The Boss Club Podcast
The Boss Club Podcast
Ep. 13 - Finding Manufacturers for Your Products (HUGE Lightbulb Moment for Young Charlie)
You can find someone to produce just about ANYTHING for you. If you are looking to find a manufacturer for your product, this episode will give you some great guidelines on how to do that and what that might entail. One of the biggest lessons here is that since you can build anything, you need to spend the majority of your time spent on figuring out how to sell the product or service. Too many entrepreneurs fail because they only focused on their product and not the entire business.
The content in this episode was a HUGE lightbulb moment for Charlie earlier in his entrepreneurial journey. From this episode you can learn it much earlier than he did!
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It's far better to sell out of an item and have to order more than it is to be left with a bunch that eventually expires one day. So just be very, very
SPEAKER_00:careful. Yeah. Welcome to the Boss Club Podcast, a show dedicated to helping you grow your business faster, more profitably, and with fewer mistakes. And now your hosts, David Grubbs and Charlie Gassmeyer.
SPEAKER_01:Welcome back to episode number 13 of the Boss Club Podcast. This is Charlie Gassmeyer, joined as always by my co-founder and co-host here, David Grubbs. To start off this episode, I want to rewind the clock more than a decade back to, gosh, I don't know, I was probably 16 years old or so when I was trying to figure out how to start my first business. And I think it's a really, really good teaching point here based on the questions I had. So let me kind of draw up the scenario for you here. I was having a conversation late one night with my dad. And my dad, I look up to him in a entrepreneur. He's been very, very successful. Built a company from scratch, ended up taking it public. He started and sold several others. Really, really accomplished guy, self-made man. And so I've always looked up to him a lot in entrepreneurship. And I remember when I was 16, the whole house was dark. It was late at night. And he was working on his next business at the time. And he's working at the kitchen table. And I just vividly remember only the kitchen table light being on, just shining down on his notepad as he was outlining here how to architect this business. Which if that's a new term to you, go back and listen to the How do you start a business? Let's say that you want to build a tire for 18 wheelers that's more efficient than any other tire that 18 wheelers currently use. And so you want to take that to market. So you start producing this tire and we're going to start to find people to buy. And I paused and I said, wait a second, can you back up? You're already now to like the marketing and building this company. It's like, how on earth would you like, how do you even start producing this thing? You're making a really big assumption that we can just build a better mousetrap and just build a better product. And he kind of looked at me... as though I should know this and said, yeah, I mean, you can build anything you would like. It's not going to be a problem to find people to make your product. That's the easy part. Now let's get to the rest of how do you build a business. And I don't really remember everything of what else he said, because I remember going to bed that night so confused that I thought, man, is that like all I can think about when I, in terms of how do I start a business is what product do I make? And my dad here, who I really look up to is saying, hey, that's kind of, that's an assumption. Let's assume that you can build a good product. And then the real work starts in all of the other part of the process. And so in today's podcast, David and I have both really found that to be true, that you can really build anything. And so I want to cover a few points. Point number one is that you can find anyone to build you anything for your business. And I think this is pretty eye-opening for a lot of new entrepreneurs. Point number two is that while you can find people to build you just about anything, there are a few things to be aware of. And then point number three is because of all of this, don't get too hung up in the product building portion of your business. So David, let me turn it over to you. I overheard you talking to class the other day where this actual question came up and I, and I heard you telling them about how you can produce anything. So let me turn it over to you and kind of, you can kind of inform our, our, our listeners here. What, what you told that student.
