Starting a Furniture Company...Am I crazy?


So I have been working on a line of chairs and getting involved with a manufacture to make them. But am I crazy to start a line of chairs when the economy is horrible?
Are people buying stuff from independent designers?

I am just a little nerves that lower end stores like IKEA will eat me up.

Anyone have thoughts?

Now is the time to get your furniture manufactured. You have negotiating power with the vendors because of the recession… Plus by the time you product is relased the recession is on it’s way to recovery.

Our sales are up considerably over last year. But maybe they would have been up even more without the economic problems, who knows.

I personally don’t think the economy is all that bad in reality. Comparisons to the Great Depression are pretty ludicrous when you can go into a coffee shop and not be able to find a table because the place is full of people drinking $5 coffees. Once we have 25% unemployment and middle class families lining up for free bread and soup we can start to talk about how bad things are.

Good value is more important than ever right now. If you can deliver that, you’ll pretty much be fine no matter what. The people who have money to spend aren’t squandering it.

And it’s always a good idea to remember the importance of cash flow, and try to minimize your up front costs as much as possible. If your business plan requires you to write 5 or 6 figure checks before you’ve sold anything, you might want to reexamine that.

thanks for the advice. do you think 25% unemployment is possible?
i do kinda need to write a big check to get my inventory.

Anything’s possible. I’d be more concerned about the massive inflation we’re likely to get in the next year or two.

You’d be well served to look at processes and suppliers that allow you to order in small quantities with short lead times. Of course if you’re getting stuff made in Asia, that’s not an option- you’re probably stuck buying at least a container full. In that case, see if you can do a small run, maybe built by the sample makers, so that you can test. Even if you’re selling that initial run at your cost (or less than cost), it will give you some idea of sales. I wouldn’t order huge inventory of anything without having a pretty good idea it was going to sell.

You also need to be wary of wholesaling right now. A lot of retail stores were kind of marginal already, and are really struggling now. When a store shuts the doors after you’ve shipped them something net 30, you’re the one left holding the bag. But some stores are doing relatively well at the same time. It’s really survival of the fittest out there.

You’ll probably get people wanting to carry your stuff on consignment. That’s OK if you want to do an initial test somewhere locally, but don’t make a habit of it. You shouldn’t have to pay for someone else’s inventory.

Thanks for your points.
All true.
I am going to China this week to meet a manufacture who has made a sample for me. His min order is 300pieces a design, which seems high to me.
I think the manufacture is good at what he knows but the sample is not perfect yet. I have had him make some changes and want him to make more. I am exploring a bit with the design. He did seem to kind of complain over the net that he is busy and that I am changing from my intail design.
So I am not sure if he will be receptive to my changes again. Should I get another manufacture involved? Any thoughts about how I would take what he has created to another manufacture?

How so you find sample makers vrs manufactures who make samples?
(I did pay the manufacture to make me a sample.)

I am hoping to get 3 good chair pieces for my product line.
Do you think that will be enough for a product line to start?

Thanks for the great advice! I am doing this all on my owen. It is nice to have this forum to talk to people who are doing the same thing.

In my experience, 300 pieces is not a very high volume for China. And if you get too few pieces, the price usually goes way up. Figure that the factory needs to train unskilled labor in each of the manufacturing steps for your chair in order to get the price down, so the volume has to be enough to recover via economies of scale on the labor/training.

Is this wood/rattan furniture? If you find a sample factory, please send contact info. Usually the business model is - a mass manufacturing plant will make a sample for low cost, but they don’t want to make much more than one. They expect to see an order after they make that sample. I haven’t found anyone that just makes samples…

Yeah, you’ve got a few issues that you should be careful about. First is that 300 chairs is a tiny order for most factories. A medium sized factory can make 250,000 chairs in a year, so you’re not even keeping them busy for a day. They are probably only taking your order because they aren’t very busy. But while it’s tiny and inconsequential for them, it might represent $20k of your hard earned money, which I’m guessing you’d rather not lose. So there is an imbalance there. A few things:

  1. When we make furniture in Asia, we always have at least one person present for the run. Usually this is one of our Asia-based QC guys (our employees, not 3rd party guys). For important stuff and initial runs of a group, it’s someone from the US. I cannot stress to you enough: go over and be there for the first run. Yes it’s expensive and will increase the cost of this run by at least 10%. But if they ship you garbage, you will be left with nothing and no recourse. They will have your money already.

