True confessions: I started a business; mistakes were made. Lots of them. Now I’d like to share my five small-business tips for product-design entrepreneurs, so you can learn from my blunders.
1. Do Your Homework. Last October, our Chinese manufacturing partner warned us about something called “CNY,” which I assumed was a heads-up that the calendar year was ending. I chuckled to myself that our partners thought we were big enough to care about the accounting impact of December 31 versus January 1. So, I lagged on some go/no-go decisions because of a packaging issue.
Imagine my surprise when I learned what CNY abbreviates. Grab a pen. You will want to write this one down.
Chinese New Year. It also stands for, “Workers go home for six weeks; manufacturing grinds to a halt.” Not kidding. For workers, it’s a hard-earned break to enable time with their kids, parents, and hometown. For the unsuspecting American, it’s time to feel like a cultural nitwit while standing idly by the computer waiting for a response. In an article I wish I’d read a long time ago, Inc. overviews what to expect.
The lesson here? In short, do your homework early. Or, miss an entire sales cycle like I did. Be aware that small companies are not first in line when the factory “On” button gets pushed.
2. Understand Your Design from a Real-World Perspective. One of our products was a fabric circle—so beautiful in renderings. Three pieces: media fur, foam, microsuede. Instructions? Cut circle. Embroider edge. How hard could it possibly be to manufacture?
Have you ever tried to sew a circle? Yeah, me neither, because it’s hard. Sewing machines forgive squares and punish circles. We chose materials that were a nightmare, even for experienced textile workers. Fur is thick and slippery; suede is delicate and grippy. Embroidered edges show threads popping through. Oops.
We failed to understand our design from a real-world perspective. What’s the lesson here? If you don’t have manufacturing experience, you need to invest time and perhaps money to appreciate the steps required to scale your perfect CAD rendering. Strip out complexity where it doesn’t add value.
3. Packaging Tells Your Story. We spent 10 times longer on packaging than on our products. We saved packaging until the last minute because it seemed like it would be easy, then spent another nine months with delays, redesigns, and hunts for vendors. My mistake? Not understanding that packaging is a product that introduces, protects, and displays. It showcases the story of your brand. In fact, a recent Marketing Week article goes so far as to state: “Packaging should be seen as a plot point. A point of inflection. Decision time.” In other words, that wrapper we took for granted significantly drives consumer decisions.
Packaging is also manufactured, with parts, molds, and scale hurdles. One day we got an email that said, “Glue doesn’t work with your package design.” That prompted a time-sucking, rabbit-hole argument about how to stick one piece of paper to another.
The lesson here? Packaging is narrative. Glue doesn’t always stick. Build that into your timeline.
4. Know Your Partners. I didn’t make a due diligence “meet-and-greet” trip to China ahead of choosing a vendor. We ended up in a factory based on a referral (which could mean that someone’s cousin did us a favor for a 10 percent commission).
Problems started when I opened the FedEx box of production samples that had fingerprints on half the items, smudges on the other, and crooked staples on our very simple bag packaging. A self-righteous, indignant stink followed in my email to our partner. We complained and assembled detailed diagrams and instructions on how to do better next time. Their polite responses were frustrating and unhelpful. Then one day when we got a note that read, “Monsoons are coming. Your product is stored in a leaky shed. Do you want to take production? The goods will mold if you wait.” My head spun around on its axis.
We scrambled and found a friend of a friend in Hong Kong who works with small American companies trying to do business in China. He visited the factory on our behalf, and in one sentence during a Skype call, he clarified everything: “This factory makes Happy Meal toys for McDonald’s. I don’t know how you ended up here.”
If we’d invested time in getting to know our partners, we’d know that we were a mismatch. We wanted our small runs to be high quality in premium packaging. Instead, we ended up as gnats browbeating a giant that made zillions of cheap, unpackaged toys. The lesson here? Invest in a relationship with your factory.
5. Crowdfunding Is Not Free Money. Crowdfunding is fun, exciting, validating, and relevant. Free, it is not. For product companies, the best part about crowdfunding is the ability to test the market for your product. But products have margins.
We didn’t lose money on our Kickstarter project, and it was invaluable and precious to us for many nonfinancial reasons. But profitable? Not if we assess the following: 1) Time spent on our video, etc. for the Kickstarter site; 2) Time trying to attract publicity; 3) Time responding to supporter inquiries during and after the project; 4) Effort fulfilling/tracking rewards; and 5) Known costs (shipping, manufacturing, payments, Kickstarter’s take, etc.). Financially, we would have been better off taking on additional freelance work and funneling that money into our company. But thankfully, money wasn’t why we did it.
A New York Times story profiled successful entrepreneurs who struggled with unforeseen crowdfunding costs. One Kickstarter star, who experienced disappointing delays, said about his campaign: “It [sounded] like a lot of money, and [supporters] were like, ‘Where did it go?’ But the reality is that for four guys for two years, we scrounged.” The lesson here? Understand the costs and real reasons to crowdfund your project.
Read three more difficult confessions in Part 2 of the story. And for more small-business lessons, check out When Life Gives You Lemons: 4 Business Lessons From the Kid With a Lemonade Stand and Manufacturing Costs: 9 Considerations to Make Before Taking Your Idea From Prototype to Production.
While it’s unlikely any of you have made my garish blunders, perhaps you have a “friend” who has? What caution flags would your “friend” share about starting a small manufacturing business? Please share them below in the comments section.