How - to- Start a Manufacturing Business

How - to- Start a Manufacturing Business 1

FAITH INSTITUTE www.faithinstitute.org 2

How - to- Start a Manufacturing Business Business Fundamental Introduction Who We Are? Introduction to Private Label Manufacturing Consumers are Switching to Private Label Private Labeling: What is it? What is Private Label Manufacturing Getting Started Private Label Resources 3

How - to- Start a Manufacturing Business Advertising Finding a Supplier The Nuts and Bolts Business Fundamental Develop a Marketing Program Build Repeat Business Reaching the Next Level The Potential 4

How - to- Start a Manufacturing Business Business Fundamental How to Make Money With Your Own Private Label Products Begin at Home Buy in Bulk 5

How - to- Start a Manufacturing Business Private label manufacturing gives any business the opportunity to have its own range of products, with its own brand name and label, for which customers must return exclusively to them to repurchase. 6

How - to- Start a Manufacturing Business A company can make a lot of money doing nothing more than buying a product in bulk, putting it into smaller containers, and selling it under their own-brand name. Now, you can discover how to get your share of this lucrative market. 7

How - to- Start a Manufacturing Business You see them every time you go to the grocery store. Private label products make up a large portion of items sold. Almost every grocery store sells its own label products. 8

How - to- Start a Manufacturing Business Start Your Own Business - High Profit & Prestigious Private label manufacturing of cleaning products, toiletries and cosmetics is a growing and highly profitable industry. Many businesses - from hair and beauty salons to cleaning companies, supermarkets and many more - are beginning to realize the value in promoting their own business name and logo, and gaining customer loyalty for their own products, in preference to providing free advertising for multinational conglomerates. 9

How - to- Start a Manufacturing Business Start Your Own Business - High Profit & Prestigious Private label manufacturing gives any business the opportunity to have its own range of products, with its own brand name and label, for which customers must return exclusively to them to repurchase. 10

Private Label Manufacturing With the correct formulations, these products can be as good as, if not better, than the leading brands. Private label manufacturing allows you to choose the quality of your ingredients and know exactly what is in the products you are using and selling to your customers. 11

Private Label Manufacturing You don't need to hire a private label manufacturer in order to produce your own range of products. You can easily and safely do it yourself. In fact, you can even manufacture products for other companies. 12

Private Label Manufacturing Private label manufacturing is also extremely profitable. If you have an existing business and use cleaning products, toiletries, skin or hair care products on a regular basis, you have the potential to save a substantial sum. 13

Private Label Manufacturing The profit margins in private label manufacturing are something most outsiders find amazing - a bottle of shampoo which sells for $10 or more can cost as little as 50 cents to make from raw ingredients. 14

Private Label Manufacturing Private label manufacturing is also surprisingly easy - if you can follow simple directions, you can easily mix together the ingredients required to make everything from window cleaner and laundry detergent, to deodorant and air freshener, self-tanning spray, acne treatments, mineral make-up, etc. 15

Private Label Manufacturing The formulations are not common knowledge - which means it is an extremely difficult business for others to copy. This also explains why the major manufacturing companies are some of the wealthiest corporations in the world. 16

Private Label Manufacturing Private label manufacturing is a unique and prestigious business offering unlimited opportunities to expand further in many directions. This workshop will delve into the world of Private Label and explore perceptions, usage patterns and intentions as it navigates marketers and manufacturers alike through the complexities of understanding this increasingly popular market segment. 17

Branding Your Products Brand sponsored by a wholesaler, retailer, dealer, or merchant, as distinguished from a brand bearing the name of a manufacturer or producer; also called private brand. Manufacturers use either their own name, that of a middleman, or a combination of both when they are marketing their products. 18

Branding Your Products Since manufacturers' (producers') brands have large advertising expenditures built into their cost, a private labeler is able to buy the same goods at a lower cost and thus sell them at a lower price and/or at a better profit margin. 19

Branding Your Products In addition, private labelers have more control over pricing and are able to advantageously display their own brands for maximum impact. 20

Branding Your Products For example, a grocery store can quickly reduce the price of its own private-label brand in order to meet or beat a competitor's price. Or the grocery store can create a special point-of-purchase advertising display and/or give its brand predominant shelf space in order to boost sales. store label with a product's name. 21

