on your Vision and Entrust Others to Execute
As recent developments prove, the manufacturing sector is changeable and vulnerable to economic decline. There are also numerous types of manufacturing firm, each of which belongs to a distinct market and remains susceptible to relevant trends and consumer behaviour. This means that must adopt a strategic outlook as a business owner in this industry, and strive to focus on your vision and long-term goals while delegating everyday operational tasks to trusted employees. By attempting to immerse yourself in working processes and time-consuming manufacturing tasks, you can lose sight of the bigger picture and ultimately struggle to achieve your goals.
This is even more important in the manufacturing sector, where you must split your focus between meeting production deadlines and selling your products for a viable profit. The issue is that you may not have the financial resources to employ a dedicated team to assist you, so you will need to think creatively and ensure that you adopt a simple business model during the first year of trading. Many entrepreneurs in this position also refuse to take a salary during their first twelve months in business, and instead use this capital to hire skilled employees who can manage specific operational tasks. Outsourcing is another option, as this enables you to delegate non-strategic tasks to specialists while also minimising salary costs.
The Last Word
While establishing a manufacturing business is a challenging discipline, it is one that can deliver genuine rewards. Responsible for an estimated 52% of all UK exports and a global employer of billions, for example, it remains extremely lucrative and offers a viable route to market for any aspiring entrepreneur with a sound product concept. So as long as you bear the previous points in mind when starting out, there is every chance that you can capitalise on a growth sector and build a successful business.
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