gettin stuff made.

i was wondering if anyone out there in design land does this:

  1. puts together a design package (cads, orthos, etc.)
  2. sends it to a manufacturer with a fat check
  3. receives multiples

essentially i am wondering if anyone has ever taken the initiative to design and sell their own products, and have manufacturing facilities take care of the inbetweens, because they, of course, don’t own a factory.

let me know of your experience in this sort of thing.

It can be done and I have a friend right now who is working on getting some furniture designs put together and manufactured.

You need to make sure that you put together a really good, detailed set of plans and directions, you want to avoid letting the manufacturer “fill in the gaps” whenever possible because chances are they are going to do something very different than what you planned and the result will not be good.

You also need to get things taken care of legally before you submit it to someone. I would recommend talking to a lawyer that works in Intellectual Property to discuss what you need to do. Without this you risk having someone at the factory “borrow” your plans and produce things behind your back, especially if you are doing something that stands to make a good profit down the road.

The manufacturer is going to charge you a pretty large amount for the first one they produce, but after they have the tooling and procedures in place the cost per unit is going to drop and you can negotiate a better price for production. If you are producing something that uses different materials you are also going to need to do a lot of coordinating between vendors to make sure that the part’s fit and finish actually work when all is said and done. If you can find someone that will handle everything in-house you will be in better shape.

My friend is currently getting investors for his project and that will pay for the prototype. Once he makes more and sells them he will then give his investors their share of the profit.

It should be easy to find companies and manufacturers for things like metal, wood, and some plastics. Other more exotic materials are going to require research on your part and significantly more money. Also remember to stay local whenever possible. Depending on what you are producing, shipping can add a major increase in price that you may not be counting on. You do not want to be paying commercial trucking charges.

what’s a general rule for the profit return on investment? For example, you want to develop a product, an investor invests $1 mil. How much and when will he get his profit?

Investors need to be in it for the long haul b/c, realistically, it could take 5 years to launch even the best product.

People are going to look at an investment in your product the same that they look at things in the banking and financial world. Take a look at certificates of deposit, mutual funds, etc and you will see where banks say things should be.

Usually you are looking at giving people X dollars back at certain increments.
Here’s an example for a certificate of deposit.

CD Maturity
(in months)Interest Rate___Annual Percentage Yield__Minimum Opening
8________________3.54%3.60%
$1000
15_______________3.78%3.85%
$1000
25_______________4.02%4.10%
$1000

Basically the longer they let you hold onto their money the more they get down the road. This website has a good Java Calculator to see what payments you are looking at for what amounts, interest rates, and repayment periods, just play around with the numbers.

This is also important if you want to get a bank to give you backing. You would need to write up a business plan, get investors, and prove to the bank that you, not just your product, are a good investment.

You can also talk to various groups like the Kauffman Foundation to get advice and maybe even money to start a small business. There are actually a lot of groups out there that promote entrepreneurship, you just need to do the research and find them. Google is a great thing for this, I highly recommend you use it.