Branding Your Products Private-label brands are usually priced lower than comparable manufacturers' brands and therefore appeal to bargain-conscious consumers. An example of a private-label brand would be a supermarket product bearing a store label with a product's name. Private label manufacturing of cleaning products, toiletries and cosmetics is a growing and highly profitable industry. 22

Branding Your Products Many businesses - from hair and beauty salons to cleaning companies, supermarkets and many more - are beginning to realize the value in promoting their own business name and logo, and gaining customer loyalty for their own products, in preference to providing free advertising for multi national conglomerates. 23

Branding Your Products Private label manufacturing gives any business the opportunity to have its own range of products, with its own brand name and label, for which customers must return exclusively to them to re-purchase. 24

Branding Your Products With the correct formulations, these products can be as good as, if not better, than the leading brands. Private label manufacturing allows you to choose the quality of your ingredients and know exactly what is in the products you are using and selling to your customers. 25

Branding Your Products You don't need to hire a private manufacturer in order to produce your own range of products. You can easily and safely do it yourself. In fact, you can even manufacture products for other companies. 26

Branding Your Products Private label manufacturing is also extremely profitable. If you have an existing business and use cleaning products, toiletries, skin or hair care products on a regular basis, you have the potential to save a substantial sum. 27

Branding Your Products If you're looking to start a business, or increase your existing income, cosmetic and chemical manufacturing has little competition for such a huge market. The profit margins in private label manufacturing are something most outsiders find amazing - a bottle of shampoo which sells for $10 or more can cost as little as 50 cents to make from raw ingredients. 28

Branding Your Products Private label manufacturing is also surprisingly easy - if you can follow simple directions, you can easily mix together the ingredients required to make everything from window cleaner and laundry detergent, to deodorant and air freshener, self-tanning spray, acne treatments, mineral make-up, etc.. 29

Branding Your Products You can use exactly the same raw ingredients as the major cosmetic and chemical manufacturers. Private label manufacturing is a highly profitable service to offer for fundraising and promotional activities for sports clubs, schools, service organizations, and similar groups. Private label manufacturing does not require an expensive laboratory and equipment - it can easily be done from home or workshop. 30

Branding Your Products The formulations are not common knowledge - which means it is an extremely difficult business for others to copy. This also explains why the major manufacturing companies are some of the wealthiest corporations in the world. Private label manufacturing is a unique and prestigious business offering unlimited opportunities to expand further in many directions. 31

What is Private Labeling? First, let's be clear about what I mean by Private Labeling. According to Wikipedia, the online encyclopedia, private label products or services are typically those manufactured or provided by one company for offer under another company's brand. 32

What is Private Labeling? So this covers everything from Wal-Mart brand products to the small restaurant putting their label on someone else's hot sauce.. 33

What is Private Labeling? It is amazing the number of businesses now that are engaged in some form of private labeling. Restaurants, hotels, spas, hair salons, even car dealers are all putting their own brands on products such as hot sauce, lotions, shampoos, coffee, lip balm, bottled water and wine. 34

What is Private Labeling? Many corporations want to put their own logos on products that they give away to reinforce their brands. The corporate gift market is particularly busy around Christmas. 35

Getting Started There are also many small businesses that want to appear more professional by having their own brands of products to sell - coffee and bottled water are especially popular here. 36

Getting Started So how do you get started in private labels? The easiest way is to just start selling to other local companies. If you sell coffee then start with the local cafés and donut shops - many companies are happy to support other local companies, particularly if they can get their own brand name on the products. Obviously, your existing customer base would also be a good place to start. 37

Getting Started Once you have a few private label customers you can then start a formal "Private Label Program" giving prospects examples of what other companies have done. One important point to note is be sure to make it as easy as possible for your customers. 38

Getting Started You should offer to do all the work for them including the labeling, so they will just receive the finished product. You may end up having lower margins on your private label products, but you can make up for that with increased volume. 39

Private Label Resources You don't have to do it alone in your private label venture; there are plenty of resources out there to help you. There are two main publications that you can read: Private Label Magazine Private Label Buyer Getting Started 40

Getting Started There is also a national organization - the Private Label Manufacturers Association that puts on a big trade show every year just for the private label industry. 41

Reaching the Next Level If you continue to do all the production work yourself there is obviously a limit to how large your private label business can be. If you want to reach the next level you will need to hire the services of what is known as a Contract Packager. 42

Reaching the Next Level Basically, these are companies that take your product and packaging and put it all together for you and then ship it to your customers. They can even mix your ingredients for you to create your end product. 43

