Finding a Manufacturer

Finding a Manufacturer

Key points to think about in a new manufacturer relationship

By Marcia Smith

What to consider...

First of all, define what you need from your manufacturer. Will they source their own raw materials? Will they ship orders direct to your customers?

Consider whether you’ll look domestically or overseas. Asian countries offer attractively low manufacturing costs and a wide choice of suppliers, but may suffer from lower quality standards, longer shipping times and poor protection for your intellectual property. Customers may also view your use of overseas manufacturers negatively. Domestic suppliers will be easier to visit and communicate with, and you can benefit from a ‘Made in Britain’ stamp.

When you have defined your criteria, search through the many online supplier directories, or contact your industry’s trade association or your local chamber of commerce.

Setting up a royalty agreement

If you’re looking for a royalty agreement with a manufacturer, this probably means that you want to give them a great new idea for a product, get them to produce it, then take a cut of the revenue for yourself. This can be a complex and difficult agreement to set up.

First, approach the manufacturer with your idea. Preferably, get them to sign non-disclosure and non-compete agreements, so they do not simply walk away with your idea. Think about what else you can offer them, such as marketing skills or an established customer base. Be prepared to negotiate, and get legal help in drawing up a contract.