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Manufacturing Business Plan PDF Example

• May 7, 2024
• Business Plan

Creating a comprehensive business plan is crucial for launching and running a successful manufacturing business. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your manufacturing business’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a manufacturing business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the manufacturing industry, this guide, complete with a business plan example, lays the groundwork for turning your manufacturing business concept into reality. Let’s dive in!

Our manufacturing business plan covers all essential aspects necessary for a comprehensive strategy. It details operations, marketing strategy , market environment, competitors, management team, and financial forecasts.

• Executive Summary : Provides an overview of the manufacturing company’s business concept, market analysis , management, and financial strategy.
• Facilities & Equipment: Describes the facility’s capabilities, machinery, and technological advancements.
• Operations & Supply: Outlines the production processes, supply chain logistics, and inventory management.
• Key Stats: Offers data on industry size , growth trends, and market positioning.
• Key Trends: Highlights significant trends impacting the industry, such as automation and localization.
• Key Competitors : Analyzes primary competitors and differentiates the company from these rivals.
• SWOT: Analyzes strengths, weaknesses, opportunities, and threats.
• Marketing Plan : Outlines tactics for attracting new contracts and maintaining client relationships.
• Timeline : Sets out key milestones from inception through the first year of operations.
• Management: Information on the management team and their roles within the company.
• Financial Plan: Projects the company’s financial performance over the next five years, detailing revenue, profits, and anticipated expenses.

Manufacturing Business Plan

Fully editable 30+ slides Powerpoint presentation business plan template.

Download an expert-built 30+ slides Powerpoint business plan template

Executive Summary

The Executive Summary introduces your manufacturing business plan, offering a concise overview of your manufacturing facility and its products. It should detail your market positioning, the range of products manufactured, the production process, its location, size, and an outline of day-to-day operations.

This section should also explore how your manufacturing business will integrate into the local and broader markets, including the number of direct competitors within the area, identifying who they are, along with your business’s unique selling points that differentiate it from these competitors.

Furthermore, you should include information about the management and co-founding team, detailing their roles and contributions to the business’s success. Additionally, a summary of your financial projections, including revenue and profits over the next five years, should be presented here to provide a clear picture of your business’s financial plan.

Make sure to cover here _ Business Overview _ Market Overview _ Management Team _ Financial Plan

Dive deeper into Executive Summary

Business Overview

Facilities & equipment.

Describe your manufacturing facility. Highlight its design, capacity, and technology. Mention the location, emphasizing accessibility to transport routes. Discuss advantages for efficiency and cost management. Detail essential equipment and its capabilities.

Operations & Supply Chain

Detail product range. Outline your operations strategy for efficiency and scalability. Discuss supply chain management. Highlight sourcing of materials, inventory control, and logistics. Emphasize strong partnerships with suppliers and distributors.

Make sure to cover here _ Facilities & Equipment _ Operations & Supplies

Market Overview

Industry size & growth.

Start by examining the size of the manufacturing industry relevant to your products and its growth potential. This analysis is crucial for understanding the market’s scope and identifying expansion opportunities.

Key Market Trends

Proceed to discuss recent market trends , such as the increasing demand for sustainable manufacturing processes, automation, and advanced materials. For example, highlight the demand for products that utilize eco-friendly materials or energy-efficient production techniques, alongside the rising popularity of smart manufacturing.

Key Competitors

Then, consider the competitive landscape, which includes a range of manufacturers from large-scale enterprises to niche firms. For example, emphasize what makes your business distinctive, whether it’s through advanced technology, superior product quality, or specialization in certain manufacturing niches. This section will help articulate the demand for your products, the competitive environment, and how your business is positioned to thrive within this dynamic market.

Make sure to cover here _ Industry size & growth _ Key competitors _ Key market trends

Dive deeper into Key competitors

First, conduct a SWOT analysis for your manufacturing business. Highlight Strengths such as advanced production technology and a skilled workforce. Address Weaknesses, including potential supply chain vulnerabilities or high production costs. Identify Opportunities like emerging markets for your products or potential for innovation in production processes. Consider Threats such as global competition or economic downturns that may impact demand for your products.

Marketing Plan

Next, develop a marketing strategy that outlines how to attract and retain customers through targeted advertising, trade shows, digital marketing, and strategic partnerships. Emphasize the importance of showcasing product quality and technological advantages to differentiate your business in the market.

Finally, create a detailed timeline that outlines critical milestones for your manufacturing business’s launch, marketing initiatives, customer acquisition, and expansion goals. Ensure the business progresses with clear direction and purpose, setting specific dates for achieving key operational and sales targets.

Make sure to cover here _ SWOT _ Marketing Plan _ Timeline

Dive deeper into SWOT

Dive deeper into Marketing Plan

The Management section focuses on the manufacturing business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the manufacturing business toward its financial and operational goals.

For your manufacturing business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

Financial Plan

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your manufacturing business’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs and capital expenditures.

For your manufacturing business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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Getting started: A guide to creating a manufacturing business plan

Every day people are trying and failing at entrepreneurism.

The journey is a difficult one, and the chances of success are slim. Those that succeed sometimes have a brilliant idea, while others have a wealth of resources. The one commonality among all successful entrepreneurs is that they had a manufacturing business plan.

You need to know where you are going, how you will get there, and what you will do when you arrive. This is especially important for those in the manufacturing industry because of the significant amount of forethought required.

Even if you are leveraging digital solutions to minimize the amount of time, money, and effort required to bring your product to market, you will still need a plan. This is not an area where you can wing it and hope for the best.

Below, we will examine the basics of a manufacturing business plan, what is necessary to include, how to create one for your own company, and some common mistakes that you should avoid.

Table of contents:

What is a manufacturing business plan, why does a manufacturing company need a business plan, what are the key components of a business plan, how to write a business plan for a manufacturing company, common mistakes to avoid.

A manufacturing business plan is a formal document that outlines the goals and objectives of your business. It includes detailed information about your: 

• Products or services 
• Target market 
• Marketing strategy
• Financial projections 
• Operational details  

The purpose of a business plan is to give you a roadmap to follow as you build and grow your business. It forces you to think through every aspect of your venture and identify potential problems or roadblocks before they happen. 

Manufacturing business plans can also be used to attract investors or secure funding from lenders. If you are looking for outside financing, your business plan needs to be even more detailed and include information on your management team, financial history, and expected growth. 

Ideally, you should update your business plan yearly to ensure that it remains relevant and accurate. As your business grows and changes, so too should your plan. 

No matter how simple or complex your ideas may be, you need a plan, or they will never become a reality. A business plan will clearly understand your costs, competition, and target market. It will also help you to set realistic goals and track your progress over time. 

Let’s look at a manufacturing strategy example. You have a great idea that you think will revolutionize the  automotive industry . Your new safety harness will be made from a lightweight, yet incredibly strong, material that cannot be cut or torn. You are confident that your product will be in high demand and generate a lot of revenue. 

But before you walk into Ford or Toyota to try and get a  purchase order , you need to have a plan. You must know: 

• How much will it cost to produce your product
• How many units do you need to sell to break even 
• Who is your target market is 
• What is your competition selling 
• How will you reach your target market 

You also need to clearly understand the regulatory landscape and what it takes to bring a new product to market. All of this information (and more) should be included in your business plan. 

This is not just a document that you create and forget about. It is a living, breathing tool that should be used to guide your actions as you build and grow your business. 

Every manufacturing business plan will be different, but almost always, they will include the same five components: 

Executive summary

Company description, products and services, market analysis.

• Financial plan 

Let’s take a closer look.

The executive summary is the first section of your business plan, but it is typically written last. This is because it should be a concise overview of everything that follows, and you can only do that once you have completed the rest of your plan. 

Include the following in your executive summary: 

• The problem that your product or service solves
• Your target market
• Your unique selling proposition (what makes you different from your competitors?)
• Your manufacturing business model (how will you make money?)
• Your sales and  marketing strategy
• A brief overview of your financial projections

Someone should be able to quickly scan through your executive summary and have a pretty good understanding of what your business is and how it plans to be successful. 

This is where you can get a bit more creative, explaining your company’s history, mission, and values. You will also include information on your team or management structure. 

It can be simple but should inspire faith in your ability to execute your business plan. 

You will need to provide a detailed description of your product or service, as well as any unique features or benefits that it offers. You should also include information on your  manufacturing process  and  quality control  procedures. 

If you have any patents or proprietary technology, they should be listed here as significant assets for your business. 

For example, let’s say you are planning on creating a brand-new line of disposable coffee cups. The dimensions, materials, and other specifications would be listed here, along with any unique benefits (such as being made from recycled materials). 

You might also include information on your manufacturing process, such as the fact that the cups will be produced in a certified clean room or that you will employ workers local to where the product is sold.

Chances are, you started down this path because you realized that there was a market opportunity for your product or service. In this section, you will need to provide detailed information on the opening, as well as the analysis that convinced you to pursue it. 

This should include: 

• Market size (current and projected)
• Key market segments
• Customer needs and wants
• Competitive landscape 

This is where you will need to do your homework, as you will be justifying your business decision to enter this particular market. The more data and analysis you can provide, the better. 

For our coffee cup example, the market analysis might include:

• Information on how many cups are used every day 
• Projected growth 
• Key segments (such as office workers or on-the-go consumers) 
• Customer needs (such as convenience or sustainability)  

It would also examine the competitive landscape, including both direct and indirect competitors.

Financial plan

You’re in this to make money, and so are your potential investors. In this section, you will need to provide detailed information on your manufacturing business model and how it will generate revenue. This should include: 

• Initial investment
• Sales forecast
• Carrying costs
• Pricing strategy
• Expense budget 

You will also need to provide information on your long-term financial goals, such as profitability or break-even point. Discuss production line details,  inventory management strategies , and other factors impacting your bottom line.

The process of creating a business plan for a manufacturing company is similar to any other type of business. However, there are some key considerations to keep in mind. 

First, you need to understand your industry and what it will take to be successful in it. This includes understanding the competitive landscape,  the costs of goods sold , and the margins you can expect to achieve. 

You also need to have a clear understanding of your target market and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits. 

While there will be many things specific to your company, here are five questions to answer for each of the sections listed above. 

Executive summary: 

• What is the problem that your company will solve? 
• How will your company solve that problem? 
• Who are your target customers? 
• What are your key competitive advantages? 
• What is your business model? 

Company description: 

• What is the legal structure of your company? 
• What are your company’s core values? 
• What is your company’s history? 
• Who are the key members of your management team? 
• Where is your manufacturing facility located? 

Products and services: 

• What product or service does your company offer? 
• How does your product or service solve the problem that your target market has? 
• What are the key features and benefits of your product or service? 
• How is your product or service unique from your competitors? 
• What is the production process for your product or service? 

Market analysis: 

• Who is your target market? 
• What needs or wants does your target market have that your product or service will address? 
• What is the size of your target market? 
• How do you expect the needs of your target market to change in the future? 
• Who are your key competitors, and how do they serve the needs of your target market? 

Financial plan:

• What are the start-up costs for your company? 
• How will you finance your start-up costs? 
• What are your monthly operating expenses? 
• What is your sales forecast for the first year, and how does that compare to your industry’s average sales growth rate? 
• What are your gross margin and profit targets?

Even if you do nothing but answer these questions, you’ll be well on your way to creating a thorough manufacturing business plan. 

How to stabilize your growth

However, new manufacturing entrepreneurs often fall into a handful of traps when creating their business plans.

• Not doing enough research  – You can’t know everything about your industry, but you should do your best to understand as much as you can before writing your business plan. This means talking to experts, reading trade publications, and studying the competition
• Not being realistic  – It’s important to be optimistic when starting a new business, but you also need to be realistic. This is especially true when it comes to financial projections. Don’t overestimate the amount of revenue you will generate or underestimate the costs of goods sold
• Not having a clear understanding of your target market  – You need to know who you are selling to and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits
• Failing to understand your competition  – You need to know who your competitors are, what they are offering, and how you can differentiate yourself. This information will be critical in developing your marketing strategy
• Not having a clear vision for the future  – Your manufacturing business plan should include a section on your long-term goals and objectives. What does your company hope to achieve in the next five years? Ten years? Twenty years? 