Reaching the Next Level You need to be at a reasonably high volume for this to be worthwhile, but the beauty of outsourcing your production work is that it scales very easily - and it leaves you time to focus more on bringing in business. 44

Reaching the Next Level The Contract Packaging Association is the trade group for contract packagers and their web site has a wealth of information. You can read about the criteria you should use when choosing a contract packager. They can even help you find a contract packager in your area with the capabilities that you need. 45

The Potential We have seen it many times when a small business will start out small ordering their own brand of product. Then they will start private labeling with a few of their key customers. 46

The Potential The next thing you know they are sending us dozens of different labels for a large number of customers as they expand their private label business. 47

The Potential It may be just a dream for many of you to have your products as the store brand at a national chain, but if you don't start out down the private label road you may never know the potential for your product. 48

The Potential If you are completely focused on selling your products under your own brand at wholesale or in a retail store you may be missing out on a huge growth opportunity. The private label trend shows no signs of slowing down - you could very well find that the sky is the limit. 49

How to Make Money with Your Own Private Label Product You can produce your own private label products. You can buy hundreds of products direct from manufacturers and have them package the product into cans, cartons or bottles adding your own label. Imagine. You can become an instant wholesale distributor or retailer of a vast array of products all bearing your own company name! 50

How to Make Money with Your Own Private Label Product You can become an instant wholesale distributor or retailer of a vast array of products all bearing your own company name! 51

How to Make Money with Your Own Private Label Product Not long ago we visited a local health food supermarket. We were impressed with all the bottles of fruit juices which were packaged for this market under its own brand name. 52

How to Make Money with Your Own Private Label Product However, we have seen the same bottles in other stores that also offer health foods. The only thing different was the label. 53

How to Make Money with Your Own Private Label Product Many large producers can help you get started creating your own private label products, even in limited quantities. Manufacturers often accept a contract from a large, nation-wide firm to produce and package a set amount of a product. 54

How to Make Money with Your Own Private Label Product After finishing the job, there are usually large amounts remaining; not enough to sell to a major distributor, but too much to waste. You can step in and arrange to have the remainder packaged under your private label. You can then resell it to distributors in your area. 55

Begin at Home But even before you make a contract with a producer, you can begin slowly from your home producing your own product line. 56

Begin at Home Some products are very easy to prepare in your home. In smaller quantities it will pay you to buy the product in bulk and repackage it yourself. 57

Begin at Home By preparing a private label product from home in limited quantities, you will not have to make a commitment for a production run. And you will only repackage the product into smaller containers as time allows. Thus, you can grow as slowly or as quickly as you desire. 58

Buy in Bulk Many products are easy to buy in bulk quantities and repackage. These include soaps, dry goods such as sugar, beans, flour, chemicals, cleaning compounds of all kinds, glues, paints, oils, solvents, and waxes, to mention a few. 59

Buy in Bulk Because of strict federal guidelines concerning the sale of food items, you may wish to avoid this category all together. The easiest products to consider packaging under your own name are non-food items such as liquids. 60

Buy in Bulk Many of these you can buy in five gallon containers. They can easily be repackaged into one ounce, two ounce, one pint or one gallon cans or bottles. 61

Buy in Bulk Consider glue. When you shop for this item in a store you will typically see a four-ounce bottle retailing for $1 or more. If you buy that same glue in a fivegallon can, your cost will not be more than several dollars a gallon. 62

Buy in Bulk It is easy to see how dividing a $3 gallon into 32 containers selling for $1 each results in a $29 gross profit per gallon! Multiply that by hundreds of gallons of your product and watch the profits soar! 63

Buy in Bulk The only additional cost besides your product will be the smaller containers into which you divide your product, the adhesive labels for each, and the distribution cost. 64

Buy in Bulk Plastic or metal containers purchased in bulk will cost you from 5 to 25 each, depending on their size and material. Labels can be printed for only pennies apiece. 65

Advertising You must realize that a very high percentage of the cost of products is advertising. If a product is promoted with national TV and radio advertising, the costs are incredible. 66

Advertising However, when you develop your own local distribution system, you can avoid these costs and pass on a lot of savings to your customers. Thus, your product sells for less than the name brand, but is often the exact same high-quality product. 67

Advertising Let's look at the successful results of one private label distributor we know. He repackages and markets paint. He markets a high-quality exterior paint. His paints sell for $8 to $12 a gallon, several dollars less than the name brand sold next to it on the shelf. 68