SPEAKER_02:Well, this student and even I was when I first started out in entrepreneurship, we're in the same boat. So I was talking to the student and the student was kind of, you know, scratching their head and like, I've got this idea for a particular item. How do I go manufacture this? I mean, you have to buy a warehouse, you have to put a bunch of machinery in it, you have to hire staff, it seems like very expensive and time consuming proposition to be able to go create something in bulk and mass. And the reality of the fact is, is it's not and it can be really I had a mentor of mine kind of show me how to do this years and years and years ago. And so hopefully we can kind of peel back the curtain a little bit and show you how you can actually do this relatively quickly. In fact, I've got a couple examples. I launched a skincare product line in 60 days. So an entire line of skincare products in my own custom packaging with my logos on the bottles and everything in 60 days. In fact, there's manufacturers out there for just about every type of product that you could possibly think of that are willing to make for you and on behalf of your business. In fact, most of the products that you use or consume on a daily basis are not directly produced by the brand on the bag or on the box. In fact, most of of the time they're produced on behalf of that brand by some other third party. And so that's really, really interesting. It was super eye opening for me. I also started a supplement business. So we started a workout supplement company and we did that in 30 days. We literally went through formulation, flavoring and everything within 30 days. There's manufacturers that specialize in doing this and they have an entire process built out to help you do this. And there's a couple of different ways you could do it, but you can produce anything. I'm mentoring a young student right now who's actually in one of our programs making energy bars. So it's kind of like granola bars. And there are companies dedicated to making prepackaged energy bars and they have existing formulations and they have a team that helps you go do this. And, and then they produce them for you and they ship them to you. I mean, it's a, um, a pretty eyeopening experience if you've never heard that this is out there. And so, again, I think it was a pretty interesting story that Charlie told about, um, his dad and, you know, he, you know, I can just sit there imagining, uh, His dad looking at him funny like, yeah, you can make anything. And in fact, there are car tire manufacturers out there that will make tires for you. So, yeah, as Charlie was saying, don't get hung up on the product. And you can find people to manufacture just about anything for you. And in fact, there's a couple of different ways you can do this. So the first thing is you can actually go do a Google search. So type in manufacturers of tires. Fill in the blank, whatever it is you're trying to build. And I've done this personally. I have used this method to go build several different product lines. I literally Google searched, you know, suppliers and manufacturers of X. Fill in the blank. Another great way to do this is actually go to industry associations. And so there are industry associations for just about everything from skateboards to scooters. you know, consumable goods to peanut butter to you name it, there are industry associations. And a lot of times they actually have a directory of manufacturers in that particular industry. And so you can simply go down the list and give them a call and see if you can find one that might be a good fit for you. And the last thing is you can literally go look at the packaging of your competitors. A lot of times they will have on the package, it will say, manufactured by on behalf of you know fill in the name brand x and so you can find out who made that particular product go look them up online and find their contact information and reach out and see if they'll be willing to make a similar product for you and so these are three really easy ways to go find manufacturers for for what you're looking for and if you still need help maybe you can reach out to us and we might be able to point you in the right direction
SPEAKER_01:And, you know, another key word to actually search in here is you're Googling all the things David just mentioned, but also be co-packers. And this is how I found the people to produce my first company, Big Bear Barbecue Sauce. And what co-packers are, are basically people that usually create their own type of inventory. So like the co-packer that I found for my barbecue sauce company was actually a salsa company, okay? But they had the exact same equipment to manufacture salsa and put it in jars or bottles. And that's the same thing that I needed for Big Bear. And so co-packers will basically kind of rent out their machinery or their operations on a part-time basis when they're not using it. And so it's a good way for them to kind of bring in some money when they're not doing inventory runs and they want to charge people like me to create kind of a custom thing. One more thing I just kind of add, David, to what you're saying there is that as you already experienced, there are kind of two different routes you can go with either a manufacturer or a co-packer. Those are kind of two flavors of the same thing. You can really either go the kind of white label route or you can go a full custom route. And so a white label route would just mean Yeah. They already have kind of the formulations. They already have the product basically ready. They're basically just putting what's called white label. They'll put a white label on it and then print your label on top of that. So it could be someone else's product or suddenly it's your product. So they'll ship it to you and they have done everything, but they already had it ready. They just put your product on it. So white labels is a good thing to know. That's a question they'll ask you whenever you reach out to these people. Or you can go kind of the full custom route where you're coming up with the recipe if it has one from scratch and you're doing everything customized. And this gets a lot more expensive. This is kind of what I did with Big Bear. I sent them my entire recipe and we had to go back and forth of batches like they tried it. And then I remember they shipped me on ice like a few bottles of barbecue sauce and I would try it and say, oh, no, that's not right or tweak this. They actually got it on the first round, but I literally just emailed them my recipe and they put their interpretation of it together and sent it to me. I said, that's great. Let's go with that. So white labeled and full custom are two really good things to know about. But as you're searching through manufacturers, don't forget to also look for co-packers, which could be be a good thing. So to summarize all we're saying, I think those are important details, but to summarize all of it, point number one here is we're trying to just say, hey, let's demystify the product creation process. For the most part, whatever you're making, at some point, if you don't want to make your own thing anymore in your house and you want to have someone else do it, that is actually far easier than I think most entrepreneurs understand.
