Key Costs When Starting a Manufacturing Business

by Alex Feldman

November 9, 2020

Are you thinking about starting a manufacturing business? Manufacturing can be a smart industry to enter because there is always demand for high-quality products and there are many different sectors that you can serve. There is the potential for success when it comes to manufacturing but it is important to be aware of the various costs involved in getting set up and running as these can be much higher than a typical office-based business. Read on to discover the main costs involved if you want to start a manufacturing business so that you can calculate startup costs and secure funding.

  • Premises

One of the biggest costs that you will need to cover is your business premises, which you could either purchase or lease. Obviously, this will need to be quite a large space so the costs can be high for this. This is also one of the most important decisions as you will need somewhere with ample space but also somewhere that is easily accessible with good transport links.

  • Utilities

Following on from this, manufacturing businesses tend to have high utility bills due to the nature of the work so you will need to account for these each month. Using energy-efficient equipment and alternative sources of energy are both effective ways to keep these costs down.

  • Staff

Staff are another major and incredibly important cost to consider as you will need a team of skilled and motivated employees to power the operation. It is a good idea to automate what you can for production, but you will also need manpower – you could outsource certain aspects of the operation, which will work out to be more cost-effective.

  • Equipment

Obviously, a manufacturing business will rely heavily on equipment and you will need to invest in quality equipment to run an efficient operation. Conveyors will be a key purchase and you will find it best to get custom conveyor systems from places like fluentconveyors.com, which will help you to operate to a high standard from the very start. 

  • Raw Materials

You will also need to factor in the raw materials that will allow you to manufacture new products. The cost of this will depend entirely on what you are making and what materials you require but can add up to a significant amount each month. 

  • Insurance

It is vital that you have adequate insurance in place from day one so that you are fully protected in case you encounter any issues (there are many potential hazards and issues in this industry). There are many different types of insurance that you may need, so you will need to research these beforehand.

  • Transport

You will then need to factor in the transport and shipping costs involved in moving the products that you make. There are ways that these costs can be brought down, but you need to make sure that you have an efficient system in place to keep customers happy.

Starting a manufacturing business can be smart but there are various costs to factor in with the above being a few of the key ones to cover.