Creating a business plan for manufacturing can be simple. It can be quite simple if you break it down into smaller pieces.

Once you have it in place, staying on track can be quite a bit more difficult. By using  ERP software like Katana , you can track all of your key metrics in real time, avoid any potential issues, and make course corrections as needed. 

To start following your plan and creating a successful manufacturing company,  get a Katana demo  today.

• Manufacturing guide
• 1.1. Production vs manufacturing
• 1.2. Production scheduling software
• 1.3. Production tracking software
• 2.1. How to manufacture a product
• 2.2. Manufacturing best practices
• 2.3. A guide to creating a manufacturing business plan
• 2.4. Manufacturer e-commerce
• 2.5. Marketing for manufacturers
• 2.6. Manufacturing business processes
• 2.7. Food manufacturing
• 2.8. Small business manufacturing software
• 3.1. Job shop manufacturing
• 3.2. Production quality control checklist
• 4.1. Just-in-time (JIT) manufacturing
• 4.2. Tips to reduce manufacturing waste
• 4.3. Manufacturing KPIs
• 5. Light manufacturing
• 6. Advanced manufacturing
• 7. IoT in manufacturing
• 8.1. Manufacturing execution system (MES)
• 9.1. Manufacturing overhead formula
• 9.2. Manufacturing inventory software
• 10. Good manufacturing practices (GMP)
• 11.1. MRP in supply chain management
• 11.2. Best MRP software
• 12.1. Best ERP software for manufacturing

More guides from Katana

Manufacturing Business Plan Template

Written by Dave Lavinsky

Manufacturing Business Plan

You’ve come to the right place to create your Manufacturing business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Manufacturing companies.

Below is a template to help you create each section of your Manufacturing business plan.

Executive Summary

Business overview.

Perfect Snacks, located in Lincoln, Nebraska, is a food manufacturing company that specializes in the production of snack foods and packaged goods. We manufacture an extensive line of snack products, including trail mix, gummies, and chocolate. Our company focuses on quality and only uses the best natural ingredients in our products. We will primarily sell our products to grocery stores and other establishments that sell snacks, but will also sell bulk orders to individual customers through our website.

Perfect Snacks was founded by Joe Boseley. Joe has been working on the manufacturing company concept over the past few years and began networking with grocery store clients and locating the land to build his manufacturing and distribution center. As a line manager that oversaw dozens of employees, Joe has the proper knowledge and experience to own, manage, and operate his own manufacturing company.

Product Offering

Perfect Snacks will manufacture an extensive list of sweet, salty, and healthy snacks. Some of our initial products will include:

We will primarily sell our products to grocery stores, recreation centers, and other businesses that sell snacks in bulk. Consumers can find our products in stores or buy them in bulk on our website.

Customer Focus

Perfect Snacks will primarily serve the residents of Lincoln, Nebraska. The community has a large population of families and children, who are the primary consumers of snack foods. Therefore, we will market our products to recreational centers, schools, grocery stores, and other establishments that sell snacks to children and their parents.

Management Team

Perfect Snacks is owned by Joe Boseley, a local entrepreneur who has worked in various warehouses and manufacturing companies in Lincoln, Nebraska. Working in the manufacturing industry and in warehouses, Joe is very familiar with the processing and distribution of packaged foods. As a line manager that oversaw dozens of employees, Joe has the proper knowledge and experience to own, manage, and operate his own manufacturing company.

Joe will utilize his past experience with developing staff roles and functions. He is also very familiar with the manufacturing equipment and plans to purchase the latest technology that is efficient and cost effective. His contacts have allowed him to gain concrete Letters of Intent from local supermarket chains to have his manufactured goods in their stores.

Success Factors

Perfect Snacks will be able to achieve success by offering the following competitive advantages:

• Taste: Perfect Snacks’ snack products will be made with the highest quality ingredients and offer quality over quantity.
• Price: Perfect Snacks is able to offer the highest quality snacks at a competitive price point.
• Community Relations: Perfect Snacks will be a pillar in the community and be heavily involved in family-related activities in the area. It will sponsor events, provide snacks for schools and daycares at a discounted price, and donate a portion of its proceeds to area family-related charities and organizations.
• Proprietary Technology: Perfect Snacks will invest heavily on the latest technology to manufacture the snack foods for distribution. It will ensure the food products are made safely and free from any harmful chemicals and ingredients.

Financial Highlights

Perfect Snacks is seeking a total funding of $1,200,000 of debt capital to open its manufacturing company. The capital will be used for funding capital expenditures, salaries, marketing expenses, and working capital. Specifically, these funds will be used as follows:

• Manufacturing facility design/build-out: $400,000
• Equipment and supplies: $375,000
• Initial inventory: $100,000
• Three months of overhead expenses (payroll, rent, utilities): $250,000
• Marketing costs: $50,000
• Working capital: $25,000

The following graph below outlines the pro forma financial projections for Perfect Snacks.

Company Overview

Who is perfect snacks, perfect snacks history.

After conducting a market analysis, Joe Boseley began surveying the local vacant warehouse space and decided on a parcel of land to construct the warehouse and distribution center. Joe incorporated Perfect Snacks as a Limited Liability Corporation on January 1st, 2023.

Once the land is acquired for the warehouse space, construction can begin to build-out the manufacturing facility.

Since incorporation, the Company has achieved the following milestones:

• Located a vacant lot that would be ideal for a manufacturing facility
• Developed the company’s name, logo, and website
• Hired a general contractor and architect for the build-out of the warehouse, small office, and distribution area
• Determined equipment and necessary supplies
• Determined beginning inventory
• Attained Letters of Intent from supermarket clients
• Began recruiting key employees

Perfect Snacks Services

Industry analysis.

The Manufacturing sector’s performance is largely attributable to the value of the US dollar, commodity prices, policy decisions and US manufacturing capacity. Food manufacturing has a history of success as it produces a basic human need. According to Grand View Research, the industry is currently valued at $121 billion and is expected to expand at a compound annual growth rate of 9.5% from now until 2030.

Commodity prices are currently stabilizing from coronavirus-induced volatility and renewed demand, both in the United States and global economies, which is anticipated to facilitate revenue expansion for manufacturers. Moreover, shifting technological change in the Manufacturing sector is anticipated to benefit large, developed economies, such as the United States. Therefore, now is a great time to start a new food manufacturing company in the U.S.

Customer Analysis

Demographic profile of target market.

Perfect Snacks will serve the community residents of Lincoln, Nebraska and its surrounding areas. The community of Lincoln, Nebraska has thousands of households that have children. Statistics show that the main consumers of snack products are children of all ages. They are regularly placed in school lunchboxes, afterschool snacks and programs, and at weekend sporting events. Therefore, we will market to locations where snacks are bought by children or their parents, such as grocery stores, recreational centers, and schools.

The precise demographics Lincoln, Nebraska is as follows:

Customer Segmentation

Perfect Snacks will primarily target the following customer profiles:

• Grocery stores and recreational centers

Competitive Analysis

Direct and indirect competitors.

Perfect Snacks will face competition from other companies with similar business profiles. A description of each competitor company is below.

Snacks N More

Snacks N More is another local manufacturing company that provides snack food to the immediate area. Established over thirty years ago, the company has the knowledge and expertise in food processing, commercialization, and packaging. They are known as a recognized ingredient supplier for the foodservice industry. Their portfolio of products include a variety of nuts, snacks, confections, and dry-blend ingredients. As a private label manufacturer, Snack’s More produces a full line of non-chocolate candy, nuts, and fruit-flavored snacks. The company is known for their fruit flavored snacks, dried raisins, nut mixes, and producing ingredients for local restaurants and establishments. Their line of nuts and dried fruits are often used for baking purposes.

Jaxon’s Candy

Jaxon’s Candy is a manufacturer of all things candy related. As a contract manufacturer, the company works with many companies to create their custom designed confections. Their large 50,000 square foot facility produces over 300,000 pounds of candy every month. All of the products are highly concentrated either in sugar or chocolate, or both. Jaxon’s Candy also designs and manufactures their own custom packaging. The candy produced is also kosher certified, gluten free, peanut free, and non-GMO.

Jaxon’s Candy currently manufactures candy for the following brands – Tommy Candy, Laffy Town, Chocowhoawhoa, Jellylicious, Healthee Candeee, and Sticky Teeth. Jaxon’s Candy can be found in grocery stores and convenient stores along the west coast of the United States.

Gimmy Candy

Gimmy Candy is located in the midwestern portion of the United States and boasts a facility of over 1 million square feet. Their fleet of transportation trucks distributes throughout the continental United States and is considered one of the largest candy manufacturers in the country. Their product portfolio includes assorted chocolates, gummy candy, hard candy, fruit candy, as well as gums and mints. Gimmy Candy was established in 1947 and has grown to be a model of manufacturing companies the industry uses as a model of sustainability and profitability. Their lineup of candy products can be found in every single grocery store and convenient store in the country. Gimmy Candy is considering expanding its distribution globally and start exporting its candy products to Asia, Canada, Europe, and South America. As one of the largest privately held companies in the United States, Gimmy Candy is also considered a top employer in the country and offers its employees a generous benefits package.

Competitive Advantage

Perfect Snacks will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

Perfect Snacks will offer the unique value proposition to its clientele:

• Fresh and comforting taste
• Community family advocate
• Developed with proprietary technology
• Manufactured with fresh, quality ingredients
• Affordable price

Promotions Strategy

The promotions strategy for Perfect Snacks is as follows:

Social Media

Perfect Snacks will invest heavily in a social media advertising campaign. The brand manager will create the company’s social media accounts and invest in ads on all social media accounts. It will use targeted marketing to appeal to the target demographics.

Website/SEO

Perfect Snacks will invest heavily in developing a professional website that displays all of the features and benefits of the snack products. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Major Publications

We will also invest in advertising in selected larger publications until we have achieved significant brand awareness. Advertisements such as billboards and commercials will be shown during peak tv watching time and the billboards will be placed in highly trafficked areas.

Sponsorships

Perfect Snacks will also invest in sponsoring certain athletic and school events so that their banners and collateral material are displayed all over the event where numerous parents and children are at.

Perfect Snacks’s pricing will be moderate so consumers feel they receive great value when purchasing our snack products.

Operations Plan

The following will be the operations plan for Perfect Snacks.

Operation Functions:

• Joe Boseley will be the CEO of Perfect Snacks. He will oversee the general operations and executive aspects of the business.
• Joe is joined by Candace Smith who will act as the warehouse manager. She will train and manage the staff as well as oversee general production of our products.
• Joe will hire an Administrative Assistant, Marketing Manager, and Accountant, to handle the administrative, marketing, and bookkeeping functions of the company.
• Joe will also hire several employees to manufacture our products and maintain the equipment and machinery.

Milestones:

Perfect Snacks will have the following milestones complete in the next six months.

• 02/202X Finalize lease agreement
• 03/202X Design and build out Perfect Snacks
• 04/202X Hire and train initial staff
• 05/202X Kickoff of promotional campaign
• 06/202X Launch Perfect Snacks
• 07/202X Reach break-even

Financial Plan

Key revenue & costs.

Perfect Snacks’s revenues will come primarily from its snack food sales. The company will sell the packaged snacks in local grocery stores, convenience stores, and other locations. As the company’s revenues increase, it will look to gain a wider distribution area.

The land purchase, equipment, supplies, opening inventory, and labor expenses will be the key cost drivers of Perfect Snacks. Other cost drivers include taxes, business insurance, and marketing expenditures.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Average order value: $250

Financial Projections

Income statement, balance sheet, cash flow statement, manufacturing business plan faqs, what is a manufacturing business plan.

A manufacturing business plan is a plan to start and/or grow your manufacturing business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Manufacturing business plan using our Manufacturing Business Plan Template here .

What are the Main Types of Manufacturing Businesses?

There are a number of different kinds of manufacturing businesses , some examples include: Garment manufacturing, Food product manufacturing, Diaper manufacturing, Tile manufacturing, and Toy manufacturing.

How Do You Get Funding for Your Manufacturing Business Plan?

Manufacturing businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Manufacturing Business?

