Factory Unit Manufacturing

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.

Summary
When applying for a factory unit mortgage, a manufacturing business plan should address many issues including:

  • Types of product
  • Production methods
  • Staffing
  • Sales
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