  2. Be there from the time they start cutting. If you show up while they are putting it in boxes, you won’t be able to fix major mistakes.

  3. Production always differs from the sample, often considerably. The fact that this guy is already whinging about changes during the sample phase, while you’re paying for the samples, is a very, very bad sign.

  4. If a factory over there is profitable at all, they are probably operating on a margin of less than 10%. This means if they can save $1 on your $50 product, it’s worth doing, and they will do it. If you specify certain hardware and they find something that is “close enough” but costs 25 cents less, they will change it on you. Or if they get a deal on finishing material that just happens to have a bit of lead in it…

  5. Following on from #4, make it clear that you are willing to pay a couple bucks more to get what you want. Often factories assume that you are over there because you want the absolute lowest price you can get. And this is true of most of their customers. In your market (low volume), quality is more important than price.

  6. Because you are a tiny customer, they won’t worry about losing your business. If your design is good, they will shop it around to their other larger customers. Actually, this would happen even if you were a large customer. If you’re lucky, they will only sell to someone in another market.

  7. Get it in writing. Everything. All final specs should be written down, from engineering drawings to wood species, to finish panels to carton specs.

  8. The attitude to intellectual property is “different” to what you are probably used to. The factory views this as their product, not yours. They have done the production engineering and made it real. They see you as a middleman helping them sell their product. They probably call you an agent, which sums up how they view the relationship. In the same way that you wouldn’t hesitate to replace a sales rep who was underperforming or difficult to work with, they won’t hesitate to “replace” you if it improves their bottom line.

As for the sample maker issue- I think the factories we work with are probably a lot bigger than where you are. We get samples for free, but we buy a lot of product. We show maybe a dozen new groups in a year, so we are probably getting a couple hundred sample pieces made in an average year (the factory makes an extra set that they keep).

Most factories aren’t making a lot of samples right now, so if we wanted them to make say 20 pieces of something (not for free), we could get it. That said, there are “factories” (really just glorified sample rooms) who specialize in short runs and custom one-offs. A place like that might be better for your purposes.

If you want to move it, you own the sample. You can take it wherever you want. But be prepared for the fact that factory #1 will probably try to sell your chair to someone else.

Wow that turned into a long post. Anyway, what you’re learning is that the absolute most important part of successfully making stuff in Asia is finding the right factory. It’s very hard.

i was working with rattan but just yesterday i have deciede to move on and use another material.
i can not recommend the manufacture i had for a rattan product.
they never worked with it before and the sample they created was not great.
so…i have to keep reminding myself to keep it simple.

Changing the material last minute? Sounds like trouble to me already.

Thanks again for all your comments.

I am fine with the 300pcs. Just was hoping to take on less risk. But I think I can sell them so it will be fine.

I will go to China now to meet the manufacture and discuss the sample. I found him off of Alibaba. So I don’t have any real reference. Hopefully I will feel comfortable when I meet him in person and finish the sample while I am there. If not, I guess I will have to start shopping around for another factory. The guy told me he is busy right now. He even mentioned that he is working on getting an order from Costco with big volume. Not sure if any of this is true.

When you say ‘first production run’. Is that first production run for the first chair or is that first produciton run forever new design even though the design is similar?
I was thinking of staying in China until the first production run of the first chair is done and bring back the samples of the other 2 chairs. Try to sell all 3 but just take preorders of the other 2 chairs because I would not have stock of them.

Do you suggest introducing all 3 chairs at once or do you suggest staggering one chair at a time to the market?

We are over there in person for just about every new group, and all our stuff is more or less pretty straightforward and functionally similar to what we have made in the past.

Every factory over there is “working on” getting an order from a major. It’s not news until he actually ships the order (and passes all of Costco’s factory audits). When you say you’re staying there after finishing the sample until production starts, do you really mean they will be going to production that soon (presumably within a week or so)? I would say that means they aren’t busy at all. We book production 3 months in advance usually. And they like to have more lead time than that, especially when things are busy. I would guess wood factories require longer lead times than rattan to account for the greater material procurement and processing time, but still.

As for whether to bring 3 or just 1 to start, I guess it depends. Not sure what your market is or where you’re selling (wholesale, direct, etc.). Personally I would probably just bring one and see how it does before pressing the button on the other two, but I may be more risk averse than you. Then again if you pick the wrong one, and everyone likes the ones you didn’t produce, that’s not much help.