Starting a manufacturing business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Manufacturing Business Plan - The first step in starting a business is to create a detailed manufacturing business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your manufacturing business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your manufacturing business is in compliance with local laws.

3. Register Your Manufacturing Business - Once you have chosen a legal structure, the next step is to register your manufacturing business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your manufacturing business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Manufacturing Equipment & Supplies - In order to start your manufacturing business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your manufacturing business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Manufacturing Business Plan Template [Updated 2024]

Manufacturing Business Plan Template

If you want to start a Manufacturing business or expand your current Manufacturing company, you need a business plan.

The following Manufacturing business plan template gives you the key elements to include in a winning Manufacturing business plan.

You can download our business plan template (including a full, customizable financial model) to your computer here.

Below are links to each of the key sections of a sample manufacturing business plan. Once you create your plan, download it to PDF to show banks and investors.

I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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Manufacturing Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

• Business planning and strategy

Manufacturing Business: Business Plan Example

Are you setting up a manufacturing business? We’ve created an example business plan to help you get started.

Are you manufacturing goods from home? Want to move to the next level and ramp up your business’ production? Starting to write a business plan will help you identify your markets, outline potential risks and understand the cash flow for your business.

To help you get started we’ve created an example business plan for the manufacturing industry. Our example focuses on producing high quality leather accessories, but it will work as a framework regardless of the specific business you are considering. Click the Download button to gain access to the word document.

Good luck and happy writing!

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Manufacturing Business Plan Template

What is a Manufacturing Business Plan?

A manufacturing business plan outlines the objectives, initiatives, and goals of a manufacturing business. It is used to guide the development and execution of a business strategy and to monitor progress towards achieving desired goals. The plan should address all aspects of the business, including marketing, production, personnel, operations, and financials.

What's included in this Manufacturing Business Plan template?

• 3 focus areas
• 6 objectives

Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.

Who is the Manufacturing Business Plan template for?

This Manufacturing Business Plan template is designed to help manufacturers of all sizes and industries create a plan to launch, run and grow their business. It provides a framework to clearly define and measure the objectives, actions, and measurements that are necessary for success.

1. Define clear examples of your focus areas

A focus area is an area of your business that requires extra attention in order to achieve success. Examples of focus areas can include increasing operational efficiency, improving product quality, or strengthening financial management.

2. Think about the objectives that could fall under that focus area

An objective is a goal that you want to achieve within a specific focus area. For example, under the focus area of operational efficiency, the objective could be to reduce shipping wait time.

3. Set measurable targets (KPIs) to tackle the objective

KPIs, or key performance indicators, are metrics that help to measure the success of the objectives. For example, to measure the success of the objective to reduce shipping wait time, the KPI would be to decrease the average shipping wait time by 30%.

4. Implement related projects to achieve the KPIs

Projects, or actions, are the steps necessary to achieve the KPIs. For example, to achieve the KPI of reducing the average shipping wait time, the action would be to analyze the current shipping process.

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

Cascade is a strategy execution platform that makes it easy to plan, implement, and track progress towards achieving your manufacturing business plan. With Cascade, you can create strategies, assign tasks, track progress, and quickly see the results of your efforts.

Plastic Manufacturing Business Plan Template & Guidebook

Are you interested in starting your own plastic manufacturing company but unsure of where to start? We can assist you with our plastic manufacturing business plan template and how-to manual. You can simply construct a business plan that details every facet of your enterprise, from market analysis and financial predictions to marketing plans and operational tactics, with the help of our comprehensive template and professional advice. Making your concept a reality is simple with our step-by-step process for starting a profitable plastic manufacturing company. With the help of our tried-and-true template and direction, you can confidently start the process of creating a successful plastic manufacturing company. Join the ranks of prosperous plastic manufacturing businesses by getting started right away!

Get worry-free services and support to launch your business starting at $0 plus state fees.

• How to Start a Profitable Plastic Manufacturing Business [11 Steps]
• 25 Catchy Plastic Manufacturing Business Names:
• List of the Best Marketing Ideas For Your Plastic Manufacturing Business:

How to Write a Plastic Manufacturing Business Plan in 7 Steps:

1. describe the purpose of your plastic manufacturing business..

The first step to writing your business plan is to describe the purpose of your plastic manufacturing business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a plastic manufacturing business:

Our mission is to produce high-quality, cost-effective plastic that meets the needs of our customers. We will accomplish this by providing a safe work environment for our employees and investing in the latest equipment. We will also ensure that all stakeholders are treated with respect and value their input in order to make sure we’re always making the best decisions possible.

2. Products & Services Offered by Your Plastic Manufacturing Business.

The next step is to outline your products and services for your plastic manufacturing business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your plastic manufacturing business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your plastic manufacturing business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your plastic manufacturing business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

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4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a plastic manufacturing business?

Plastic manufacturing businesses produce a wide range of plastic products, such as containers, packaging materials, and consumer goods. The equipment and supplies needed to run a plastic manufacturing business can vary depending on the specific products produced and the processes used, but may include:

• Raw materials, such as plastic resins and additives, to create the plastic products
• Manufacturing equipment, such as injection molding machines, extruders, and blow molding machines, to shape and form the plastic products
• Quality control equipment, such as gauges and testing devices, to ensure the products meet specifications and standards
• Packaging materials, such as bags, boxes, and pallets, to package and protect the finished products
• Transportation equipment, such as trucks and trailers, to deliver the products to customers

In addition to the equipment and supplies needed to run a plastic manufacturing business, it is important to obtain any necessary permits and licenses that may be required by local regulations. These permits and licenses may vary depending on the location of the business and the specific products produced.

In summary, the equipment, supplies, and permits needed to run a plastic manufacturing business can include raw materials, manufacturing equipment, quality control equipment, packaging materials, and transportation equipment, as well as any necessary licenses and permits.

5. Management & Organization of Your Plastic Manufacturing Business.

The second part of your plastic manufacturing business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your plastic manufacturing business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Plastic Manufacturing Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a plastic manufacturing business varies based on many different variables, but below are a few different types of startup costs for a plastic manufacturing business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your plastic manufacturing business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your plastic manufacturing business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your plastic manufacturing business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Plastic Manufacturing Business Plans:

Why do you need a business plan for a plastic manufacturing business.

A business plan is a document that outlines the goals and objectives of a business, as well as the strategies and tactics that will be used to achieve those goals. It is important to have a business plan for your plastic manufacturing business because it helps to focus the efforts of the company, communicate the business's goals and objectives to potential investors, and provide a roadmap for the business to follow. Additionally, a business plan can be used to help secure funding from investors or lenders, who will want to see that the business has a solid plan in place before they provide funding.

How to write a business plan for your plastic manufacturing business?)

To build a business plan for your plastic manufacturing business, start by researching your industry, competitors, and target market. Use this information to define your business's goals and objectives, as well as the strategies and tactics that you will use to achieve those goals. Next, create a financial plan that outlines your projected income, expenses, and profit. This should include a projected income statement, cash flow statement, and balance sheet. Once you have all of this information, you can use it to create a comprehensive business plan that outlines the goals and objectives of your business, as well as the strategies and tactics that you will use to achieve those goals. A well-written plastic manufacturing business plan contains the following sections: Purpose, Products & Services, Marketing Plan (including Marketing Strategy), Operations/Management Plan (including Operations/Management Strategy), Financial Plan (including Financial Forecasts), and Appendixes.

Can you write a plastic manufacturing business plan yourself?

Yes, you can write a plastic manufacturing business plan yourself. Writing a business plan is a valuable exercise that can help you clarify your business idea, identify potential challenges and opportunities, and develop a roadmap for success. While there are many resources and templates available to help you write a business plan, the process of creating one is ultimately up to you.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

How to launch a new business: Three approaches that work

COVID-19 and its ongoing repercussions have forced business leaders to reevaluate their priorities and strategies. One area where businesses across all regions have accelerated their commitments is around building new businesses. Leading growth businesses in particular have made this strategy a top priority, according to recent McKinsey research .

About the authors

This article was a collaborative effort by Ralf Dreischmeier , Philipp Hillenbrand , Jerome Königsfeld , Ari Libarikian , and Lukas Salomon, representing views from Leap by McKinsey, McKinsey’s business-building practice.

Yet despite the growing enthusiasm for business building, incumbents with good ideas, strong commitments, and big ambitions will frequently run headlong into a big question: How do we actually go about building a business? Getting the answer to this question right is crucial because it shapes the entire operating model of the business-building venture, with significant implications in terms of budget, organization, and strategic direction.

A leading industrial company learned this at a cost. When executives wanted to optimize operations in their factories, they believed setting up a fully independent start-up dedicated to developing new factory concepts was the only way to make it happen. Despite millions of dollars of investment, however, it didn’t work. The start-up struggled to access data and insights, failed to fully grasp the challenges of the core business, and did not attain sufficient support in the parent organization to test and implement changes. This example supports our research, which shows that fewer than a quarter of businesses launched ten years ago are viable large-scale enterprises today .

Figuring out the right approach to business building is especially important now as new opportunities for innovation surface. Prompted by the pandemic, new business-building archetypes have emerged, such as remote service provision, digital retail, and collaboration platforms.

As is true for many complex undertakings, there is no single right approach for launching a new business successfully. In addition, certain strategies will be important no matter which approach a company takes. Joint ventures and alliances, for example, can help to reach scale and enter new markets, and working with partners in ecosystems that, in some cases, include erstwhile competitors can expand offerings, access capabilities, and accelerate scale.

After analyzing more than 200 corporate business builds that we have supported, we have identified three major approaches that have proven successful. While other approaches can certainly work, the three we explore in this article have an established track record and clear conditions for success. The characteristics of each are unique, and so, too, are the criteria and conditions for success (Exhibit 1).

Would you like to learn more about Leap , our business-building practice?

1. internal vc-like incubator.

In this approach, incumbents develop a broad portfolio of ideas, with the goal of producing a few winners that can be successfully commercialized. Teams within the parent organization develop concepts for new businesses and pitch them to a dedicated venture-capital-style board comprising internal and external experts, who select the most promising ones. Successful teams receive milestone-based funding and resources to validate core assumptions and develop a minimum viable product (MVP)—a crucial governance necessity no matter what approach a business chooses (Exhibit 2).

The business has to be vigilant to ensure that the start-up culture “sticks” and that the legacy corporate culture doesn’t slowly start to take over. One way to do that is to assign an experienced business-building coach to each team to build up and nurture an agile test-and-learn culture.

Establishing an incubation approach is particularly suitable for incumbents that have a clear overall sense of the future direction of their business and sector, as well as a strong pipeline of promising early-stage ideas. They may, however, lack initial certainty on what the “winning concepts” will be and how they should be set up for the long term—as an internal division or an external spinout, for example. In our experience, the internal incubation approach works best when the new business is expected to focus on the parent’s core business.

A leading consumer food company achieved great success with this internal incubation approach. After a successful restructuring program, the company’s CEO and board first set a clear vision and ambition that new ventures should primarily benefit the core business and enable significant improvements in the top and bottom lines. Management then invited employees to form small teams that included a team lead and a management sponsor, such as the division head.

Over the course of six weeks, these teams then independently developed more than 100 ideas for new businesses aligned with the overall strategy. All teams scoped out MVPs and pitched their concepts to a newly created internal venture-capital (VC) board that included senior managers, external venture capitalists and technologists, sector experts, and strategic customers.

The VC board then provided initial funding to ten concepts that covered a wide range of applications, including IoT devices, process automation, data platforms, and resourcing marketplaces. Key decision criteria were resources required, path to scale, time to impact, expected overall P&L impact, and unique advantages of the parent company that could be leveraged to build the new businesses. Each initiative was assigned a delivery lead, an experienced business-building coach who helped employees to identify and de-risk the core assumptions first .

Over the course of the next six to ten weeks, these teams built out their MVPs to test core assumptions, such as market demand, required investment, and potential to scale. Those that were successful then approached the VC board and business-unit leadership for additional resources to scale the MVP. Within 16 months, the program to incubate the new businesses became self-funding.

Key success factors

• Adopt a true VC mindset, and kill ideas without clear potential early on in order to cut losses and strengthen the organization’s focus and resources on concepts with high potential.
• Include external experts on your VC board to increase objectivity and add important new perspectives.
• Match venture teams with experienced delivery leads to provide crucial coaching and skill building to test and adapt quickly.