SPEAKER_02:So point number two here is as you're starting to look for a manufacturer or co-packer for your product, there's kind of five things you need to be aware of. And the first thing is MOQs or minimum order quantities. And so what is that? Well, it's how many you have to order on the first run. And some manufacturers are going to have some pretty astounding MOQs. So I remember talking to a few that had 100,000 units as their minimum run. So obviously not a good fit in most circumstances. That would be tremendously expensive for a young entrepreneur. And so oftentimes you're going to have to avoid a You just have to dig. And so one of the first things you're going to look for, and a lot of times they'll actually publish it on the website because they get this question all the time, is they'll actually state their minimum order quantity. And so something you want to think about up front before you get too deep into this is what kind of order do you want to start with? Do you want to order 10 units? Do you want to order 100? Do you want to order 1,000? What is that order quantity? And you want to pick something that you feel like you can sell out of pretty quickly. And so you're going to think about turnaround time and how long it would take you to order more and how much you think you could sell in that amount of time and maybe a little bit longer. And so, again, don't go crazy here. It's far better to sell out of an item and have to order more than it is to be left with a bunch that eventually expires one day. So just be very, very careful. Yeah. If you heard previous podcasts, Charlie tells a pretty cool story about Big Beer and how he learned that the hard way. And I have
SPEAKER_01:as
SPEAKER_02:well.
SPEAKER_01:You're kind. I don't know if it was cool, but I gave a lot away to some food pantries.
SPEAKER_02:Well... You know, the second thing you really need to watch out for here besides MOQs or minimum order quantities is lead time. And so depending on where your manufacturer is, this may be shorter or longer, but something to consider. So a lot of times when we order items from China or India or Pakistan or some of these other countries that are fairly far away from our home base, it can take a month or more just for shipping. And so maybe it takes them a couple of weeks to produce, but then you've got a month for shipping. It ends up in the port of Los Angeles or New Jersey or some other port, the port of Houston. Then it has to clear customs. And so once it goes through customs, then it gets shipped via a typical carrier to your home or to your business. And so those different segments can really add up. And especially during COVID. a crunch like during COVID, some of those shipping times can get pretty long. And so thinking about your lead time is very important because that will also inform your minimum order quantities. You want to make sure that you're ordering enough that'll last you more than the lead time. And so that's just something to think about. If you're using a domestic producer, a lot of times those lead times are pretty short, maybe a week or two. So just something to be aware of. The third item here is packaging. So a lot of these manufacturers, you know, creating products really simple. But a lot of times they're going to have a bunch of different packaging options for you. They'll have some in-house and then some you may actually have to outsource. And so what I mean by that, well, if you're producing products, You know, skincare products, for example, this is something I'm pretty experienced with. They'll have maybe five or 10 different bottles that you can choose from that you can put your creams and serums in. If you want something different, you're going to have to order that from a packaging manufacturer and send it to their location in order for it to be filled. So that adds another level of complexity. Because you're not only having to source the product itself, but you're having to source the packaging for it as well. And so I encourage you early on, stick with whatever is standard that they have in stock. Once you start doing large volumes, you might be able to go do some more interesting packaging using a third party. But again, something to keep in mind.
