Learn to Make a Product

Expert Consulting for Product Entrepreneurs

Four Tips For Checking Supplier References

This article originally appeared on our Forbes blog

Checking references is an important (and free!) part of the supplier vetting process. I’m surprised by how many makers either don’t request them or don’t follow through once they secure names. Further, it’s not enough to ask easy questions such as, “Do you recommend Company X?” as the goal of each conversation is to go beyond surface level information. When done properly, speaking with references should paint a fuller picture of what it would actually be like to work with a given supplier.

Here are four tips to optimize your reference checks and make more informed decisions as you source new partners.

1) Ask For More Than One Reference

Reputable suppliers should have multiple happy customers willing to endorse them. When requesting references, be clear that you’d like a few options, and let the supplier know that both past and present clients are okay. This may give them more range, as some clients in their roster will be off limits due to privacy clauses.

If a supplier refuses to provide references or will only send a single point of contact, this is usually a sign to proceed with caution.

2) Stick To Your Product Category

Speaking with references who have made products similar to yours is key. For example, if you on the hunt for a factory that specializes in structured outerwear, but the references you receive can only vouch for the supplier’s ability to produce casual knits, the intel is only so helpful. Seek confirmation that a partner is good at what you are making.

3) Create A Vetting Checklist

It always pays to be organized and methodical when vetting, especially when you’re in contact with multiple potential partners and need to collect and evaluate lots of data. Before setting up discussions with references, make a list of the questions you want each one to answer. You’ll also need somewhere to compile all of the information you receive, such as in a spreadsheet dedicated to your vetting efforts.

Here are some suggested points of inquiry:

  • Is the supplier responsive? How long do they typically take to reply to messages?
  • How long has the reference worked with the supplier?
  • Has pricing increased over time? If so, why?
  • Are deadlines usually met? If not, why?
  • If there has even been a quality issue with the factory, how was it remedied?
  • You’ll receive an extra layer of feedback if you ask questions by questions by phone since it’s possible to pick up on more nuanced forms of communication such as tone, hesitation, sarcasm, etc.

    4) Remember That No Supplier Is Perfect

    A factory doesn’t need to score 100% on price, quality, speed, responsiveness and everything else you’re looking for in order to be a worthy choice. As with any relationship, partnering with supplier requires compromises. The important thing is that you are clear-eyed about the potential trade-offs of working with one vendor over another.

    For example, if you hear repeatedly that a factory has great quality but needs to be nudged a bit to finish orders on time, you can enter the partnership knowing you’ll need to build in delivery buffers. Preparation can help eliminate unwanted surprises and offset a vendor’s weak spots. This is not to say you should ignore negative feedback, but rather a reminder that no business is perfect.

    References are likely to say positive things about a supplier, or else they wouldn’t have been chosen in the first place. By starting each conversation with the reminder that you aren’t seeking perfection but rather a solid, reliable partner, you’re more likely to receive authentic feedback.

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.

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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!

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.

Real World Advice For Protecting Your Product Idea

This article originally appeared on our Forbes blog

There are few things more nerve-wracking for product-entrepreneurs than the thought of being copied, especially if you have an innovative idea. This fear is most present when it comes to manufacturing partners, as they learn about your concept before it hits the marketplace and you’ve handed them detailed instructions about how to make it!

Legally protecting your intellectual property can be complicated and costly. Trademarks start at several hundred dollars (if you do it yourself), while patent and attorney fees range from $3,000 to upwards of $15,000. The generic Non-Disclosure Agreements many new entrepreneurs rely on are often too broad, or worse, not legally binding when working with a supplier in another country. Even if you do jump through all the correct legal hoops, the cost of enforcing any of the above provisions in a court of law (particularly in a foreign court) is usually prohibitive for those on start-up budgets.

Further complicating matters is the fact that many people simply aren’t eligible for a patent, the most basic way to prevent someone from replicating your design. You may have a clever idea, but if the USPTO (United States Patent and Trademark Office) doesn’t deem it an “invention” (you can read about the requirements here), patent laws aren’t helpful.