2. Scale-up factory

Frequently, an incumbent organization already has a strong pipeline of new-product and -business concepts that have been validated with first customers and partners. But because it lacks the specialized resources, talent, and expertise required to quickly and successfully scale an entirely new business, promising ideas wither.

A scale-up-factory approach can help address these issues. In this model, the parent sets up a fully owned “factory” that is exclusively dedicated to rapidly scaling promising concepts from the parent’s R&D pipeline into independent businesses. Typically, with this approach, the parent is the first and largest customer of the new businesses. In return, the factory’s new businesses can leverage the parent’s brand, reputation, and customer network. Importantly, providing employees with equity gives them “skin in the game” and helps attract and retain the best digital talent from start-ups and tech firms.

Despite a strong R&D pipeline, new ideas at a leading global energy player frequently did not reach sufficient scale to generate meaningful new revenue streams. To change this, the company used the scale-up-factory approach to address a key business goal: build and scale disruptive technologies and business models from the internal R&D into rapidly growing and revenue-generating businesses.

The new scale-up factory is located in a separate office and staffed with a dedicated team, most of whom were hired to meet the need for specialized skills and a “start-up mindset.” The new company is governed by its own leadership and a dedicated, internal board of directors, rather than by business-unit leaders. While senior group leaders dedicate significant time to strategic decision making and steering toward targets and milestones, they do not get involved in the scale-up factory’s day-to-day decision making.

After two years, the businesses developed by the scale-up factory have scaled to more than 100 employees and have already become a significant revenue-growth motor for the parent company.

• A strong pipeline of “potential blockbuster” ideas within the parent company that have been validated and deemed commercially viable
• Clear funding and governance to establish accountability for each project that has business-unit and factory representation, remove any ambiguity in approvals and funding (such as joint signatures between factory and business unit), and align up front on milestones for the release of further funding
• Strong learning and pattern-recognition processes —the more scale-ups the factory executes, and the better team members become at collecting and codifying learnings, the more efficient the factory’s processes will become (a key insight from our latest research )

Why business building is the new priority for growth

3. ‘clean slate’ business building.

In some cases, executives have identified a big, promising idea for a new business well beyond their organization’s core focus, such as leveraging a disruptive new technology or entering a new industry. In this case, a clean-slate approach works best, with the new business typically fully owned by the incumbent (or jointly owned with external investors) and all talent hired externally.

Similar to the scale-up factory, the new start-up enjoys organizational independence but has greater entrepreneurial latitude. Speed is more important than process perfection in areas such as HR, IT, and procurement. The new business develops its own tech stack, for example, and explores different business models, even working with traditional competitors. It has different compensation and hiring models than the parent company, as well as its own R&D and insights capability to aggressively test completely new markets. Incumbents that have been successful in driving growth via clean-slate business building often start to shift to adapting principles of the scale-up-factory approach described in the previous section.

“Acqui-hiring” talent (that is, hiring an entire team or acquiring a company to access its talent) can be used to turbocharge business builds in any of the three approaches outlined in this article, but it is particularly suitable for accelerating clean-slate builds when internal capabilities are limited. Acqui-hires provide incumbents with immediate access to a well-integrated team with relevant capabilities who can hit the ground running.

Acqui-hiring can work only if the new venture has a strong culture that can quickly and successfully integrate the acqui-hired team. Clear leadership communication and strong alignment of incentives—such as equity awards distributed to all members of the business-building team—are critical to bringing the new team on board and avoiding potential resentment from members from the incumbent organization.

Using a clean-slate approach enabled one of the world’s leading engineering companies to quickly build a highly innovative IoT platform to sell software through an app store. Initial testing had validated the concept, which also had strong support from top management. Given the need to move quickly and lacking the right talent internally, the company set up a new start-up with strong financial backing, a separate office several hundred miles away from parent-company headquarters, and a leadership team hired from leading technology players.

Senior executives from the parent organization narrowed down the catalog of more than 1,000 rules, regulations, and governance processes that new divisions were typically required to implement to only about 50 that were essential. To establish the new business’s neutrality, the company set up a new industry alliance and collaborated with external partners—some of them direct competitors of the parent company—from day one.

To further accelerate this process, the company decided against gradually hiring developers or retraining staff. Instead, it acqui-hired a full development team of more than 30 people from a major software producer. This approach enabled the building of a highly complex digital solution and a thriving ecosystem with dozens of partners at record speed: first sales were generated less than 15 months after the acqui-hire had been completed.

• Strong focus on culture through strong investment in regular team-building activities that are crucial to integrate teams and unite them behind a common goal
• Foundations for an ecosystem of partners built early on by engaging with external partners—even competitors—as soon as the new business is set up, so that the market perceives it as a neutral player; then build out a large-scale ecosystem over time
• A start-up CEO fully committed to the new venture, through incentives (equity, bonus structure, and so on) that are fully tied to the start-up’s fortunes and do not include a “safety net” in the form of guaranteed continued employment with the parent

Business building is increasingly a core strategic pillar for companies operating in a digital world. Selecting the approach that is right for any given business, based on an understanding of the necessary trade-offs, conditions, and criteria for success, is one of the most important decisions incumbents need to make, as it can unlock the opportunity for rapid growth.

Ralf Dreischmeier is a senior partner in McKinsey’s London office; Philipp Hillenbrand is a partner in the Berlin office; Jerome Königsfeld is an associate partner in the Cologne office; and Ari Libarikian is a senior partner in the New York office, where  Lukas Salomon  is a consultant.

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Related articles.

Scale or fail: How incumbents can industrialize new-business building

Derisking corporate business launches: Five steps to overcome the most common pitfalls

Innovating from necessity: The business-building imperative in the current crisis

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Clothing Manufacturer Business Plan

Start your own clothing manufacturer business plan

New Look, Inc.

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

New Look intends to lever up its position as an established retail men’s clothing business now to become a manufacturer of an upscale clothing line targeted at males between the ages of 20 and 40. New Look not only develops the clothing line, but supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness. New Look intends to market its line as an alternative to existing clothing lines, and differentiate itself by marketing strategies, exclusiveness, and high brand awareness.

The key message associated with the New Look line is classy, upscale, versatile, and expensive clothing. The company’s promotional plan is diverse and includes a range of marketing communications. In the future, the company hopes to develop lines of accessories for men, women, and children. These accessories will include cologne/perfume, jewelry, eyewear, watches, etc.

New Look not only develops the clothing line, but supports it with advertising and promotion campaigns. The company plans to strengthen its partnership with retailers by developing brand awareness

Our customers are males  between the ages of 20 and 40 with a disposable household income. Within this group, there are no color barriers, and customers have diverse backgrounds. The New Look customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.

Competition

Companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).

We are an alternative to existing clothing lines. We make our own lines which offers exclusivity, your coworkers or other fashion forward friends won’t be wearing the same thing. We are also highly aware of trends and brands,  you will be the envy of all your friends because you found us first.

Expectations

The company’s goal is to expand from retail into online, with its own branding, to be sold by the end of the period in other retail stores as well as online.

Financial Highlights by Year

Financing needed.

We are looking to expand our design line so our owner will put in $65,000. Further we are looking for a $115,000 business loan. Both will be paid back by our second year with our already established customer base and relationships

Problem and Solution

Problem worth solving.

The New Look strategy is to expand and grow our existing retail clothing business by aggressively developing and marketing a full range collection of its own brand. It intends to market its line as an alternative to existing clothing lines and differentiate itself through its marketing strategies, exclusiveness, and brand awareness. New Look intends to build on its core portfolio of products and overcome any obstacles by using the company’s expertise in the clothing industry.

The company’s goal over the long term is to make an overwhelming impact on the fashion industry and create a large consumer demand for the product. The company’s goal in the next 2-5 years is to venture into women’s and children’s clothing. It plans to also license a line of cologne and perfume, bedding, underwear, small leather goods, jewelry, and eyewear. According to Standard & Poor’s (S&P’s), women’s apparel accounted for 52% of total apparel sales in 2015.

Nashville Connection

The company has strategic alliances with Music Records and the Entertainment Group. These alliances are valuable to New Look because they provide the needed exposure for its line and the association of its products with celebrities. Celebrities are valuable assets because they receive free clothing for interviews, concerts, and music videos.

Our Solution

New Look clothing line is classy, upscale, versatile, and expensive clothing. Our current customers are males between the ages of 20 and 40. New Look not only develops the clothing line, but supports it with advertising and promotion campaigns. Our customers are the envy of their fashion forward friends. Our prices are in the mid range to upper level in the market, there are more expensive clothes on the market. Our clothes are top notch. This allows our customers to believe they are incredibly smart fashion forward shoppers. 

Target Market

Market size & segments.

[note: information here is for illustration purposes only, to serve as a sample business plan. It is not accurate and should not be reused]

The company plans to target males between the ages of 20 and 40 with a combined household income of more than $40,000. Within this group, there are no color barriers, and customers have diverse backgrounds. The New Look customer is a versatile man who can fit into any environment and is willing to pay a high price for quality clothing.

The company’s target group is seen as having enough disposable income to spend on high priced quality clothing.  From 2000 to 2007, for example, disposable personal income grew at a healthy average annual of 7.0%. Apparel and footwear expenditures increased at a strong .2% annual rate during the same period. After 2008, however, growth in personal income slowed somewhat and so did apparel expenditures. From 2008 to 2016 disposable personal income rose at an average annual rate of 4.7%, while apparel and footwear expenditures grew 4.5% per year.

According to S&P’s, in the men’s apparel segment, much of the growth in spending is being driven by consumers with annual household incomes of more than $60,000. Spending in this segment increased by approximately 13% in 2010. Apparel purchases by men from households with incomes between $40,000 and $59,999 grew by 7% in 2010. Men’s apparel sales at department stores and off-price retailers grew at double-digit rates in 2010.

As growth slows in the mature U.S. apparel and footwear markets, companies are increasingly looking overseas for growth opportunities.  American brands translate well internationally, and many expanding economies overseas are interested in buying U.S. products. International business has therefore become a focus of some U.S. companies.

Many apparel and footwear manufacturers see Europe, with a population of 350 million, as an attractive market. Tommy Hilfiger and Polo Ralph Lauren recently opened flagship stores in London in an effort to build up their brands in Europe. Expansion in Asia, however, has been sidelined by economic troubles. In other parts of the world, footwear company Payless ShoeSource Inc., has been performing well in Canada and South America.

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As companies in these mature industries continually look for ways to compete effectively, U.S. apparel and footwear manufacturers have increasingly moved their production facilities to lower-cost locations outside of the United States. Although some manufacturers have moved operations completely offshore, others are retaining a few production facilities in the United States to manufacture products requiring a quick turnaround time.

While manufacturing in Asia remains substantial, the growth of apparel manufacturing in Mexico and the Caribbean has been significant due to the North American Free Trade Agreement (NAFTA) and the lowering of tariffs. Apparel assembled in Mexico and the Caribbean nations from fabric formed and cut in the United States accounted for 27% of all apparel imports in 1998, up from 9% in 1990.

With an improved economic outlook, Asian currencies have strengthened against the U.S. dollar over the past year. For example, the Thai bhat and Korean won appreciated 13% and 20%, respectively, from June 2013 to June 2014. While this has benefited U.S. exports somewhat, it has put pricing pressures on imported Asian goods. For the vast amount of goods manufactured in China, however, no such benefit is currently expected, as this country’s currency has remained fixed in value versus the U.S. dollar.

Leaner inventories, but continued pricing pressures

After several years of inventory build-ups, the apparel industry’s inventory-to-sales ratio declined steeply in 2008, and through 2010 it remained near its lowest levels in 16 years. According to the U.S. Department of Commerce, the inventory-to-sales ratio was 1.49 as of May 2016, significantly below the 1.74 of a year earlier.

