Testing, Manufacturing and Prototyping

Tim Ferris — "If you’re going to be manufacturing physical goods (and I’ve done hundreds of thousands), there’s a few things I would recommend.

Number 1: if you can’t find contract manufacturer of X through Google (X being the product that you’re seeking), or even if you can find them online - I would recommend trying to find the trade magazine (if there is one) for the product category that you seek. So in the case of (let’s say) vitamins; it used to be Vitamin Retailer. Through them - look for trade shows. You can do that online as well. If at all possible I would recommend visiting a trade show dedicated to the industry you’re interesting in getting into, because you will see all the distributors and all the manufacturers - and the most reputable manufacturers, all at that single event. If that means you postpone things for a month? So be it. I think it’s a fantastic investment of time. You can certainly look at things like Alibaba, Thomas’ Registered Manufacturers, etc.

Once you’ve found a number of manufacturers and you’ve put out a proposal to most of them (letting them all know that you are putting out multiple proposals), chances are you are not going to impress them if you have a limited budget in the amount of capital you have to put into a first manufacturing run. They’ll want to figure that out really quickly. Just make it clear that if this plan succeeds you have plans for a following marketing campaign and a following business plan (which is what I did to get my first business off the ground). Reputable manufacturers are good business people, so they are going to want to know how much volume you are going to bring to the table if they go through the trouble of setting you up as one of their customers. You have to get good at pitching that. To that effect, I would recommend reading ‘The 22 Immutable Laws of Marketing‘ and a few other good books on good PR and pitches. That would be my number one pick.

One thing I would recommend (just to do your due diligence properly), is to take the manufacturer name and (as a precaution) put it into Google with ‘fraud’ or ‘scam’ and see if anything pops up. Do the same thing with the principals of the business: find out who the lead executives are on the team and stick them into Google and do the same search. ‘Lawsuit’, ‘FCC‘, ‘FTC’, ‘fraud’, ‘scam’ - and see if anything pops up. Typically things will not, but sometimes they will. What I would also say is: if a manufacturer does not have a good website it does not mean they are not a good manufacturer. Manufacturers are notorious for having crappy websites, so it’s hard to judge a book by it’s cover in that respect.

Prototyping can be done in many different ways. A buddy of mine named Steven Key has sold dozens and dozens of licenses for products to companies like Coca-Cola, Disney - he’s made millions of dollars doing this - and his prototypes are almost all made with paper. Paper and cardboard. He designs games. He did the Michael Jordan Wall Ball, and he just makes it with paper, and then takes photographs of that as a ‘looks like’ prototype. There are ‘looks like’ prototypes and there are ‘works like’ prototypes. You don’t always need both. You need to understand the purpose of your prototype. Is it for the purpose of manufacturing? Is it to sell to prospective clients? Is it to test or sell on Kickstarter? You need to know your objective and have that in mind first.

From the standpoint of physical prototyping, things have improved a lot in the last few years with 3D printers. If you have an industrial design firm in your home city you can most likely find someone to help you, or you can get an actual 3D printer (like a replicator) through Makerbot for like $1500. It’s amazing. If you are going to prototype through a manufacturer or do a small batch (which is what I recommend), I would emphasize the point that you should not get seduced by per-unit costs. Just because you will save $1 per unit if you do one thousand instead if one hundred - until you know for a fact that you can build demand (or find demand); and fill that demand; acquire customers profitably; all of that - you should only manufacture in small batches, because if you end up with a lot of inventory that you can’t clear out and then you have to pay your invoices net-30 or whatever it is? You can go out of business really fast. You have to be smart about cash-flow.

You have to keep agile, also. If you end up wanting to Tweet the product (which will almost always happen) and then you realize there’s a defect - customers don’t like A, B, or C? You left something off of a label? You will need to have the ability to pivot and change the product without having to throw out a thousand units. One of the ways around that, for instance, in books they will do this: take what will have the longest lead time and manufacture them in advance. Book covers typically take longer to create than books, but the books are (in many cases) a lot more expensive. So they will print out the covers well in advance: they might have two-hundred-thousand covers printed and then do an initial print-run of ten thousand books. At times it can make sense to stockpile certain components if it speeds up your manufacturing time. I used to do that with specific ingredients that went into sports nutrition products. There were two or three that took a long to to procure, and it made our turnaround time for manufacturing about twelve weeks. As soon as I started stockpiling two or three ingredients - which only cost a few thousand dollars (keeping in mind that the business was generating a hundred grand a month at that point) - it was amazing. I was astonished that no one had brought this up to me earlier. It made out turnaround time 8-10 days! So it makes sense to think about it in terms of components."