Learn to Make a Product

Expert Consulting for Product Entrepreneurs

Paying An Overseas Supplier? Read This First

This article originally appeared on our Forbes blog

Paying an overseas supplier for the first time (or second, or third!) can be a nerve-wracking endeavor. Are they trustworthy? Will they deliver what they’ve promised? Are they even a real company?! Unfortunately – and I wish this weren’t true – some of the nervousness is warranted. After helping countless entrepreneurs untangle manufacturing problems with factories, I’ve seen my share of bad apples.

The good news however is that when things go wrong, it’s almost always the result of an easily avoidable mistake. A review of an overseas transactions that has gone awry usually uncovers one of the following errors.

Mistake #1: Not Requesting a Sample

Requiring that a supplier send you a sample of whatever you’re buying before paying them may seem like common sense, but it’s a step many people skip. They do so for one of two common reasons. The first is that suppliers may make a compelling argument for why samples are not needed. For example, “Don’t worry, we produce for many big companies!” or “Sending a sample will just be extra time and money. Our quality is great so there’s no need.” While this logic is flawed (big companies still require samples and the cost of securing them is nominal compared to risks of not doing so), new entrepreneurs who lack experience are more likely to be swayed.

The second reason is that people believe photos are a sufficient form of approval. A factory might email a picture of a material sample or finished product that looks great, but when the actual order arrives the specifications deviate in a way that was not apparent on a screen. Even worse is when the “sample” in the photo is completely different than the item ultimately shipped.

Mistake #2: Paying 100% upfront

It’s always best to structure supplier agreements using a deposit/balance schedule. As with many other industries, you pay a deposit to start a production order (typically between 30-60% of the total purchase order value) and then issue the balance payment prior to their release of the finished goods. There are a few instances where it is industry standard to require full payment up front, such as when a supplier is creating custom molds for a metal or plastic component of your product. While paying in advance for certain fees is unavoidable, deposits are the norm in most production scenarios.

When you pay a supplier in full at the start of a project, you lose your most compelling negotiating tool – a refusal to send more money until the company corrects unsatisfactory work. You also increase your financial exposure should they fail to deliver entirely. While it’s terrible to completely lose a 30% deposit payment if a supplier disappears, it’s even worse to lose it all!

Mistake #3: Sending Money to a Fake Account

While most supplier disputes are the result of a miscommunication or mismatched expectations, a small number are due to outright deceit. An increasingly common type of fraud occurs when rogue individuals imitate legitimate factories, convincing foreign buyers to send deposit payments for various goods and services that they have no intention of rendering.

To avoid this type of transaction, check that the ‘Pay To’ account information on the invoice is the same as the company name who you are supposedly doing business with. For example, if you are buying buttons from XYZ Button Co. but the payment instructions on the invoice ask you to send a wire transfer to QRZ Inc., consider it a red flag. The same is true if you are asked to pay large sums of money via paypal or issue a bank transfer to an individual’s personal account. In short, make sure the names on all invoices, bank accounts, and shipping documents match the name of the actual factory.

—–

Setting up trustworthy supplier partnerships involve more than just payment practices, but being aware of these classic mistakes is an important part of protecting your investment!

Payal Singhal and The Desai Foundation Share 3 Steps For Making Products That ‘Give Back’

This article originally appeared on our Forbes blog

When leading Indian fashion designer Payal Singhal and New York-based nonprofit president Megha Desai connected at a Mumbai fashion event last year, a conversation around women’s empowerment spurred an idea: could they create beautifully designed products that would delight clients and improve the livelihoods of the women responsible for making them? The answer, it turns out, is yes.

Social entrepreneurship is a growing field that all business leaders can explore. Here we breakdown how Singhal and Desai combined forces to produce “bags for good” and how their success is giving socially-conscious product entrepreneurs (and entrepreneurial nonprofit leaders!) an inspiration to follow in the process.

Step 1: Start With A Great Idea

The Desai Foundation’s mission is to empower women and children in India and the US through various community initiatives, while the Payal Singhal brand is known for its fashion-forward dresses, sarees, and other special occasion attire. In preliminary discussions about their partnership, Singhal and Desai decided the foundation’s vocational sewing program would naturally be the focal point. Training sewers to produce produce certain Payal Singhal products would provide the women with skill-based work while adding a philanthropic component to the brand’s supply chain.