After several difficult years and many bankruptcies in the early 2010s, the apparel industry is relatively healthier overall, and its lower inventory levels are a sign of that. Despite the lean inventories, however, prices of women’s apparel declined in the first 6 months of 2015, compared with year-earlier levels, after rising slightly in 1998. S&P’s still expects some degree of apparel pricing pressure to persist in the near future. Intensifying competition doesn’t bode well for apparel manufacturers’ ability to raise prices. Companies are continually searching around the globe for cheaper sourcing and are looking for ways to cut operating costs. Consumers are also very value conscious-they want quality merchandise at the lowest possible price. This trend is evident in the successful growth of off-price retail stores.

Modest growth in ’16

As with most mature industries, the apparel and footwear industries are experiencing intense competition and pricing pressures, while facing the need for constant product innovation. However, these industries are enjoying a great economic cycle, with low interest rates, low unemployment, strong consumer confidence, and a low savings rate. Consumers are continuing to spend at a healthy clip. As a result, S&Ps expects sales for the apparel industry to rise about 4% in 2016. We believe that maker’s with strong brand recognition and those that are closely in tune with consumers’ needs will enjoy average growth. The footwear industry faces a tougher environment, however, considering the still-high inventory levels and low-margin price points. 

Apparel outlook still positive

Although S&P’s doesn’t expect the economy and consumer spending to sustain growth forever, we expect the overall apparel industry to continue to post-modest gains through 2016. Among apparel makers, we expect the best performances to come from companies with strong brand recognition, such as Tommy Hilfiger Inc., Gap, Abercrombie & Fitch, and Jones Apparel Group Inc. As more and more companies have adopted casual attire in the workplace, the trend toward casual dressing continues. This has sustained the need for men and women to establish new wardrobes or alter their existing ones. S&P’s believes this has had more of an effect in the men’s segment, as evidenced by the higher growth rate in sales of that segment in the past year. Eventually, the casual trend will slow to a level of demand that satisfies basic replenishment needs, but for now we expect heightened consumer confidence to encourage spending beyond basic needs. Current career offerings have less structured looks, and consumers have favorably received these.

S&P’s expects the branded apparel companies that sell to the department store channel of distribution to grow somewhat faster than the overall industry. In addition to favorable demographic trends, this segment is benefiting from its strength in design and marketing, which has led to a high consumer awareness of and demand for branded apparel. Nonetheless, because there’s little pent-up demand for apparel, the need for freshness is still a vital part of keeping customers interested.

In response to a challenging and saturated domestic market with slower growth prospects, S&P’s expects that companies with strong brands will increasingly turn to international markets for growth. Companies are hoping that the international consumer’s interest in the U.S. lifestyle will translate into sales of brands that represent that lifestyle. Many companies as a significant growth area see Europe, and Asia appears to be recovering from the economic turmoil experienced in the past couple of years.

Apparel companies have been quick to recognize the importance of the youth market and have started to establish product lines to target this group. Generation Y–those individuals between four and 21 years of age–is a large demographic group with considerable spending power. This group is also significant in setting styles and trends that influence the styles for older consumers.

The current environment of abundant supply, consolidation, and intense competition has forced companies to maximize profits, not only for growth but for survival as well. Companies are constantly searching for ways to maximize efficiencies, cut costs, and increase sales. S&P’s believes this improved condition of apparel companies has positioned the successful ones for a greater degree of growth and should serve to develop a healthier industry.

Buy now, wear now

In the past, consumers purchased apparel and footwear for the upcoming season when retail stores decided it was best to carry the merchandise, usually months in advance. Times are changing, however, consumers are buying apparel and footwear closer to or during the season. The industry has had to adjust to this trend, or risk losing sales and carrying unwanted inventory. Companies have had to shorten design, development, production, and distribution cycles.

In order to stay in tune with consumer needs and trends and to aid in product planning, companies have established internal teams or have hired firms to gather feedback from relevant consumer groups. For example, Tommy Hilfiger recently established what it calls Quick Response Capsules (QRC), teams of designers and production staff to work in collaboration with retail stores to bring out fresh, new fashions within a month. When Nike recently reorganized its apparel division, it created a strategic response division to monitor consumer trends. Other companies are doing this as well.

At the moment, a few apparel companies are using domestic plants to fulfill small orders for fresh products. Although indications now are that most merchandise will continue to be sources offshore, some seasonal/special items may need to be produced domestically. If such demand increases, there may be some benefit to the rapidly shrinking domestic production industry. This buy now, wear now trend is a manifestation of the power that consumers now have in the mature apparel and footwear industries. Consumers dictate price, location, styles, and time of purchase more, something we don’t see changing anytime soon.

What’s in a name?

In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop an are spending their disposable income more carefully. Established brand names, with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business.

Many established brand manufacturers, such as Tommy Hilfiger, Polo Ralph Lauren Corp., Jones Apparel, Liz Claiborne Inc., and Nautica Enterprises Inc., are leveraging their existing brand names by adding various accessory lines, such as sunglasses, watches, fragrances, wallets, and footwear. Jones Apparel’s recent acquisition of shoe retailer Nine West Group Inc. was a strategic move aimed at broadening the company’s product lines and creating opportunities to cross-sell products between the two brands. However, most companies choose to extend their product lines through licensing. Most recently, Tommy Hilfiger announced new licensing deals to market jewelry, hosiery and, most notably, watches through Movado.

A company with an impressive brand name must exercise caution when entering into licensing agreements. If a new product line doesn’t live up to the quality standards that consumers have come to expect from the brand name, the brand’s image can be tarnished. It remains to be seen how consumers will react to this onslaught of new brand name product introductions. To date consumers have embraced the extended product lines.

The Apparel Industry

The U.S. apparel industry is large, mature, and highly fragmented. Apparel sold in the United States is produced both domestically and in foreign locations. According to estimates from the American Apparel Manufacturers Association (AAMA), an industry trade group based in Arlington, Virginia, the dollar value of domestic apparel production was $39 billion at the wholesale level in 2014 (latest available), which was less than the $46 billion (U.S. wholesale value) of goods imported into the United States. In addition, $15 billion of goods were produced in both the United States and other countries.

The U.S. apparel market can be divided into two tiers: national brands and other apparel. National brands are produced by approximately 20 sizable companies and currently account for some 30% of all U.S. wholesale apparel sales. The second tier, accounting for 70% of all apparel distributed, comprises small brands and store (or private-label) goods.

Apparel is sold at a variety of retail outlets. Based on data from NPD Group, discount stores, off-price retailers, and factory outlets accounted for 30% of 2015 apparel sales, while specialty stores and department stores accounted for 22% and 18%, respectively. Another 17% were sold at major chains, and direct mail/catalogs accounted for 6%. The remaining 7% of apparel sales occurred through other means of distribution.

Current Alternatives

Although the apparel industry is mature and slow growing, it exists in a dynamic and competitive environment. In order to improve profitability, many companies are restructuring to create leaner organizations and adopt new technologies. Consolidation has been prevalent in this industry in the past few years, as larger companies gain leverage in market position and cost cutting. In the apparel industry, companies can operate as retailers or manufacturers (wholesalers) or both. For instance, Gap, Inc., a vertical retailer, manufactures and markets their own apparel and accessories. A company like VG Corporation is a manufacturer and sells solely to retail channels. A company like Tommy Hilfiger does both, selling its products to both retailers and consumers (through retail outlets).

Our Advantages

In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon.  Brands have become an increasingly significant factor in apparel and footwear. Many consumers have less time to shop an are spending their disposable income more carefully. Established brand names, with their quality image, make the shopping experience easier and faster for many consumers. For manufacturers, brands build consumer loyalty, which translates into repeat business. 

The company’s name, New Look, is a competitive advantage in itself. The name is not attached to any particular group of customers and it allows entry into different segments of the industry. Another competitive advantage is the company’s marketing strategy. Through the use of celebrities, advertising, promotion, and giveaways, the company is able to develop its presence in the market. Although the company uses retailers to sell its line, most of the marketing and advertising is done in-house.

Keys to Success

Keys to succeses.

It’s about fashion, and style. We live or die with the look. 

Distribution will be critical. Although we start online, to grow we need to get the resonance of appearing in retail. 

• Department stores 
• Apparel specialty stores 
• Internet store

Marketing & Sales

Marketing plan.

The companies marketing plan is: 

• Public relations. Press releases are issued to both technical trade journals and major business publications such as DNR Magazine.
• Trade shows. Company representatives will attend and participate in several trade shows such as Magic in Las Vegas.
• Print advertising. The company’s print advertising program includes advertisements in magazines such as Code, and Rap Pages.
• Website. New Look plans to establish a presence on the Internet by developing a website. Plans are underway to develop a professional and effective site that will be interactive and from which sales will be generated worldwide. When up and running the customers who choose will be able to purchase our clothes from the comfort of their own home. We will even offer free expedited shipping to our reglars. 
• Social Media – We will use Facebook, Twitter, Instagram and YouTube. Celebrities will be seen wearing our clothes on Facebook and Instagram. We will also run sales and promotions online. We will speak with our customers as well as have them speak back on Twitter. Youtube will be used as a way of promoting our clothing line designers. They will answer questions about fashion "dos and don’ts" and the best way to pick their color palate. 
• The company also plans to use various other channels including billboards, radio and television commercials, and a street team.

New Look intends to build a sales team that will be tasked with generating sales leads on a regional and national basis. They will also be responsible for establishing connections with retail outlets.

Several large retail chains-particularly in the athletic footwear sector-have developed formats called superstores, which have more square footage dedicated to a particular product category. 

Differences exist in the distribution mix for men’s, women’s, and children’s items. For example, more women’s apparel is purchased in specialty and department stores than is the case for men’s apparel. Men’s apparel is more prevalent in discount stores and general merchandise chains. In the children’s segment, a considerably higher portion of apparel is purchased in discount stores.

Catalogs are another important method of distribution. Consumers have less time to shop, and for some, catalog shopping offers a more convenient and pleasant alternative. 

The distribution channel that has received the most attention recently is the Internet. Although it now represents only a small portion of apparel sales, this distribution channel has the most potential for growth. Consumers like the convenience of being able to shop from anywhere and at anytime they wish. Manufacturers with Internet sites use them for marketing and informational purposes. With expected technological advances in hardware, software, and data pipelines in the future, shopping for apparel and footwear should gain popularity.

Milestones & Metrics

Milestones table, key metrics.

Key Metrics are: 

1 – Keeping track of the customers that mention the print publications. We want about 10 to 15 percent of our people to mention the add, use a code or a referral. We will be taking surveys and each cash register attendant is set to ask two questions, did any one help you, where did you hear about us? 

2 – Trade shows – Connect with designers and make manufacturing deals at trade shows. We will keep very good records of the cost of the trade show and the profit from going there. We must cover our costs and make 1 or 2 percent of sales or it is not worth it. 

3 – Public Relations – Keep the cost low and measure by overall sales. These are hard to see and measure directly. They fall under branding and will be seen in sales and Twitter and Facebook. We need to be on people’s minds, have them speaking about us. 

4 – Website. These are measured by page views and links and sharing and our sales on our site. We want 80 percent of the people who search for us and view our clothes to turn into online sales. Technology allows us to keep track of if they drop out and what point in the process. We will have sales people on chat standing by to help. 

Ownership & Structure

New Look was founded as a Tennessee C-Corporation with principal offices located in Memphis, TN. All operations, from administration to marketing strategies, take place at this leased office location of approximately 500 square feet.

Past Performance

We brought our sales up to $3 million last year, with a 25% gross margin, but no profits. That gross margin was way below industry averages for good reasons as we ramped up, and we project an industry-standard gross of 50% for the future. 

New Look products will be priced at the high end to reflect the quality and exclusiveness associated with the brand. The company will use high-end materials such as cashmere, a wool blend, and high gauge denim. When a mark up is placed on New Look products, customers are willing to pay the premium because of the perceived value and quality guarantee that comes with all products. The New Look line is targeted at males between the ages of 20 and 40.

Management Team

The company’s management philosophy is based on responsibility and mutual respect. New Look has an environment and structure that encourages productivity and respect for customers and fellow employees.

Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

Key Assumptions: 

– There are fashion forward men in the area

– These men have money they could spend on luxuries if they choose 

– These men are looking for high quality and unique clothes. They appreciate brands over everything else. 

