Contract Manufacturing – A Start-up Solution

November 8, 2021

All you need to know about contract manufacturing – what it is, who it’s for, the pros and cons.

An example – Jane makes the most delicious spicy chicken. Everyone starts commending her on it. “You really need to bottle up that spice mix and start selling it. I’d buy it”, says Jim, her brother in-law. Jane thinks things through – costing associated with mass producing her spice mix, the technology required as well as the cost of packaging. And then, what if it doesn’t work? What if nothing sells? She seeks out a manufacturer who already producers food related products, they ensure that they can produce Jane’s spice mix, with packaging included. All she has to do is purchase a minimum quantity of 2000 pieces. This is an example of contract manufacturing. And yes, it is becoming quite popular here in Australia.

Who is it for and why would you consider it as an option:

Ideal for start-ups and small businesses who are looking to keep things simple. Business owners who are prefer working on their business rather than ‘in the business’. Reasons why it’s a great option to consider:

A cost effective solution, allowing businesses to better allocate capital into developing their brand and marketing. Less money spent on manufacturing and packaging and more resources allocated towards brand building.
A great way to test the market. Have the product created by a manufacturing and make changes based on consumer feedback.
Outsourcing allows a businesses to scale production at a quicker rate and to adjust based on demand. If customers like your product, you can easily request to produce more without having to increase staffing or by purchasing additional resources.
Access to expertise and technology. Sit back whilst those who have been doing this for years, do what they do best. All at no extra cost to you.
It frees up time allowing you to work on other areas of the business. It’s also a great option, if you’re creating a start-up alongside your day job.

The not so good stuff:

Things to keep in mind:

Finding the right contract manufacturer who can bring your vision to life as well as maintain quality will be the most important step.
You won’t have as much control over the production process. A relationship built on trust will be important.
Intellectual property – your secret recipe will no longer be a ‘secret’ once you hand it over to manufacturers to produce. Something to keep in mind.

Your questions answered:

My recipe is vegan friendly, has no preservatives etc?

There are manufacturers who can accommodate for this. The Other Chef is an example of a manufacturer using local, sustainable ingredients.

How long does the set-up process take?

Depending on your product idea and packaging it usually takes 2 – 4 weeks, which is a lot less time than setting up production by yourself.

Can I choose my own packaging?

Most manufacturers give you the choice. It might be handy to have ideas for branding in mind.

I don’t have a recipe – Can I use an existing one?

Turns out starting a business in the 21st century is a lot more simple than you thought. No recipe, no worries. Ask your manufacturer to create one for you.

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