SPEAKER_01:Hey, one thing I'd just jump in on there, that's what happened with Big Bear too. So I sent them the formula and they said, hey, yeah, we can make this. Here are the three different bottles we carry on site. I said, okay, well, I'll pick one of those. And then they referred me to a label printing company. This is a while ago. This is probably even a lot easier than it was back then. But they referred me to a label company. And then I hooked up the label company with my graphic designer to get the correct dimensions to put it all together. But otherwise... David, to your point, if you have to end up ordering something custom, those people you order from also have minimum order quantities. And so there might be a mismatch of how many your manufacturer needs versus how many you have to go order. And then you end up with extras everywhere and it just inflates the costs and all kinds of stuff. So just to emphasize your point here, if they have something that you can use, really try to do that. It's going to make it a lot easier and avoid some added costs.
SPEAKER_02:I think that's an incredibly valuable point and something that I also learned the hard way with our skincare products. In fact, our labels were produced by a third party And their minimum order quantity was 10,000. And obviously that's a little scary because the minimum order quantity for the skincare manufacturer is 2000, something a little more digestible. But the nice thing is those labels will only cost us about nine cents a piece. And so, you know, 10,000 labels. Yeah, it's expensive, but it's not, you know, a deal breaker. And whereas if, if the minimum order quantity for the skincare bottle and the cream itself was that I would, I would be looking for another solution. That'd be very expensive. So yeah, there's definitely different aspects of what goes into your product. Hopefully your manufacturer can do that all in house. If not, you may have to go source some of these items elsewhere and have it shipped to their location. So the next two points are some that we can kind of talk about together. And that's storage and also fulfillment. And sometimes those are actually done in the same place. So we'll combine them. So once you've produced the product and the manufacturer is done, they send it to your home or to your business or a third party warehouse. You actually got to figure out how you're going to store it and how you're going to send those orders out to customers once they come in, whether that's on the phone or to your website or any other means. And so there are third party warehouses. three PLs, third-party logistics centers that can help you with this. We're going to do a whole separate podcast on this, so I'm not going to go into too much detail here. But as a young entrepreneur, I highly encourage you to really do a lot of this out of your home. Once you reach a certain threshold, at least three to 500 orders per month, you can start looking at having someone else store and fulfill your product. But for now, if you can find a place in your house to store your initial runs, I think that's going to help you learn about the entire process upfront before you start, you know, hiring other people to do it for you. So just to kind of give you a real world practical example, Charlie, how did all that work with Big Bear when it came to storage and fulfillment?