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

The New Look strategy is to aggressively develop and market a full range collection to consumers. The company intends to market its line as an alternative to existing clothing lines and differentiate itself through its marketing strategies, exclusiveness, and brand awareness. New Look intends to build on its core portfolio of products and overcome any obstacles by using the company’s expertise in the clothing industry.

Sources of Funds

We believe we will be able to finance our growth through careful management of existing streams of income and working capital generated by the business. 

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

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December 28, 2021

How to Plan & Design a Manufacturing Plant Layout? (Video Examples Included)

Our experts at Visual Components discuss how to plan and design a manufacturing plant layout with a simulation case. We review the benefits, process, and necessity for a high-quality plant layout in your business organization.

Discover the essentials of factory layout design using advanced simulation and CAD technology. This approach aims to optimize space and efficiency, catering to each factory’s unique needs. Learn about creating lean layouts that streamline production and enhance workflow. Gain insights into how strategic planning can lead to cost savings and increased productivity. Explore the steps from concept to execution, including real-world examples, demonstrating the benefits of effective layout planning for manufacturing success.

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When it comes to running a manufacturing facility, there are a lot of things to consider. As an owner or manager, you’re probably looking for ways to speed up your process, improve your yield, and increase your profit. Did you know that a simple plant layout can achieve all three of these goals? 

Layouts are often overlooked, despite their huge money-saving potential. 

In this piece, we’ll discuss what is meant by a plant layout, some benefits of a layout, an example, and our step-by-step process for laying out a plant. 

These are the topics we’ll cover. You can also jump to the part that interests you the most 🏃🏻

• What is meant by a plant layout?
• What is a lean plant layout?
• What are the characteristics of a good plant layout?
• Plant layout design benefits

Plant layout example

• Step-by-step plant layout design process
• Case: tire assembly and warehousing layout

Let’s go! 

What is meant by a plant layout? 

The plant layout definition is simple: it’s a way to draw your facility’s building, equipment, and major components on paper. It’s typically done through 2D CAD (2-dimensional Computer-Aided Drafting and Design) software. 

The designer will use real-world dimensions of your equipment and facility and layout a scaled model of your plant. Without using real dimensions, the final layout won’t be as helpful for your plant. 

In a lot of cases, the designer will submit a final layout that allows the viewer to fly through the building, seeing the equipment in motion and observing how the process looks. Since everything is a scale model, the viewer can find out how much distance there is between equipment, for walkways, and so on. 

Since it’s all done on paper, this can be done before getting equipment or before having a warehouse. It also allows the designer to change the layout as much as they’d like. 

The layout includes a lot of different features: 

• How product moves through your building 
• Equipment 
• Building floorplan 
• Dimensional distances between everything 
• Visualization of your process 

What is a lean plant layout? 

If you take the concept one step further, you can start optimizing everything. In a lean plant layout, the designer will start incorporating lean principles into the floorplan. 

A big principle in lean layouts is adding sections for different operations. If your process has multiple steps, like cutting, organizing, and packing your product, then it will be broken into different physical areas. 

Cutting will be done in one zone, organizing in another, and packing in a third. This also groups together the required machinery and personnel to expedite the process. 

Why does this work? Material and people travel shorter distances, the layout is more compact, and everything is streamlined. 

There are a lot of other concepts that go into lean principles (a lean layout). For the sake of brevity, we’ll leave it there. 

What are the characteristics of a good plant layout? 

Knowing whether a plant layout is good or not really depends on your operations and needs. In general, there are a few characteristics to look for: 

• Effectively uses the space . One of the limiting factors in your operation is how much space you have. You can’t just invent new space, so you have to get creative with the space you have. A good plant layout effectively uses every square inch of operation space. 
• Accessible design . At the end of the day, there should be enough space between items for the full floorplan to be accessible. This means that material handlers need enough space for themselves as well as the product they’re carrying around the building. 
• Flexibility for future growth . Make sure that the floorplan isn’t going to constrict your operation. A lot of manufacturing plants benefit by adding a potential for 20-40% growth. This doesn’t mean that you have to predict exactly how much you’ll grow in a decade, just design with future growth in mind. 
• Has your operation in mind . You need a layout that works for your individual operation. There are very few cookie-cutter solutions that fit the needs of your business — your layout is the same way. A good plant layout is specialized to what your business needs. 

If you want to oversimplify this idea, a good plant layout is one that achieves the goals of your operation while optimizing every possible parameter. 

Plant layout design benefits 

Why do people spend so much time putting together a plant layout? There are a number of benefits. Let’s quickly review some of the top reasons why people opt for a plant layout in their business organization. 

Reduce cycle time 

Cycle time is a term that quantifies how long it takes a business to make a product. It’s the combination of every process step that’s required to make your end product. 

With a good plant layout, everything is set up with the operation in mind. As a result, businesses will see a reduced cycle time. 

Increase Operational Speed 

On top of an overall speed increase, you’ll find speed increases in every step of the process. This goes back to the idea of splitting your operation into different zones. 

Rather than an operator walking across your warehouse to perform a task, everything will be centralized. Think of it as storing the knives next to the cutting board in your kitchen. 

Maximize Your Square Footage 

Depending on where you’re located, the price of your land could be your biggest expense. Due to that fact, most people want to maximize their square footage. 

With a manufacturing plant layout, you have the ability to move equipment around on paper in order to maximize your square footage. 

The designer can do things like relocating, rotating, and reorienting equipment to see which option makes the most sense for your facility. Clearly, this is a lot faster and less expensive than physically changing around equipment and testing the new layout. 

Visualize and Tweak Your Operational Process 

Once things are laid out, it might help you to see a potential shortcut in your operation. Maybe you can save time and money by moving one step of your process to another part of the cycle. 

This is highly dependent on your operation, but we’ve seen it happen in the past: a company thinks their operation is optimized until they do a plant layout and notice some shortcomings. 

Maximize Profits 

When you combine all of these factors, you’re left with one big benefit: maximized profits. This is the major reason why a lot of businesses opt for putting together a plant layout. 

You save time, space, and create more products each year. That should sound like millions of dollar signs annually. 

To help illustrate this idea, let’s look at an example. Our team at Visual Components lead the design for a company called Midea. 

Here’s a case study of one of our previous clients, Midea . They’re the world’s largest producer of major appliances. Before adding a new, high-end production line, they decided to get a plant layout. 

Our simulation looked at the real-world size and operational speed of their different machines. We worked closely with their team to understand how the process works, what the limiting factors were, and what kind of flow their operation had. 

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After we produced some rounds of layouts, we arrived at, what both parties deemed to be, the best possible arrangement. We saved their operation a lot: 

• Floor space used was reduced by 10% 
• Production capacity increased 10% 
• Reduced product defects by 10x 
• Construction schedule expedited 20% 
• Total project cost savings: $879,000, roughly 15% 
• Long-term labor cost reduction, operational efficiency increase, and projected profit increase 

This project for Midea shows the importance of lean plant layouts. We foresee an increase in their profits year over year — this isn’t just a short-term, upfront cost saving. The future of their operation will benefit thanks to an initial plant layout. 

Step-by-step plant layout design process with a case example 

Curious about what the plant layout design process looks like? Here’s a step-by-step process that we typically follow for our clients. Here’s our workflow for planning and building a plant layout: 

1. Understanding clients’ needs 

It all starts with understanding our clients’ needs. Before a plant layout can be generated, some information about the operation needs to be explored. 

This entails a few conversations going over some basics like floor space, equipment, flow, and more. 

For example, our customer Firac received a clear request from their client — to automate a manual screw tightening process. Read  the whole story.  

2. Planning manufacturing system design 

Now it’s time to start drafting. Different companies will opt for different manufacturing programs in this step. 

Some companies will only provide a 2D layout with no motion included. Others will use a 3D layout that shows how the equipment will move and how the product goes through the cycle. 

At Visual Components, we typically use a 2D layout for the building and add a static 3D layout on top. This overlay ensures dimensional accuracy which is paramount in making a plant layout. 

3. Equipment selection 

Now it’s time to select and add equipment. This will go right into our static 3D layout, so it can be changed later. 

Things like the overall size, motion constraints, and equipment parameters will be inputted during this step. This is done to ensure the model is precise and accurate. 

As you probably noticed from our Midea case study, the equipment physically moves and operates in our model. During this step, we’re making sure our clients get the best visual of their potential layout. 

To help our clients save time on equipment selection, we offer ready-made components.  Visual Components eCatalog  has a library of virtual models of robots, machines, and equipment from dozens of leading brands in industrial automation. We have over 1,500 pre-defined and ready-to-use components, to be exact. 

4. Layout design 

Once the equipment is selected, the designer can start moving around components. This is part of the optimization process where items are moved around until they’re in the perfect place. 

Since the equipment and building are already drawn on the computer, this step is more of a “drag and drop” process. On the computer, the designer will move around equipment, change its orientation, and find the best place for the physical pieces. 

Jump to 2:34-5:50 in the video below to see how it works in practice. 

5. Define the flow 

In step 5, we’ll start optimizing the flow. There are three major parts of this step: 

• Defining the products 
• Defining the processes 
• Defining the process flow 

There’s some overlap between this and the first step on the list. However, this step focuses on optimizing everything from a layout perspective. 

This might mean changing the location of equipment, storage, and walkways to improve the overall process. 

The flow is how the material cycle looks in your operation. In other words, when you trace the product from raw material to shipment, that’s the flow. 

Jump to 6:43-9:22 in the same video below to see how it works in practice. 

6. Simulation 

With all of these parameters in mind, our team is ready to put together a simulation. The simulation will show the material and how it physically moves down the line. 

A simulation is a 3D video that shows a flyby through your facility. It shows how the equipment and product move throughout. The Midea video discussed earlier is a great example of a simulation that our team makes. 

However, this isn’t the final stage. Part of the simulation entails finding bottlenecks. This is where your operation is slowing down and hurting the production speed. 

After finding a bottleneck, our team will work to alleviate them. Removing even one bottleneck in your operation can result in a huge performance improvement. 

Some of our design software comes with plant layout analysis that aides us in targeting and alleviating these bottlenecks. This is another benefit of using computer-based plant layouts. 

7. Modify And Validate the Changes 

The final stage is all about making changes to improve the design. We typically target metrics when it comes to the use of space, operation cycle time, and the ability for product defects. 

These changes result in faster speeds and more room for profit within your business on an annual scale. 

If this layout is done before construction, you’ll also find some construction cost savings built into this step. 

The validation stage involves our clients and getting valuable feedback from you. 

Case: Tire Assembly and Warehousing Layout

Let’s discuss a case where the task was to design, simulate, analyze and optimize a manufacturing and warehousing system based on predefined production and layout goals. 

This case is about a tire assembly and warehousing facility that is capable of handling a certain number of tires before they are supplied to a downstream assembly line. We can assume that the downstream is a car manufacturing plant. 

Products and product variants 

The product that we had to work with in this case was tires however there were many product variants. 

First, we had three tires types meaning tires in three different materials. 

Next, we had five tire sizes in the three tire types. These sizes are represented in different colors of tire rims.

So including all the product variants, we had to design a system that could handle 15 different tires. 

Production goals 

Once the products and product variants were clear, the next step was to evaluate the pre-defined goals. Here’s the list of the production goals that we had to meet, 

• The customer needed a setup that was capable of handling all these tires in batches of 4. 
• The downstream assembly required that this tire plant could supply 720 tires per hour regardless of how many it can store. The main objective was to have a functional system that provides uninterrupted supply to the downstream assembly regardless of how many tires it could store. 
• Since we were working with batches of 4, 720 tires per hour meant that the goal was to supply 3 sets of tires per minute.

Layout Goals 

Based on the production goals, there were also some layout goals, 

• There must be enough buffer to recover from possible machine downtime. 
• There must be enough warehouse to store tires for 5 hours of production meaning 900 sets in 5 hours and they must be available at all times to ensure any downtime does not interrupt the downstream supply. 
• Also, in addition to storage, we needed to ensure that we had enough conveyor capacity to handle this amount and variety of products. 