The final result is the PS x Desai Foundation collection, which includes lenghas, scarves, and tote and makeup bags in a stylish lotus print reminiscent of the nonprofit’s logo. The proceeds from the bags go directly to the Foundation (along with a portion of revenue from the rest of the line), and the sewers making them receive fair wage compensation, in fair working conditions, as well as flexible hours to meet the needs of village life.

Step 2: Build A Solid Team

To set up the supply chain, the pair traveled to one of the Desai Foundation’s sewing centers in Valsad, Gujarat with Monica Dogra, the face of the partnership. Once there, they hosted a communal event to introduce the sewers to the leadership team, brief them on the purpose and scope of the project, and explain the specific benefits they would receive by participating. “We wanted to ensure that they felt like they were a part of the process, so we had a great launch day which got the whole community excited,” said Desai.

To ensure technical expertise, the sewing team completed a 3-month preparatory program, during which an American seamstress was flown in to teach high-end cutting, sewing, and finishing techniques that would satisfy the brand’s international audience. While quality control on the products is of the utmost importance, the Desai Foundation is equally committed to ensuring a high quality of life for each worker. Maintaining open channels of communication with the women to ensure their financial, emotional and physical needs are being met is essential to their production process.

That said, the logistics of any production operation can present challenges. For example, shipping to and from the center, which is located in a rural village, can take a long time. Setting up a successful joint venture requires communicating about these potential pain points up front and ensuring both parties are on the same page. Doing so will help nurture a collaborative attitude towards challenges should they arise.

Step 3: Make It Sustainable

“Great partnerships happen when both parties have shared values and shared goals,” says Desai. The lasting power of such a partnership comes when those principles and aims are part of a self-sustaining system, which the PS x Desai collaboration executes perfectly.

By joining forces, Singhal has access to a transparent, ethical production solution (a challenge for many apparel brands) and can offer her clientele beautifully-crafted products while simultaneously making a philanthropic contribution.

The Desai Foundation’s mission is equally supported, as the union creates exactly the type of jobs women in their program need. And since the foundation receives a percentage of all PS X Desai Foundation sales, this built-in revenue stream sustains and grows the initiative.

This is social entrepreneurship at its best: a great idea, a sustainable business model, and clear benefits for all parties involved.

Planning On Preselling Your Products? Read This First

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.

Why You Need To Get Out Of Your “Idea Bubble” Before Launching A Product

This article originally appeared on our Forbes blog

Most people who come up with a product idea or invention are incredibly passionate. They’ve seen a need in the marketplace – most often inspired by their own day-to-day frustrations with existing products (or a lack-thereof) – and are excited to fill the gap.

This period of excitement is what I call the “idea bubble”. During which, entrepreneurs are enthusiastically planning out their product design guided by their own unique preferences, life experiences, and gut instincts. They may share their concept with friends and family to get “objective” feedback, but loved ones are likely to be encouraging rather than brutally honest. As a result, ideas in this stage exist primarily in a bubble of subjectivity.

Bubbles are only a problem if you never leave them. As difficult as it can be to hear someone say they wouldn’t buy your product, or that your price is way too high, or the design not attractive enough, this is exactly the kind of feedback makers need to collect at the beginning stage of their business. People who get too far into product development and manufacturing without thoroughly testing their concept run the risk of investing time and money into an item that few people actually want. It might sound like common sense, but after working with hundreds of start-up brands and designers I see the idea bubble trip people up again and again!

On the flip side, sometimes feedback is irrelevant and needs to be tossed aside. A few negative reactions are not enough to shift the course of a business! So how do entrepreneurs know what’s what? The answer is volume. Makers need to poll a lot of people about their product concept in order to separate one-off opinions from the general consensus of their target market.

An NYC-based business accelerator I once interviewed requires all incoming start-ups to talk to 100 prospective customers about their business concept before receiving any further support. After carrying out this work, nearly everyone makes modifications to their original business model. Whether the change is small, like adjusting the price of a product or service, or large, like deciding to target an entirely new demographic, the effect is the same: feedback forces a positive change.

