Yahoo Small Business: How Hiring a Contract Manufacturer Can Bring Your Invention Idea to Life

How Hiring a Contract Manufacturer Can Bring Your Invention Idea to Life

By Emily Moorhead | allBusiness

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Are you an entrepreneur with a new product idea you would like to bring to market? Perhaps you don’t have the production equipment needed to produce your product yourself, or maybe you are hoping to sell or license your idea to a company, but need some initial stock to show sales potential, value, and usefulness.
In these situations, hiring a contract manufacturer may suit your needs. But what is a contract manufacturer and what can you expect from them?
A contract manufacturer is a for-hire firm that will produce a specific quantity of your product for a set fee based on agreed upon specification. The price of the service is based on an estimation of the processes, labor, tooling, and materials costs.
Hiring a contract manufacturer may make sense to startup businesses and self-made entrepreneurs because it takes the lengthy process of manufacturing off their shoulders and entrusts it to a product creation team that has experience in the industry. It also may save a business money because it allows an inventor to not have to purchase manufacturing equipment. Some contract manufacturers may even inventory and ship products, which can be both labor-intensive and cost-prohibitive for a small business.
There are always risks associated with outsourcing, and contract manufacturing is not an exception. Consider speaking to an attorney to go over the business arrangement and ensure you have an understanding of the services you are paying for and their extents and limitations. Generally, keep these words of advice in mind when considering a contract manufacturer:

Don’t Be a Cheapskate

A lower price tag may not always be the best option. This price may just include the bare minimum of necessities for your product, and you will be stuck paying for expensive and necessary add-ons in order for your invention to turn out like you imagined.


Get 25% off Web Hosting using code HOSTING25 at Yahoo Small Business   It is also possible a low price can be associated with substandard materials or less-than-stellar craftsmanship. Although this is not always the case, be wary when considering an offer that is much lower in price than competitors’ pricing. Be sure you are familiar with the specifications and know exactly what you are getting for the cost.
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Bigger Isn’t Always Better

On the other hand, a higher cost may not always be indicative of a higher quality product, just as a big-name manufacturer may not always be the best option for you.
Research many different manufacturers on consumer sites and ask for references from customers who produce products similar to yours. Always compare specifications throughout your top choices to ensure each company is offering comparable materials and labor. If a small, yet reputable company can provide you with the same service and quality materials as a big-name competitor for a better cost, it is worth considering the less expensive, but also lesser-known company.

Quality Over Quantity

A simple law in manufacturing is the more product you purchase, the less each will cost to produce. This is because the production phase of manufacturing is the most costly since it involves expensive and time-consuming processes and preparation work. Once the machines start to run, the only difference between producing 500 or 5,000 of your product is the raw materials. It may sound appealing to get 10 times more product for only double the cost, but don’t just buy because the price per unit is less.
Think about it like this: when you shop at a bulk-buying club, such as Sam’s Club or Costco, you could buy 20 pounds of ground beef at a cheaper cost per ounce than if you bought it at a local grocer. However, if you don’t use all of the ground beef, you have wasted money and resources. If you buy 5,000 of your product, but only need 500, you’re going to be wasting space in your garage with an overflow of stock and wasting money which could be used on another aspect of your business.

Specify, Specify, Specify

In manufacturing, your job costs are based on a set of agreed-upon specifications; that is, a list of the materials from which your product will be created as well as dimensions and other physical boundaries. These specifications are incredibly important. If there is a communication issue regarding size, color, type of plastic, etc., you may be out thousands of dollars and stuck with a useless product.
For the sake of both parties’ budgets and sanity, go over the specifications in precise detail before signing on the dotted line. Discuss what is to be produced, how it will be created, what materials are to be used (with brand names and weights, if applicable), the time frame from start to finish, who pays for shipping and delivery, and any other details in the production of your product. There is nothing worse than finding out halfway through production the wrong plastic was used or the dimensions are incorrect and having to start over.
Contract manufacturing can be an excellent way to turn your invention into a reality without having to do all the labor yourself; however, be wary as with signing any legally-binding document. When considering contract manufacturing, ensure you’re not paying too little for your chosen services, consider lesser-known as well as big-time manufacturers, avoid paying a lower cost per unit for an excessive amount of product, and review your specifications in painstaking detail to set yourself and your company on the right path.