Layout Overview and Functionality 

There layout was then designed based on the given production and layout goals. Here is a video for a closer look at the layout design and functionality of different sections, 

1. The tire types are fed to the robot cell as a batch of 4. 

2. Next, Tire rims which represent different sizes of the tires are incoming through conveyors behind the robot cell. 

3. The robot cell is designed with 4 assembly lines. Each of these has a Yaskawa HP20RD robot on top of a smart pedestal with a tire tool. This tire tool helps to pick the tire type, lubricate it and assemble it with the rim. 

4. Once Assembled, these tires go through a different set of machines where they are fixed and balanced before they are ready to be stored in the warehouse. 

5. The tires are then sent towards the warehousing side with five storage sections, one for each tire size and four cartesian robots. 

6. Each of these robots has certain tasks assigned to them shortly explained here, 

• The first red cartesian robot sorts the tires by sizes onto their specific conveyors 
• The second dark grey cartesian robot picks one stack of tires at a time and places them in their relevant tire size storage section. 
• The third dark grey cartesian robot with beige pillars stores the tires by their sizes in the storage section and also supplies the sets forward when needed. 
• The fourth steel-blue robot that is closer to the entrance of the warehousing collects the supplied stacks of tires released by the previous robot and places them in the rack. These racks are then picked and stored by the forklift in the next storage area. 

7. From the last storage, the tires are then supplied to the downstream assembly as they’re needed. 

Performance evaluation of the designed systems 

Initially, two scenarios were designed and their simulation performance was evaluated. 

The first scenario consisted of 4 robot assembly lines.

The second one had 5 robots assembly lines. 

Later, we realized that machine breakdowns are not taken into account in the first two scenarios. Machine breakdowns could be due to many reasons but the most common reason for a production stoppage is usually Maintenance. So, the Maintenance times or Mean Time Between Failures (MTBF) averaging 150 seconds were added to the machines in the robot cell. Also, the maintenance cycle was defined which meant the machine maintenance had to be carried out after every 30 tires were produced. 

After these metrics were clear and defined, two more scenarios were built, basically, the same and 1st and 2nd scenarios but now with MTBF values included. 

Overall, four scenarios were designed and simulated. Here is the summary of all scenarios with their production output.

The difference in the production output is quite clear between scenarios where MTBF values were not considered and once they were. Based on the scenarios, it was safe to say that Scenario four with five assembly lines was able to generate the required goal of 780 tires per hour. This scenario was then locked as the final design for this case. 

Summary of case results 

Some important conclusions of this case were, 

• The designed system was capable of handling batches of four tires in all the product variants. 
• There was enough buffer to recover from possible machine downtimes. 
• The production rate of tire assembly was not constant after the maintenance times were added but with enough buffers and storage systems, the supply to downstream was smooth. 
• The last but one of the most important lessons to learn from this case was if the simulation is run with too few details, the results may be wrong like the clear difference between the production outputs in the first two scenarios compared to the last two. 

Conclusion 

We just reviewed how to plan and design a manufacturing plant layout. Now, you should know the benefits and process that goes into making a layout for your plant. With  Visual Components , designing a plant layout is more logical, visual, and easier to do. Contact us today to get started. We’ll show you how your operation can save time and money thanks to our services.

Curious to learn more on the topic? Be sure to  download our eBook  about planning and optimizing your manufacturing plant layout. 

Further reading

Boosting Production Line Efficiency: A Guide on Improving Production Output

Blog | March 27, 2024 Industry

An Introduction to Virtual Commissioning

Blog | February 22, 2024 Industry

Are Manufacturers Really Ready for the Digital Era? (Survey Results)

Blog | October 16, 2023 Industry

Pharmaceutical Business Plan Template

Written by Dave Lavinsky

Pharmaceutical Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their pharmaceutical companies.

If you’re unfamiliar with creating a pharmaceutical business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a pharmaceutical business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Pharmaceutical Business Plan?

A business plan provides a snapshot of your pharmaceutical business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Pharmaceutical Company

If you’re looking to start a pharmaceutical business or grow your existing company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your pharmaceutical company to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Pharmaceutical Businesses

With regards to funding, the main sources of funding for a pharmaceutical business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for pharmaceutical businesses.

Finish Your Business Plan Today!

How to write a business plan for a pharmaceutical company.

If you want to start a pharmaceutical company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your pharmaceutical business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of pharmaceutical business you are running and the status. For example, are you a startup, do you have a company that you would like to grow, or are you operating pharmaceutical companies in multiple markets?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the pharmaceutical industry.
• Discuss the type of pharmaceutical business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of pharmaceutical company you are operating.

For example, you might specialize in one of the following types of pharmaceutical businesses:

• Generic Pharmaceutical Manufacturing : this type of pharmaceutical business develops prescription or over-the-counter drugs products that do not have patent protection.
• Vitamin & Supplement Manufacturing: this type of pharmaceutical company primarily develops products that contain ingredients intended to supplement the diet.
• Brand Name Pharmaceutical Manufacturing: this type of pharmaceutical business engages in significant research and development of patent-protected prescription and over-the-counter medications.

In addition to explaining the type of pharmaceutical business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of patents awarded, the extent of your product portfolio, reaching X number of distributors under contract, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the pharmaceutical industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the pharmaceutical industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the pharmaceutical industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your pharmaceutical company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: healthcare providers, chain pharmacies, independent retailers, and consumers.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of pharmaceutical business you operate. Clearly, individuals would respond to different marketing promotions than hospitals, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Pharmaceutical Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other pharmaceutical businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes imported alternatives, herbal remedies, or customers’ nutritional self-care. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of products do they manufacture?
• What are their research and development capabilities?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide product development?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a pharmaceutical company, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of pharmaceutical business that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you manufacture patent-protected prescription medications, or a range of vitamins?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your pharmaceutical business. Document where your company is situated and mention how the site will impact your success. For example, is your pharmaceutical company located in an industrial district, near a major medical and/or scientific hub, or near input markets? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your pharmaceutical marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Advertise in trade publications
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your pharmaceutical company, including meeting with potential customers, creating and distributing product information, developing and manufacturing products, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to produce your Xth product, or when you hope to reach $X in revenue. It could also be when you expect to expand your pharmaceutical business to a new city.  

Management Team

To demonstrate your pharmaceutical company’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing pharmaceutical businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a pharmaceutical business or successfully running a R&D company.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions including your sales projections. For example, will you manufacture a line of general sales products, or will you specialize in manufacturing controlled drugs? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your pharmaceutical company, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a pharmaceutical company:

• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your facility blueprint or a list of products you manufacture.  

Writing a business plan for your pharmaceutical business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the pharmaceutical company industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful pharmaceutical company.  

Pharmaceutical Business Plan Template FAQs

What is the easiest way to complete my pharmaceutical business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your pharmaceutical business plan.

How Do You Start a Pharmaceutical Business?

Starting a pharmaceutical business is easy with these 14 steps:

• Choose the Name for Your Pharmaceutical Business
• Create Your Pharmaceutical Business Plan
• Choose the Legal Structure for Your Pharmaceutical Business
• Secure Startup Funding for Your Pharmaceutical Business (If Needed)
• Secure a Location for Your Business
• Register Your Pharmaceutical Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Pharmaceutical Business
• Buy or Lease the Right Pharmaceutical Business Equipment
• Develop Your Pharmaceutical Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Pharmaceutical Business
• Open for Business

Don’t you wish there was a faster, easier way to finish your Pharmaceutical business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s business plan writers can create your business plan for you.

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How to Select the Location of Your New Manufacturing Plant

11/29/2017 | 152 Likes | Manufacturing , Assembly , Heavy Duty , Industrial Facilities , Material Handling ,

Determining where to locate your next manufacturing plant can be a difficult decision, and it’s one that requires significant due diligence. We take a comprehensive look at the key factors — from the availability of skilled workers to effective corporate tax rates and quality of life issues — that can make your manufacturing relocation plan a success.

First, a quick disclaimer: as well all know, no two manufacturing operations are alike. For example, the needs of a specialized, R&D-driven medical devices company will be different from a price-sensitive, mass-market consumer goods operation. Likewise, an OEM electronics component supplier whose output delivery needs to be timed to the minute to satisfy a major automotive manufacturing plant will have different location requirements than a manufacturer processing raw materials sourced from a mining operation in Wyoming.

In other words, even though we’re presenting a comprehensive framework of manufacturing relocation factors, we hope it’s obvious that the importance of any one factor will be determined by the specific needs of your organization! Having said that, let’s take a look at hard costs first, followed by indirect, soft costs. Then we’ll look at some future trends to consider when weighing a manufacturing relocation decision, followed by a short list of some of the leading low-cost domestic and foreign locations. Finally, we’ll take stock of the pros and cons that could influence your own decision.

Manufacturing Relocation: Direct Hard Cost Factors to Consider

In this section, we’ll look at five relocation factors that can have a direct, measurable impact on the bottom line.

1. Supply Chain Infrastructure / Logistics and Access to Customer Markets

Does the candidate location bring you closer to your customer markets? Moving your manufacturing plant closer to your customers can help you increase profits or build up market share by speeding up delivery times, reducing inventory, and cutting costs.

Can you build an efficient, end-to-end supply chain in the candidate city, or will delivery of some components or raw materials be compromised by long distances or unreliable connections? Will weather conditions create unacceptable delays during part of the year?

We recommend performing a complete review of the region’s infrastructure, e.g. deepwater ports, freight rail access, trucking and highway connections, international airports, expediting and transshipment services, as well as Internet, communication, power and water utilities to determine if they are reliable and efficient enough to meet your specific needs.

2. Effective Corporate Tax Rates and Incentives

For each candidate location, it’s crucial to calculate the total impact of local, state, and national taxes, including property-based taxes. Quite a few jurisdictions offer tax breaks and rebates to companies in exchange for activities that benefit their community, such as renovating existing facilities or remediating brown-field sites, investing in targeted industries that create new jobs or conducting research and development activities.

(If your customer includes the Federal Government, don’t overlook preferential contract treatment set-asides — through the HUBZone program, for example — for companies headquartered in historically low-income census tracts.)

It’s also becoming more common for major companies, such as Boeing or Amazon, to conduct highly-publicized campaigns when choosing the location of a new facility. Many cities, regions, and states are willing to negotiate multi-year tax incentives or abatements in exchange for creating new jobs or locating facilities in their jurisdictions. Incentives may be available at the country level as well; for example, France has become notably more aggressive in courting tech-oriented companies .

3. Tax Domiciles, Exchange Rates and Economic Conditions

While smaller manufacturing companies are likely to keep things simple by limiting themselves to domestic operations, large corporations, such as Apple and Nike, have recently been thrust into the news as details of their highly complex tax domicile and ownership structures have been leaked to the press.

That’s quite a bit beyond our remit to provide that level of corporate advice*, as we’d rather stick to much more transparent considerations, such as exchange rates and general economic conditions. With respect to exchange rates, quite a few multi-national companies find it advantageous to hedge against dramatic shifts in exchange rates by having multiple manufacturing bases around the world. When one currency goes up, production can shift to a location with a more favorable exchange rate. And countries with long-term economic growth (and rising consumer incomes) obviously make better candidates for locating consumer goods manufacturing plants — unless your goal is to export 100% of the goods from countries with very low, depressed wages.

*We do note that proposed changes to the US Corporate tax code now before Congress (as of late November 2017) are worth careful monitoring as potential changes to the tax code may encourage US companies to repatriate their foreign-earned profits back to the USA.

4. Business Regulatory Regimes and Customs/Trade Agreements

Substantial trade agreements (such as NAFTA in North America), customs unions (such as the European Union), and special economic zones (such as China’s Shenzhen, the city immediately north of Hong Kong) have helped create regional manufacturing zones, where goods in process (as well as completed goods) can travel across country borders with minimal delays or customs duties.  Harmonizing regulations across borders has also reduced non-tariff-based trade barriers. This combination has led to the development of highly-sophisticated manufactured goods supply chains; for example, oftentimes the individual components of automobiles produced North America make multiple trips across the Mexican, US, and Canadian borders before final assembly.

There are also new agreements are on the horizon that may impact manufacturing relocation decisions as well, such as the revived negotiations for a pan-Pacific trade agreement (once known as the Trans-Pacific Partnership) that will stretch from Canada to Chile, to New Zealand and Australia, to Japan and, potentially, Korea. (The US has opted out, and China has yet to be invited.)