Independent makers and inventors can benefit from the same approach. Set a goal to seek out between 50 and 100 ideal customers and ask them for direct feedback about a product’s design, price, branding, etc. Connecting with this many people requires getting creative! For example, a recent client making a medical garment for chronically-ill kids posted questions in various online parent support groups, spoke to her child’s doctors and nurses, and attended a conference so she could talk directly with families and care providers familiar with her customer’s needs. The response rate was fantastic.

Methods of collecting feedback vary, and can include one-on-one phone calls or in-person discussions, online surveys and polls and focus groups. Hiring a market research company can be a pricey investment for most bootstrappers, but it’s definitely an option. Remember: the goal is to leave the bubble and listen to customers, not conduct an airtight scientific research study. Questions about a product’s overall appeal, the necessity of certain features and benefits, and the target price are important, but so is allowing for open-ended conversation. In fact, off-hand comments can yield powerful insights that may fundamentally alter the design of a product, as well as inspire ideas for new products.

In order to be useful, feedback has to be measured. Inquiries like “What would you pay for this product?” or “Do you feel there is a significant need for this product in the marketplace?” are easy to track, but evaluating more nuanced intel, like the tone of a conversation or the overall level of enthusiasm from the feedback group, requires something different. In order to harvest this type of non-data, entrepreneurs must consciously avoid the trap of “hearing what they want to hear.” Giving yourself a little mental reminder to be open and clear-eyed can be helpful before each conversation!

Collecting an adequate amount of feedback will certainly require elbow grease, and in some cases, a bit of cash too. A virtual assistant to manage the project might be helpful for people juggling a day job or a family, while participation incentives such as a $50 gift card to one lucky survey winner work well too. Whatever the investment, it’s wise to spend a little money up front, before a product design has been made in bulk. The process of developing, testing, manufacturing, packaging and shipping a physical item isn’t cheap, and once it’s done, it’s done!

A maker may wholeheartedly believe there is a need for their product exactly as they’ve designed it and hopefully, that’s the case. But exposing ideas to the outside world before too many startup investments have been made can prevent wasted time and energy. Stepping out of the idea bubble as early as possible is the best way to launch a physical product.

Maker’s Beware: 3 Product Entrepreneurs Share Their Biggest Rookie Mistakes

This article originally appeared on our Forbes blog

Launching a business with physical products comes with its own set of unique challenges. Here we chat with three product-entrepreneurs who share their most memorable rookie mistakes, along with how they corrected course and consequently, implemented permanent improvements in their businesses. Their anecdotes represent some of the most common missteps made by new makers. After working with designers and inventors for nearly a decade, I can confirm that nearly every newcomer who loses time, money, or momentum has done so because of one of these preventable errors!

Mistake #1: Assuming Everyone Understands What You Want

Learn to Make a Product | Maker's Beware: 3 Product Entrepreneurs Share Their Biggest Rookie Mistakes
Briana Borten
Briana Borten, Founder, The Dragontree

When Briana Borten was launching her holistic body care line, she, like most people bringing a product to life, was hyper-focused on the details. In her case, packaging was a central focus; she had beautiful labels designed for each product, and tweaked and retweaked the colors and copywriting and layout until they were just perfect. The first production run went off without a hitch, and she was was thrilled with the results.

Product sold quickly, and when it came time to re-up on inventory, she handed off the specs to a production manager who would oversee reordering. This is where the “a-word” reared its ugly head. Borten assumed that because she was providing a finished design to her team as well as her supply partners–one that she had outlined clearly and painstakingly–there would be zero confusion about her expectations for the finished product. She didn’t see the need to establish a system of checks and balances to ensure the specifications were met, because it just seemed obvious that they would be.

Production mistakes happen for a variety of reasons. Changes in personnel, calibration issues with machines, accidentally using the design files. Human error is present, if not prevalent, in manufacturing. All these variables make “assuming” a risky business.

