When Start-up Costs are High

I realise now why so few people go into manufacturing products – the start-up costs are huge! Service-based and information-based businesses can largely be started with little capital. Even my previous tea company only needed about $5k to get started before I had a batch of products to sell.

My ambitions to do something with recycled plastic this time is far more expensive than any business I’ve ever tried. Sure, I can buy something from China and private label it for minimum costs, but I wouldn’t be fulfilling the purpose of the social enterprise (to reduce plastics going to landfills and waterways by making great products out of Australian recycled plastic).

How much am I talking about? Well, the design and mould costs alone for my simplest product is estimated to cost $30k. This is before I even have one product to sell.

While 3-D printing has definitely revolutionised the cost of prototypes, the process itself is not ideal for mass production or even performance testing of products that must have some level of strength or rigour.

Therefore, in order to make more robust and mass produced items, moulds still have to be made in a material that is significantly stronger and can withstand greater heat than the product material itself i.e. plastic.

Having these costs upfront is useful as I can more accurately assess risks and cashflow. At the same time, I can’t afford to fund all these moulds myself with only the savings I put aside after selling my investment property.

I always think that roadblocks are God’s way of telling me to pivot or shift directions.

I’m going to have to rethink my funding model to make it happen. Maybe, I go ahead and pay for the full design and product prototypes and see if I can somehow pre-sale or crowdsource cash to pay for the moulds. I may also be able to afford one mould if I can get a local government grant in August to start this project. Having the prototypes ready will be useful to convince people that the idea is worthy.

Any advice from my readers?

-Tammy

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Tammy Ven Dange

Purpose Driven Entrepreneur Be kind to animals and mother nature!

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