A Manufacturing Guide To Crowdfunding Campaigns (Part 1)

What information do you need to get a manufacturing quote you can be confident in? Who should you partner with? How do you best manage your tooling costs and timeline?

Guest Post by Greg Fisher

If you are making a physical product you will likely have many questions as you prepare for and execute your crowdfunding campaign.  While each product is made of its own materials and uses its own processes, in this article I’ll outline a manufacturing guide, a few rules of thumb, and throw in a couple tricks to help you best tackle this challenge that can feel enormously daunting.

Any well-executed manufacturing plan will focus most of the energy in preparations before the campaign launch.  The real key to manufacturing is to specify the product that is to be made, clearly, with tolerances.  If you can do this well, everything else will fall into place much more easily.

Related to crowdfunding, the goal is to put enough information together to:

  1. Confirm the feasibility of manufacturing your design
  2. Get rough quotes for your fixed costs and manufactured price

If you can’t fill in all the information, don’t worry about it, yet.  Fill it in the best you can.  Having the format and knowing the unknowns will help your manufacturing partner understand where the missing pieces are.  This will start discussions on those points and they can help you fill in the blanks.

Not everything needs to be known before you launch your crowdfunding campaign, but you will at least want to know a rough cost so you don’t get in a situation where you actually lose money by fulfilling to your backers and create the problem of establishing a price point that is too low to go to market beyond crowdfunding.

Choosing a Partner

Manufacturing partners come in all shapes and sizes and it can be a real mess trying to figure out the best fit. It’s beyond the scope of this article to address the subtle differences, but here are a few key points to look for:

  1. Experience with startups – manufacturing is and has been a game played by big companies with large orders, thorough engineering support, deep pockets, and streamlined systems.  Startups are changing that game now, but experience is required to find workarounds to meet low minimum orders and find cost-effective solutions within a system that wasn’t built for it.
  2. Responsiveness – There are a lot of important aspects you won’t be able to measure about a potential partner, but responsiveness is one you can, immediately and quantitatively.
  3. Experience with your type of product – A ton of details goes into making each product.  Experience goes a long way to understanding what works and what doesn’t that will save your partner and yourself a lot of costly headaches.
  4. Ability to work “on-the-ground” – Manufacturing happens at the factory.  The most critical job function of your manufacturing partner will be to oversee and troubleshoot manufacturing as it happens, so they need to be able to be there physically.

Keep the Momentum Going Strong

Once you have established your manufacturing partner, confirmed feasibility, and have confident, rough quotes, you have what you need to build your crowdfunding campaign…but don’t stop there, keep that momentum going! There will be a lot of details you’ll need to vet out and improve before you have your designs to a point where you are ready to manufacture effectively.  Many of these details will require iterations of designs and prototypes that may take a month or more for each iteration.

The less confidence you and your manufacturing partner have in the manufacturability and details of the design, the more you must continue to push on through.   Some of this R&D won’t necessarily take too much of your personal time or money, but a lot of real-time, so make sure that keeps moving.  One of the best ways to use this time is to define your quality inspection criteria. Your specifications and engineering package will define what your product should be, but they don’t define how you will test each product to determine if it is an acceptable product or defect.

Work with your manufacturer to make sure you and they know how your product will be tested. Through this work, whether it is before, during, or just after crowdfunding, you will need to completely define your product specifications and manufacturing processes, which will also define a committed price from your manufacturing partner.

In the Heat of Crowdfunding

During the crowdfunding campaign, you’re going to be busy, really busy!  You’ll need to rally supporters, push for stretch goals, engage media, and update backers to hit those numbers. You’ll want to stay focused during this stretch and not spend a lot of time on the operations side of things.  That’s why it’s so critical to be well prepared going in.

Also, there’s really not too much you can do at this stage if you’ve prepared well.  The next step will be placing the deposit for tooling and components and you’ll likely need your crowdfunding money to do that.  What you will want to have a keen eye on though is your lead time to fulfil.

To give you a quick view of generic lead times, check this out:

Of course, these numbers will change depending on your product and situation, but this is a general guideline to help you understand the steps and roughly associated timelines.  While this is the amount of time it theoretically takes if everything goes well, that rarely happens.  You are likely a small company with limited resources designing and manufacturing an innovative product in small quantities for the first time…pretty much on the wrong side of each of those variables for things to go smoothly.  Be conservative in your promise to backers.

One little trick is that you should place the order for tooling and your longest lead time components as soon as you know you have, or know you will, raise the money required to pull the trigger on tooling and that first production run.

If you raise enough in the first week of your crowdfunding you can immediately knock out three weeks in your lead time by placing that order when you have confidence versus when the campaign is over.  Always be aware of the bottlenecks in your lead time and focus on those first.

We cover what happens after you’ve crowdfunded your product in Part 2.

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