SPEAKER_01:Yeah, well, big disclaimer, I would not do it the same. So if you've heard elsewhere in our courses or on the podcast, my big theme of Big Bear is like mistakes everywhere. But the way that it kind of played out for me was, first of all, the people that I've found to co-pack my barbecue sauce, the minimum order quantity was 2,400, which mistake number one through 10 right there that I made just ordering way too much. But that's what the minimum order quantity was, the MOQ. The lead time, I think it took them about a when they could make it for me. Packaging, I kind of already talked about. They basically, they put it in the bottles they already had. And then I had sent them the labels. But to David's earlier point, I had to buy way more labels than 2,400. And so you end up with some added costs there. But then as far as like storage and fulfillment, They shipped the 2,400 bottles of barbecue sauce, which if you can kind of picture that, that takes up a lot of room, okay? It was a lot of room. And it came on two huge pallets on an 18-wheeler that had to be unloaded into my parents' house. And I talked them into letting me store two pallets. I mean, that takes up like half a room of barbecue sauce in their garage. And so from the garage, then I would drive three hours to where I was in college. And I would load up my Ford Explorer with as much barbecue sauce as it could hold. And I would store it in my room at college. And And then anytime that I got orders, I would then take the barbecue sauce out and then repackage it into a new box and then take it over to FedEx. The whole process was like super inefficient. Not to mention, for some reason, I chose glass bottles, which are a shipping nightmare. And so like almost half of all my orders would send, and they were all friends and family. So they're very nice about it. But they're like, hey, Charlie, we just ordered$200 of barbecue sauce from you. And they all shattered. Here's the picture. And so you'd get a box that was just like covered with bloodied in barbecue sauce. It was horrible. I'm like, oh my gosh, I'm so sorry. So I'd have to spend so much money bubble wrapping as much as I possibly could each order. So it was very unprofitable. But that's how I did it from a kind of storage and fulfillment perspective, again, as you might be laughing on the other end of this podcast, I would do things so much differently now, namely not even choosing glass bottles. So that's kind of a brief real world look into, you know, how someone might do this. And as you can already point out, some ways you might be able to improve that process. But I think that kind of the whole point here, you know, point number one is you can find someone to produce anything. Point number two is that you need to think through some of these implications, everything from the minimum order quantities all the way through How are you going to store and fulfill your product? I didn't think about any of that stuff when it came to Big Bear, which is, again, a common theme here. Mistakes to Charlie. But then point number three is with all of this in mind, I think the whole point of us making this episode is to say, because all of this is doable and solvable, don't get too hung up on the product. Just kind of going back to the initial story of this entire episode of me asking my dad, how do you start a company? And he just quickly glazed over the fact that, OK, let's assume we're making these new features. fuel efficient tires, now move on. Just in the same way that he moved on pretty quickly to start talking about all the other really important aspects of the company, like the marketing and the financing and the financial model, all of those things need to be worked out. And they're as important, if not more important than the product itself. So point number three is don't get too hung up on the product here. As entrepreneurs, we can get so focused on that, but we really have to quickly just assume, okay, we're going to have a product. We can get it made. We can get it shipped. Okay. Now let's spend the majority of our time figuring out how do we go sell these things like gangbusters. So hopefully that's an encouragement to you might demystify a little bit of this kind of product creation process. So David, any kind of final closing thoughts here on, on this topic.
SPEAKER_02:Yeah, I think the one final closing thought I had was just as you were talking about the Big Bear story, I just want to provide some encouragement. I think there are a couple of aspects there that you did really well. I mean, you MVP that as best you could. I mean, getting someone to custom formulate something for you for an MOQ of 2400 bottles is actually pretty good. And so you did that MVP great. You started at home, which is also a great MVP approach instead of going right out of the gate and paying some third party to warehouse it. And yeah, maybe you would have changed the glass bottles to plastic and maybe a couple of other tweaks. But honestly, I think... If you are in that same shoes as Charlie listening to this podcast right now and you've got an idea you want to produce, I absolutely encourage you order it, ship it to your home. And then once you have it stored at home, start shipping them out of your house. If you have to take them off to college with you, that's great. Like do that. And once you've scaled it to a certain point, as we'll talk about in other podcasts, then you can look at third party providers for warehousing and fulfillment. But I think Charlie did a great job with the MVP approach, at least in the early days of Big Bear.
SPEAKER_01:Well, thanks for that. I appreciate it. Luckily, there are mistakes I could have made that I didn't. I did make a lot of mistakes, but I didn't make every mistake in the book. And so, yeah, I think deciding to fulfill it myself and whatnot was luckily something I did right, but plenty of other things to learn from all the same. So I appreciate that encouragement. So I hope that this is an encouragement to you in your own entrepreneurial journey and demystifies a little bit of the product creation process. If you've got any questions for us related to this episode or your business or anything else considering your entrepreneurial journey, you can always reach out to us at podcast at bossclub.com. You can send us an email and we might feature you on an upcoming episode. So thanks for listening. I hope you enjoyed it and it was an encouragement and we'll see you next week.