So what are new makers to do? If legal protections are available and affordable to you, then by all means, follow through with them! But for those who can’t afford protection, don’t qualify, or who want to take extra precaution when working overseas, there are some non-legal, budget-friendly best practices that can limit your exposure.

Learn to Make a Product | Real World Advice For Protecting Your Product Idea
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Use a “Dummy” When Talking to Suppliers

Searching for a manufacturing partner means having conversations about your product with lots of different people. Most makers I work with speak to between 5 and 15 suppliers before landing on their final partner. While you’ll obviously need to provide potential manufacturers with some basic design information to confirm their capabilities and interest, it’s not necessary to share the nitty-gritty about what makes your product different.

I recommend people use what is called a ‘dummy product’ when speaking about their concept during this phase. The dummy product is another item on the marketplace, similar in materials or construction to your design, minus your ‘special sauce’.

For example, if you are making a special type of jeans that accommodate the wearer’s weight fluctuations, you could show suppliers a photo of another pair of jeans (like the ones you want to make in terms of style and material), and simply make a note that the design of your waistband differs in that it would require sewn-in elastic. This is enough information to get confirmation about whether the factory has the equipment to produce your product; the more technical aspects of the design can be shared once you’ve narrowed down your list of factories based on general criteria, such as their minimum order requirements, reputation, quality control program, and ease of communication.

Be Vague About the Product’s End Use

People are often so involved with their idea they can’t imagine anyone else looking at the design and not ‘getting it’ right away. But in some cases, the product’s end use is not actually obvious unless it’s explained with detailed verbal or visual descriptions.

Take a designer making a specialized equestrian product – a saddle pad made of unique cooling fabric . When shown on a horse, the purpose of the pad is obvious, but when shown as a flat piece of quilted fabric, it’s function is not necessarily apparent. During the preliminary sourcing phase, you can take advantage of the ability to be vague with potential factories, revealing only what is necessary.

Sometimes you can’t hide what your product does, but you can still withhold what makes it unique (and enticing to copy). For example, a smart maker may opt to source the above-mentioned cooling fabric separately and simply not divulge its special properties to the final sewing facility that would be putting it all together.

Two things to note: people employing this approach will sometimes use a private email address to communicate with suppliers so as not to link to their company’s website. Further, this type of “selective sharing” doesn’t need to be a long-term strategy. Once you’ve developed a trusting relationship with your manufacturing partner, it’s okay to be more transparent.

Search for Reviews

People who get ripped off are usually pretty mad about it. Because factory searching is mainly done on sourcing platforms which allow users to leave reviews, it’s a good idea to search the major sites for negative comments about the partners you’re considering. A simple web search for ‘sourcing database’ or ‘find manufacturers’ along with the name of the country where you are producing should yield a list of sourcing platforms to search. It’s also a good idea to do a general search of the supplier’s name.

Split Production Into Multiple Locations

Breaking up production into different locations can require a bit more legwork and some added logistics costs, but for makers with high-tech or highly sensitive products, it can be worth it. Let’s say you have a design with 3 main components. Instead of having one factory do the entire job from start to finish, you hire 3 different partners to perform different processes, so that no one supplier has the specifications or materials necessary to make your entire product.

A company might give Supplier A instructions to make two of the components, hire Supplier B to make the third, and then instruct Supplier C to assemble all three pieces prior to shipping. They may also utilize a hybrid sourcing model, where overseas suppliers make certain parts and a domestic factory (under local legal jurisdiction) is tasked with final assembly. Those who are really concerned about IP might even complete the final step in their own private warehouse.

Focus on Branding

There’s no shortcut or quick tip to achieving great branding, but it’s the ultimate IP protector. Consumers buy product due to a mix of motivators; the most influential factors being compelling branding, great photography and/or copywriting, and high media visibility. And these are all things that you, the passionate, creative force behind your product, are in a unique position to excel at! A factory that specializes in machinery and quality control and logistics? Not as much.

Whether you raise outside capital or invest in hardcore sweat equity, focusing on branding is one of the most important things you can do to crowd out those who may try to copy you.

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