This article originally appeared on our Forbes blog
Preselling is a great way to launch or grow a new business with physical products. Because customers pay for goods upfront, before a large batch of inventory has been made, entrepreneurs can escape the pressure of funding their own manufacturing expenses. Revenue generated by presales can be used to cover the cost of materials, production, and more.
Though the presale model may sound ideal, it does come with some risks. While seasoned brands have had time to test and refine their manufacturing process, new makers are still operating on a learning curve. Beginner’s mistakes can lead to production delays, defects and quality problems, and, in a worst-case scenario, a total loss loss of inventory. The latter can be disastrous, particularly if a brand lacks the resources to re-make the product or issue refunds.
Thankfully, there are a few things you can do to minimize the likelihood of problems when preselling.
1) Complete the Sampling Process With Your Manufacturer
In my work with clients, I’m surprised at how many people don’t get fully finished samples before starting to presell. This trend is due, in part, to the ease with which designs can be presented before they are actually made. The ability to retouch imperfect samples or create life-like digital renderings means that a concept can be partially flushed out or exist solely on paper, but still make for compelling website photography!
Going through a complete sampling process with your manufacturer of choice will ensure that your design doesn’t have weak spots and that your supplier can make the product at the level of quality you desire, in a reasonable amount of time. Getting semi-finished samples–or worse–waiting to sample until production starts (after you’ve sold inventory) leaves you vulnerable to unwanted surprises, such as poorly performing materials, assembly defects, and slower than anticipated turnarounds.
2) Perform Product Testing
Whether you are sending your finished product to a testing agency or performing your own set of tests, making sure your design functions as its supposed to is an integral part of the making process. Certified agencies are great for tests such as seam strength, material toxicity, choking hazards, and other metrics that require special equipment and precise measurements. Informal tests, such as simply using a product sample for an extended period of time, or repeatedly washing a garment according to the care instructions you’ve set, are great ways to understand if design changes are needed before you produce.
With either method of testing, it’s crucial that you’re 100% confident in the way your product will perform before sinking other people’s money into making it.
3) Build in a Buffer
The age-old advice to build a cushion into any budget or timeline is especially true when manufacturing a product. Add even more so if you are a beginner! Things often take longer and cost more than anticipated, which is fine (albeit frustrating) if you are answering only to yourself. But promising finished products to customers and then either running out of money to make them, or falling significantly behind schedule, will cause extreme stress and strain.
In order to preserve your sanity, reputation, and wallet, build at least a 20% buffer into any time and cost projections. This includes the total investment you anticipate will be required to manufacture your pre sale inventory, as well as the delivery date you set for buyers.