About Emily Moorhead

Emily Moorhead is a Social Media and Digital Marketing Specialist at InventHelp, specializing in content creation. She enjoys blogging about inventions, innovation, and technology and has worked in business, audio visual technology, nonprofits, and hospitality. Her passions include cooking, reading, camping, and curling up with her two cats.
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Yahoo Small Business Targeting Health Clubs and Swanky Hotels, But Finding a Purpose in Flint

By Adrienne Burke | Small Business

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Rich Razgaitis cofounded FloWater in 2013 on a mission to eliminate single use plastic water bottles and their destruction of the environment. Swanky hotels, fitness clubs, and sporting events were logical places to start placing his machines, which he says offer “crisp, ultra-purified, perfectly chilled water” sourced from the tap.He positioned FloWater systems as luxury upgrades to drinking fountains and water coolers, with H2O so much tastier than bottled water that consumers would be inspired to carry their own refillable vessels.
But when word spread about lead-contaminated water in Flint, Mich., and of the bottled water being trucked in, Razgaitis saw a new opportunity to pursue his vision. He donated eight FloWater units for placement in Flint government buildings, police stations, schools, and churches to prove their effectiveness in eradicating between 95 and 97 percent of the lead in water flowing from city taps. A third party lab that tested one unit found virtually undetectable levels of lead in water filtered by FloWater units from a source containing 45 times the EPA limit for lead. Testing is ongoing and FloWater is seeking sponsors to place additional units.
Even before the Flint crisis, Razgaitis says his research indicated that half of Americans either don’t trust or don’t like the taste of their tap water. “Our strategy is to use a product that is good - tap water - and transform it through this 7-stage purification system to deliver a product that tastes so much better,” he says. The process, he says, runs tap water through sediment-, carbon-, reverse osmosis-, and coconut carbon filters that remove chlorine, fluoride, herbicides, and heavy metals, and add oxygen, minerals, electrolytes, and a fresh, crisp taste. The company claims its system provides “the most advanced hydration on the planet.”
Razgaitis, who started out as a marketer in the biotech industry and went on to run several consumer goods and e-commerce companies, says he began FloWater with “an idea and a really big problem.”
“Bottled water is a $100 billion a year industry and it’s wreaking havoc on the environment,” he says. “Recycling efforts are important and noble, but less than 20 percent of that waste gets recycled.” Water coolers aren’t much better, he says. “There are 5 million 5-gallon jugs at stations around the country. It’s the most archaic form of transporting water. It’s like going to a well and pulling up a bucket, but doing that with trucks and water sitting in plastic jugs.”
To develop a solution, he partnered with industrial design firm RKS and a water purification manufacturer in Korea. After raising a first round of funding in 2013, his team spent 18 months on intensive product development, from ideation to schematics to prototypes, first-run production, full-scale production, and testing with several thousand consumers.
Today, a permanent FloWater system sells for $5,000. Leasing costs $125 per month. For some FloWater customers, that fee is no object. An office that was spending $500 per month on Fiji bottled water reduced its bill by 90 percent after installing a FloWater system, Razgaitis says.
FloWater’s 500 customers, many with more than one unit, have already contributed to saving more than 3 million single use plastic water bottles from the environment, he says. By the end of 2016, he projects 1,000 customers including hotel and fitness chains and school districts.
For now, FloWater serves just the B2B market. But consumer requests are common. “We get requests constantly from people who travel to a hotel that has FloWater. They enjoy it all week and then go home and email us a request for a unit.” That’s a product he plans to get into development by the end of 2017.  For people in places like Flint, it can’t happen soon enough.
Follow Adrienne Jane Burke at @adajane

Yahoo Small Business: 5 Tips for Your First Sale: Venture Capitalists' Advice for Startups

BY ADRIENNE BURKE | SMALL BUSINESS

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What matters most in the first years of a startup’s life? “Closing deals,” says Greg Pugh, SVP of Customer Acquisition for Rev1 Ventures, seed-stage venture development organization in Columbus, Ohio.

It’s not enough to have a good product if you don’t have customers who want it. And lack of customer interest is a common problem: More than 40 percent of startups fail due to lack of market for their product, according CB Insights.

The seasoned business leaders at Rev1, named the most active VC firm in Ohio, say the best way for entrepreneurs to close their first customer and start out on a path toward sustainable success is to believe that in a startup, everyone, including the founder, sells. Says Pugh, “By building selling into the culture of the company from the start, closing the first customer will be easier, and closing the next customer will be second nature.”

Rev1’s leaders should know. They have helped make Ohio a growing hub of startup activity. In 2015 alone, the firm claims its portfolio generated $162 million in revenue, created nearly 300 new jobs, and attracted nearly $100 million in capital to the region.  

“Inking the first deal is one of the most challenging, gratifying and defining experiences for a new company,” says Rev1 president & CEO Tom Walker, who adds that he wishes he had more early insight into the best ways to approach first customers.  

Here’s how he and the leaders of the Rev1 team recommend closing your first customer and beyond:

1. Do your homework. "Never take any meeting with a potential customer for granted,” Walker says. “When you’re working on your company’s first sales, you may spend a week studying the customer and the competition just to prepare for a 30-minute call. Over time, your customer and industry knowledge will build. But problem solving and preparation? Those will always be the keys to successful sales.”