Advertising He purchases his paint in various colors in either five gallon cans or 55 gallon drums direct from the manufacturer. He pays $5 per gallon in five gallon lots, and $3 per gallon in 55 gallon drums. 69

Advertising He purchases new one-gallon metal cans from a local supplier for less than 40 each. Self-adhesive, 5" x 8" labels are printed by a local offset printer and he applies them to the can himself. He realizes a profit of several dollars per gallon. 70

Research to Find a Supplier Go to any major library and ask to look at a current edition of the Thomas Register. This publication lists over 300,000 manufacturers of products in the United States. Under the heading Paint Manufacturers there were no less than 500 names the last time we checked. 71

The Nuts and Bolts of It When the product is in liquid form, repackaging is quite simple. All you need is a suitable rack for holding the larger container, a valve of some type to control the flow of liquid, and a suitable funnel. 72

The Nuts and Bolts of It In very high production, you can buy metering equipment of all kinds to pump out and deliver a measured amount of a product. 73

The Nuts and Bolts of It When you read a book on home-made formulas you will find many other money-making opportunities that will call for repackaging into smaller containers a product normally sold in bulk. 74

The Nuts and Bolts of It One that has been done in the past is a formula for removing oil stains from a garage floor. The compound consists of nothing more than pure cement of the kind used in construction. 75

The Nuts and Bolts of It Excellent results are achieved when you sprinkle the cement on the oil stain and leave it on for a short time before brushing it away. The cement does a quick job of soaking up the oil. 76

The Nuts and Bolts of It It is not too difficult to buy a 100-pound sack of this cement and repackage it into one-pound or two-pound boxes or bags and offer it as a floor cleaning compound for garages. 78

The Nuts and Bolts of It Almost all large manufacturing plants buy their floor cleaning compounds in 55 gallon drums. These industrial strength cleaners are ideal for people who own very small shops and for people with home workshops. 79

The Nuts and Bolts of It These small shops would never be interested in buying 55 gallon drums of a product, but they would be ideal prospects if those same good cleaners were offered to them in one gallon cans or bottles. 80

The Nuts and Bolts of It If you developed a business which concentrated on offering floor cleaning compounds, you would also want to consider offering floor waxes. Both of these items are available in bulk for repackaging. 81

The Nuts and Bolts of It They would make excellent companion products for a new business venture to offer a private brand label line. 82

Develop a Marketing Program Your marketing program can be easy to develop. Rather than market your products through retail outlets, you may decide to market it directly to the public yourself. 83

Develop a Marketing Program In most cases the products you'll consider for your own-brand label will need very little customer education. You could create, design, and print a single one-page sales flyer pointing out the advantages of buying that product from you. 84

Develop a Marketing Program This does not mean your sales flyer should not include some of the basic facts found on competitive sales flyers. However, in your case you would want to concentrate on pointing out the convenience of ordering from your local stock. 85

Develop a Marketing Program Your entire marketing program need not consist of anything more than printing a single sales flyer and distributing that message to potential customers in your immediate area. 86

Develop a Marketing Program Later on when you learn more about running a small business, you may want to consider offering your product by mail order. 87

Build Repeat Business Some products are consumed more quickly than others. If you have a product of this type, your selling efforts can be used to build up a long-term repeat business situation. 88

Build Repeat Business Most people show loyalty to a given supplier. If you give good service, offer a product at a fair price, and service your accounts on a regular basis, you can build up an impressive following of customers who will stay with you year after year. 89

Build Repeat Business Let's assume that you will make $2 per gallon profit on each can of a cleaning compound you sell. If you develop a customer following that generates 200 or 300 repeat orders every month, you have a $400 to $600 monthly income just from repeat business. 90

Build Repeat Business If your profit margin is greater, your total income will grow accordingly. If you have several products that sell at a comparable level, you can see how your profits can really add up. 91

Build Repeat Business Some products are consumed more quickly than others. If you have a product of this type, your selling efforts can be used to build up a long-term repeat business situation. 92

More Information For more details on market research, business planning, advertising, selling and other aspects of home based businesses check out our follow-up FIE workshops: How To Become Your Own Boss Home Based Part-Time Business Reports Check the Faith Institute online education portal at https://faithinstitute.digitalchalk.com/dc/guest/login for more workshops information. These workshops will be able to assist you in finding resources for your future planning and business success. Or call us at ( 910 ) 679-4319. Best Wishes for Success!

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