In some ways, acquiring a factory unit is the easy part of starting a new manufacturing business or developing an existing enterprise. Detailed business planning is essential and could make the difference between business success and failure.
When creating a manufacturing business plan, a large number of factors must be taken into account and many questions need to be asked, including:
- Will you be manufacturing finished goods for consumers, or components or sub-assemblies for other manufacturers?
- Will you produce from a standard product catalogue and / or make bespoke items?
- Will products be made to order only?
- Will you insist on minimum or maximum order quantities from customers?
- Is the market for your products likely to be seasonal in nature and if so would you use external subcontractors to ease the load at peak periods?
- Where will you purchase raw materials and what levels of raw material stock will you need to hold to ensure continuity of production?
- Where will your factory unit be located and does it have adequate links to transport infrastructure?
- Will your employees work a five-day week, single shift or two shifts, or 24 hours per day, seven days per week?
- How much training will your employees require (at start-up and ongoing)?
- How will you deal with product quality assurance?
- How will you motivate your workforce?
- Is the market for your products regional, national or international?
- Will your factory employ its own sales force or use third party agents or resellers?
- Will you sell online via your own website?
- Will your factory unit incorporate its own sales outlet?
- How will you determine the price of your products and how frequently will prices be reviewed?
- If you are exporting products or importing raw materials, how will you make allowance for currency exchange rate fluctuations?
A prospective mortgage lender is going to want answers to these questions (and others) before making a mortgage offer to you.
When applying for a factory unit mortgage, a manufacturing business plan should address many issues including:
- Types of product
- Production methods