2. Identify early adopters. The visionaries and technology enthusiasts are the customers who take a risk when no one else will, Pugh says. “They help you make your product what it needs to be. They give you credibility, and often times, they become your friends.” He adds: “Be bold and ask obligating questions of your prospects in order to understand their intentions and your opportunity for working with them and growing with them.”

3. Understand your customer’s business. That’s when you can really sell to them, recommends Rev1 EVP of Investments & Venture Acceleration Wayne Embree. “They will trust you because you demonstrate that you actually recognize that their business is more than the problem that you are trying to solve. When you put it in terms of how your product makes their relationship to their customers better, that will secure them to you as a customer.”  

4. Look for prospects with a track record for doing business with early-stage companies. That’s the advice of Ohio TechAngel Funds Managing Director Parker MacDonell. “Ask someone who knows you personally to introduce you to someone she or he knows personally at the prospect company,” he says. “That removes some of the uncertainty the prospect might feel at doing business with a young company led by an entrepreneur whom they’ve never met.”

5. Provide abundant value. When you do, your very happy first customer will help you land your second and third customer, says Rev1 Chief Marketing Officer Kristy Campbell. “It’s critical your product or service can provide the value required to ensure they come away from the process as an active advocate for your work.”

Visit the Rev1 Ventures blog for more of its leaders’ insights.

Yahoo Small Business [Video-Our Customers Make It Happen] and Yes, You Can Teach an Old Company New Tricks, Innovation Psychologist Says

BY ADRIENNE BURKE | SMALL BUSINESS

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There’s a science to being creative, and, having worked with such innovative giants as Google, Disney, LEGO, and Virgin, Amantha Imber has it figured out. In her new book, The Innovation Formula, the best-selling innovation psychologist and founder of the Australian innovation consultancy Inventium, offers “14 science-based keys for creating a culture where innovation thrives.” We had the opportunity to ask the creativity genius a few questions.

Aabaco Small Business Advisor: Please explain a little about your work as an innovation psychologist.

Amantha Imber: As an innovation psychologist, I specialize in dissecting the latest research in fields such as cognitive science, organizational psychology, and neuroscience into what has been scientifically proven to increase innovation within organizations. My firm also conducts our own research into the key drivers of Australia’s most innovative companies.

ASB: You are also a singer. Your combination of right and left brain expertise seems to make you uniquely suited to writing about the science of creativity. Do you find that creative people resist the idea that there could be a formula for nurturing creative output?

Amantha Imber: Absolutely. I find that “creative” people are the most resistant to being told that creativity is a skill that can be taught. I think this makes some creative people feel less special. Indeed, our ability to think creatively is actually only 30% genetically pre-determined. The rest is up to us. By using tools that have been scientifically proven to increase our ability to come up with great ideas and exposing ourselves to stimulus that increases creativity, every one of us can significantly increase our creative thinking abilities.

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ASB: You talk in your book about the strong innovation culture at GE and the weak one at Yahoo. The differences are well known by now to many people, but they seem opposite of what we should expect – that a relatively young dotcom business would be far more innovative than an ancient manufacturing company. Is there a simple way to explain the reason for the differences in level of innovation between those two particular companies?

Amantha Imber: In my book, I talk about an initiative that Jeff Immelt started at GE called Imagination Breakthroughs (IBs). In 2003, Immelt introduced IBs to his senior leadership team, which he defined as an innovation that would contribute $100 million of incremental growth. Each member of the team was responsible for generating three IB’s every year. The challenge is big, but the resources made available to leaders make it a challenge that they can meet. And what we know from research is that setting people big challenges - but ones that they have the skills and resources to achieve - is one of the most important drivers of innovation culture.

Unlike GE, which continues to produce breakthrough innovations in the many industry sectors they play in, Yahoo has struggled to disrupt its competitors and, from an outsider’s point of view, appears to play it safe. Incremental innovation rather than more breakthrough innovation has become the focus, and as such, the risk adversity inherent in this focus has a negative impact on innovation.

ASB: Do you think small businesses have a better shot at being truly innovative than large corporations do? Why?

Amantha Imber: Small business have several big advantages over big businesses - they can move quickly, they don’t have bureaucracy slowing them down, they can make fast decisions, and they tend to be a lot less risk adverse. These are all significant benefits in the innovation race, but also ones that small businesses can take for granted.

ASB: Can you describe work you might have done helping transform a particular small business into an innovative culture?

Amantha Imber:  A lot of the work we have done with smaller businesses involves helping them build innovation capability. We have taught many businesses how to identify customer-driven innovation opportunities and given them tools they can use again and again to keep uncovering new opportunities for their business.

We have taught many small businesses tools that have been scientifically proven to enhance their creative thinking efforts - to give them a competitive advantage in the kinds of thinking and ideas they produce.

And finally, we have worked with many businesses in teaching them how to experiment with an idea and test it properly with customers before investing a lot of money into implementing it. Essentially, having the skills to experiment with ideas prior to implementation is a great way to de-risk innovation.  

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