In Borten’s case, her manager failed to request a new set of samples prior to production. Also a victim of assumption, she assumed the supplier would deliver exactly what had been sent on previous orders. She didn’t want to delay delivery by double-checking. As a result, a very large order arrived at her warehouse with incorrect labels.

The experience led Borten to implement systems to preserve quality instead of relying on the judgment of any one individual. She outlined a sampling procedure in writing that required two people to sign off on proofs, as well as a quality check that would catch any incorrect orders on site at their production facility.

Mistake #2: Having Design Tunnel Vision

Learn to Make a Product | Maker's Beware: 3 Product Entrepreneurs Share Their Biggest Rookie Mistakes
Ryann Scrafford, Founder, Charlie Rowan Designs

Ryann Scrafford did what many designers do when searching for manufacturing solutions: she looked for someone who could recreate her baby blanket designs exactly as she envisioned them, with no deviation from her original design. While it sounds logical to look for supply partners who can reproduce or make your product just the way you want it, the search for perfection can be a momentum-killer.

This is mainly because it can be hard to replicate precise specifications from supplier to supplier, particularly when it comes to materials such as fabric. Not only is there natural variation between “the same” material produced by different vendors, but there are also countless types of fabric out there, with varying weights, finishes, printing techniques and so forth. The sheer volume of choices makes searching for an exact match akin to finding the needle in the haystack. This phenomenon is true for many material components.

New design entrepreneurs are better served by looking for the best materials they can find, rather than embarking on an endless search for a perfect match. This is even more true for people producing at small quantities; since they don’t have the budget to customize orders like big brands do, they are limited to “stock options” (materials that are regularly stocked by suppliers). For example, a multinational sportswear brand may produce thousands of yards of custom performance fabric at a time, made exactly to their specifications; however, a small maker looking for this same material will not be able to find it because it’s not something that textile suppliers stock.

In order to speed up the sourcing process, be open to feedback from suppliers about what material option might work best for a design rather than making narrow requests. When Scrafford’s search for a specific fabric stalled out after a year of futile sourcing, she realized she needed to be open to new solutions. The result was a revised product line that was a bit different than her initial offering, but just as high-quality!

Mistake #3: Launching Without A Clear Pricing Strategy

Learn to Make a Product | Maker's Beware: 3 Product Entrepreneurs Share Their Biggest Rookie Mistakes
Markisha Velazquez, Founder of Junior Baby Hatter

Pricing a product correctly is central to a brand’s viability. Price too low and a venture becomes unable to sustain itself; price too high and customers won’t buy. Both options, sadly, can lead to business failure.

Markisha Velazquez launched a line of children’s hats with the best of intentions. She wanted to give parents stylish headwear options for their kids at an affordable price. She set her initial price point at $20; however, her manufacturing costs were nearly just as high. Without earning a profit, she was left with very little to market the brand, let alone keep the lights on.

She then tried applying a standard retail markup in which the cost of making a good is multiplied by 2.2 to set the wholesale price (the price that stores and other resellers pay), and then multiplied by 2.2 again to set the retail price (the price the end consumer pays). These hikes resulted in a massive slowdown of sales because they didn’t account for the most important aspect of pricing: what the market will bear.

After receiving guidance from a business coach,Velazquez dug deeper into her customers’ buying habits and examined what they were paying for other high-quality children’s accessories. First she identified brands with a similar target customer and “Made in the USA” focus, and tracked their pricing across a variety of channels, including boutiques, pop ups, and ecommerce stores.

Then she signed up for in-person craft markets, which, compared to trade shows and pop ups, provided her with an inexpensive way to get face time with actual customers. This proved to be the best source of intel, as she could see people’s reactions to pricing firsthand, as well as what styles were most likely to bring in traffic. As a bonus, she also received feedback on the fit of the hats, which helped her improve her design.

Armed with this data, she set a market-based price and then resourced the labor and materials required to make the hats to fit within the desired profit margin. Ultimately, she had to find a different fabric vendor and remove some non-essential components like design trims, but the end result was a product line that did not compromise on style or quality.Velazquez’s new pricing strategy now yields enough cash flow to run the business and to invest and grow.

© Copyright - Learn to Make a Product. Privacy Policy / Terms & Conditions