This is a great report from “the front”.
Please keep posting your progress.
I can’t wait to see how it unfolds.

by the way, can you show your design or is it still confidential?
I’d love to see it!

Scott has some great input here. A few additional comments…
On “7” I would say that getting specs and details in writing will help to clarify your discussion later when you go back to some points previously discussed (such as wrong dimensions or wrong paint) but culturally my perception is that such documents are more guidelines or clarifications - especially if you try to force someone to do something because of a document. They are not the same as western documents which are an agreement that both parties generally expect to be enforced. Resolving issues is more based on relationships so deal with things on a friendly, good relationship basis as much as possible and do not expect documentation to save you.
On “8” the perception of who owns what extends legally as well. If you buy tooling or machinery, bring it to the factory, and the factory goes bankrupt, everything in the factory walls belongs to the liquidator including your tooling, raw materials, and wip, even if you bought and paid for it already. If you want it, you’ll have to buy it as part of the liquidation (usually a couple years later).

Regarding your marketing questions, it is usually easier to sell in a range of items vs a single item. If you can sell based on one model and take preorders of the others, then that would be the way to go, but it’s usually a bit harder to sell that way. It’s generally advantageous to hold onto your cash as long and as much as possible if your business can still work that way. It’s usually pretty hard to sell a product as a one item company unless it’s really impressive.

All my designs are confidential. I have deciede to take a much safer approach with my designs right now rather than trying to do something that is completely different because it is much less risk for me. I will keep you all posted.

Today I found a new manufacture whose

  • Min order is 50pcs.
  • Will make my sample in one week
  • unit price is like a 2/3 the price of other manufacture
  • And does not seem to be charging for samples.
    Seems too good to be true.
    Anyway to find the financial health of the company so they will not go bankrupt on me?

Not really. Most of the really shaky factories have already shutdown though, so the ones who are still around should be somewhat stable.

The best thing to do with this upcoming trip to visit a list of maybe 10 factories you think have potential. See what they are working on, see what the conditions are like, look at some of their previous samples, etc. Talk about order sizes, capacity, lead times, quality, etc. After you’ve been in a few factories, it becomes really obvious which of them have their shit together. Don’t give anyone drawings yet. After you’ve seen a bunch, pick the best two or three and give them drawings to make a sample and give you a quote.

Absolutely. Having things in writing helps eliminate confusion, but if the shit ever hits the fan, and you don’t represent a significant percentage of a factory’s revenue, any documents you have are pretty worthless. You certainly aren’t taking a breach of contract case to court over there.

With all due respect gnanda, I realize that you want to start “your own” furniture company, but if you are not actually manufacturing your own product I don’t really see how you can call it “yours” (other than by design). And if, as Scott has pointed out, off-shore manufacturers can be expected to sell your designs to anyone who will buy them, with no concerns at all about leaving you out of the loop, why risk it?

Considering the economic situation in the United States, and your low production volume, why aren’t you considering US shops? I imagine many would go to extremes right now to keep their doors open. Consider: shipping, import regulations, communications (time and clarity of translation), legal, etc.)

In another thread you wrote, “Unfortunately i am in Michigan. nothing here…” I don’t think I have to tell you that you are in the heart of Michigan furniture county. You may, in fact, be working for one.

Northern Indiana has many “small” companies, notably in the Goshen area (about a hundred miles south down Highway 131 near South Bend). Swartzendruber comes to mind; all they build is low volume, often one-off.

A quick google of “Amish furniture builders” “Indiana furniture builders”, Michigan furniture builders", etc. would reveal many others.

I am in the heart of the auto industry not furniture industry. I used to work for a big car company and quite a few years ago. I have had many samples made with my lighting product in the US. The local shops around me do not have furniture skills. And for me to work with them, to get the product I want would cost me a ton of money. One simple sample I got made in the US costed me $700 which would have costed a fraction in China.

Obviously I know America is hurting and would love to work locally but I have to think of my current situation and what is workable for me.

I will not apologize for what I am doing. it is important that America does business with China…(after all they are lending us money.) The only solution is for America to innovate our ways out of this slow down instead of trying to ‘save’ jobs. And I believe I am contributing to Americas well being. There are other aspects to my business that are base in USA (warehousing, customer service, website, advertising, tradeshows, etc…)

Anyway I dont want to turn this into a political conversation…Maybe someday I will have stuff made in the US.

I am in the heart of the auto industry not furniture industry.

So much for Michigan history …