On the one hand, so important are the ramifications of major trade agreements and customs unions, such as NAFTA and the EU, that they can be considered in some cases to be the sole determining factor when deciding where to locate a new manufacturing plant. On the other hand, these agreements can be politically controversial: witness the UK’s vote to leave the EU over issues such as free movement of people — despite repeated warnings from companies, such as Honda and Airbus, that a ‘hard’ Brexit would put their UK manufacturing operations at risk. Similarly, many American workers have come to resent NAFTA, for whom the agreement represents nothing more than jobs shifting to Mexico. However, changes to the NAFTA agreement recently proposed by the US trade representatives may prove just as disruptive to workers in the Detroit automobile industry as it will to mid-west farmers who depend upon grain sales to Mexico.

North American automotive manufacturing experts discuss ways that changes proposed by the US Administration to NAFTA’s rules-of-origin content regulation will affect North American manufacturing competitiveness.

The bottom line: when choosing a manufacturing location, have your eyes wide open to potential treaty and regulatory regime changes that may be on the horizon. Carefully investigate business regulations, permitting times (maddeningly long in Brazil and Greece), environmental regulations, and labor rules that would apply in your proposed new location. For example, European Union rules governing environmental pollution (such as the elimination of lead in manufacturing processes) and greenhouse gas reduction can be surprisingly strict, as can requirements for compensation and notice due to workers facing potential layoffs.

5. Business Operating Costs

Performing due diligence on direct business operating costs is next. You’ll want to collect data on these areas:

Facility / Real Estate Costs

What is the market for purchasing or leasing real estate? Will it be more advantageous to build or rent a new facility or renovate an existing one? Can you get an option for potential expansion? What are the tax implications (mentioned above) for owned property, including tools and inventory?

Utility Costs

Is the country self-sufficient in energy or could its supplies be disrupted by an energy boycott or cutoff? Are the utility costs favorable and services reliable? Will you need to budget for more than just emergency backup generators? Industries with high energy demands, such as data centers or aluminum alloy manufacturers, tend to gravitate to locations with low-cost energy resources, such as hydroelectric power.

Labor Unions and Wage Costs

What is the availability of skilled workers required for your manufacturing plant? What are the current local wage rates and minimum wage standards? Are there local training centers that graduate workers with the skills you need, or will you need to invest in training programs or pay to relocate staff? Are most manufacturing plants unionized in this location? Does the location have open or closed shop union regulations? How would you characterize the labor union’s relationship with local industry?

Employee Benefits such as Healthcare, Pensions, Unemployment, Insurance

What are the customary employee benefits in this location?

For example, will defined-benefit retirement plans (e.g. traditional pensions) or defined-contribution retirement plans (e.g. 401K) planned-benefit pensions be required as part of the compensation package?

What about employer-provided healthcare plans? Keep in mind that outside the USA most healthcare plans do not require employer contributions, these are provided either by direct insurance plans paid directly by individuals or funded by the government directly.

Is the employer responsible for paying unemployment, occupational accident or life insurance policy premiums in the proposed location? While these are benefits typically offered by American companies, this can vary worldwide.

Manufacturing Relocation: Indirect and Soft Cost Factors to Consider

Now let’s take stock of some of the indirect factors that you should consider when undertaking a manufacturing plant location analysis.

1. Network Effect / Industry Clusters / Talent and Knowledge Base

Historically, many industries tend to cluster in certain geographic areas. Examples of this include the auto and truck industry in Detroit, computers and software in Silicon Valley, pharmaceuticals in New Jersey, entertainment and media in Los Angeles, and finance in New York City or London. If there is such a cluster of industry in your sector, you should weigh potential pros and cons of the “network effect” that comes from being located near your competitors. When a region is known for a particular industry segment, it can attract talent and support institutional “know-how” that takes many beneficial forms, from informal industry contacts to educational programs in area schools and universities. It could also lead to job poaching or worse, such as compromising industrial secrets, which may lead you to decide to avoid being located anywhere near a competitor!

2. Business Transparency and Criminal Activity

As Americans, we tend to think of successful business transactions in terms of offering the best deal, the best product, the best service. As such, the idea that you have to pay a bribe to a potential customer or an official to secure a deal, or obtain a license or agreement doesn’t happen that often (not the least of which because it’s illegal this country). However, this level of business transaction transparency is not universal around the world. Paying money to customers, government officials, and organized crime figures can be commonplace in some parts of the world, which in turn, can pose problems for Americans who want to avoid these practices and also avoid violating American law. The stakes can be even higher. Criminal activities can be life-threatening in countries such as Mexico, Honduras, or El Salvador, where kidnapping company officials (or their spouses or children) for exorbitant ransoms are not unheard of. In these regions, hiring bodyguard protection and the use of secure, armored vehicles are considered a good investment.

3. Cost of Living for Employees

Can your employees afford to live well in the proposed location or will high or rising costs drive up wage costs? Take a look at housing affordability, the effective income tax rates (for national, state, and city taxes, if applicable) as well a property taxes.

Is there a way for employees to get to work efficiently, such as via a cost-effective public transportation system? Will they spend hours commuting to work — either because the road/transit system is poor and overcrowded or the commute distance between the manufacturing plant and affordable housing is too far?

4. Quality of Life Consideration

Health and safety.

What’s the homicide rate? How many deaths occur on the highway due to accidents? Are there drug and crime epidemics in the region? Do the area’s hospitals and doctors provide sufficient preventative and emergency care?

Educational Institutions

Are the public schools high quality, or will it be necessary for employees to educate their children privately, for example, at expensive, English-language international schools?

Are there institutions of higher learning that can attract candidates and provide a source of skilled, creative employees?

Cultural Institutions, Language, Religious Worship

Does the city offer museums, symphonies, theater and other enriching cultural institutions? Will company executives and family members need to learn a foreign language? Does the city or state allow for freedom of assembly and religious worship?

Diversity and Inclusion

Are the city and its workforce culturally and racially diverse? If located abroad, are there equal opportunities for women, or will female managers or expat family members find themselves excluded from many aspects of daily work and home life? Will LGBT employees and expat family members be accepted or discriminated against?

Recreation and Leisure

Are there amateur or professional sports teams in the city or region?

Are there plenty of outdoor and leisure activities to promote good health and mental well-being?

Can you Future Proof Your Manufacturing Plant Decisions?

It’s hard to predict the future, but it’s a useful exercise to think about potentially disruptive changes that could have an effect on your choice of a manufacturing location. It’s easy to get blindsided by unexpected developments… after all, even Michael Bloomberg, founder of the eponymous Bloomberg financial intelligence and media company, was caught out by the unexpected plans for the UK to exit the European Union just as he opened up Bloomberg’s spanking new European headquarters — in London! 

Some of the items on this future possible developments checklist to consider include:

• Continued impact of smart, manufacturing automation and robots .
• Jobs that will be replaced by automation .
• The increasing importance of sustainability and the impact of renewable energy on manufacturing.

Top Lowest Cost USA Manufacturing Plant Locations

So, what do you think are the best locations in the US for siting your next manufacturing plant? For many, it’s not the west coast — detractors point to overcrowding and high costs, especially in real estate and salaries. (In fact, some investors are taking a second look at the mid-west as a place to invest in new tech startups .) Yet, Elon Musk has made a successful go at it, building Tesla cars in the expensive Bay Area and rocket ships along the coast east of Los Angeles.

As we said at the beginning of this article, the answer to which is the right manufacturing location for you is dependent on your industry sector and your particular mix of requirements. So we’ve turned to KPMG, who has handily enough undertaken a sector-by-sector analysis of different cities , here in the USA and abroad, and ranked them.

On a cost basis only, KPMG found these were the lowest-cost cities for operating manufacturing facilities in the US in 2016:

• Shreveport, LA
• Montgomery, AL
• Savannah, GA
• Baton Rouge, LA
• Nashville, TN
• New Orleans, LA
• Lexington, KY
• Gulfport-Biloxi, MS

Indeed, some famous names in manufacturing have moved to these cities, including Airbus (Mobile, AL), Gulfstream (Savannah, GA), Hyundai (Montgomery, AL), Lockheed Martin Corp/NASA (New Orleans, LA), Nissan (Nashville, TN), and Northrup-Grumman ( New Orleans, LA).

States with Lower Tax Rates

These states have no personal income tax:

• South Dakota

However, income tax rates are not the complete picture: sales tax, property tax, and other local taxes can affect the effective tax rate. Kiplingers publishes a comprehensive ranking of each state , which is worth evaluating to see how your candidate location ranks among the other states.

What about taxes on manufacturing facilities? According to the Tax Foundation, these states have the lowest tax rates for labor-intensive manufacturing facilities :

• Wyoming (4.3%)
• Virginia (4.3%)
• Georgia (4.6%)
• Maryland (4.9%)
• Nebraska (5.5%)
• Missouri (5.8%)
• Arizona (6%)
• South Dakota (6.0%)
• Louisiana (6.9%)
• Michigan (6.3%)

States with Low Cost of Living

In addition to taxes, there are many other factors which keep the cost of living lower in certain states. For example, states with moderate weather have reduced the need for winter heating or summer cooling. Housing, local utility rates, the cost of food, healthcare, insurance, and transportation can drive up the cost of living in a particular location.

CNBC recently published a report that ranked each state according to its cost of living . The ten cheapest states were:

• Mississippi

Open Shop States

For some, the site location selection will be influenced by laws governing labor unions. These states have “open shop” laws (also known as “Right-to-Work” laws) which make joining a labor union optional for individual employees. In 2017, over half of the states have open shop laws:

• North Carolina
• North Dakota
• South Carolina
• West Virginia

Top Low-Cost Global Manufacturing Plant Locations

What about international locations?

During 2016, KPMG found that, among ten major western economies, the strong US dollar made America the most expensive among these ten countries. Mexico came out on top, as the most cost-effective in KPMG’s ranking. Here is the list, from least to most expensive.

• Netherlands

However, the KPMG study didn’t investigate cities and countries that are increasingly making themselves known for inexpensive manufacturing, such as Poland, Romania, and Bulgaria in eastern Europe and Malaysia, India, Thailand, Indonesia, and Vietnam in Asia.

The consulting firm Deloitte performed a worldwide analysis that ranked countries according to their manufacturing competitiveness .  While KPMG ranked the USA as the highest cost manufacturing location, Deoitte’s ranks the US as the most competitive overall. By the year 2020, Deloitte anticipates that the top 20 most competitive manufacturing companies will be ranked like this, with the US still the most competitive:

• United States
• South Korea
• United Kingdom
• Switzerland
• Czech Republic

Deloitte’s 2020 forecasts indicate that India and Vietnam will each move up six slots (compared to 2016), and Malaysia and Indonesia will each move up four slots. Along with Thailand, these countries, dubbed the “MITI V” group by Deloitte , are poised to be more competitive than China in the manufacture of labor-intensive products, such as commodity textiles, toys, and basic consumer goods.

The cost of corruption, especially bribery and extortion, is another important consideration for your manufacturing facility site selection criteria. This map from Transparency International shows the relative rankings of countries in 2016 . Denmark and New Zealand are tied for the least corrupt countries. The United States has slipped to #18.

Weighing the Pros and Cons: Why Formaspace is in Austin, Texas

Decisions get made for a variety of reasons.

As for Formaspace, we looked at the pros and cons and found that for us, locating our factory headquarters in Austin, Texas was the right location:

• We are fortunate that our region in Texas has steel manufacturers so that we can get high-quality steel locally.
• Being located in the center of the country speeds up shipping times and reduces costs for our customers.
• Austin is well-known for the University of Texas, as well as many cultural activities and festivals, including the Austin City Limits music festival and SXSW Conference for the film, interactive, and music industries.
• We enjoy good weather (despite complaining about the heat in July and August), and there are plenty of outdoor recreational activities, including cycling, hiking, and water sports.
• On the other hand, the city has grown very fast (too many of you have come!), and now it’s difficult to get around during many times of the day; new roads and public transportation projects have been slow to close the gap.
• Austin is no longer inexpensive either; housing prices have increased dramatically in recent years, making it harder to live close to the city.

Nonetheless, we’re proud to be here and wouldn’t have it any other way!

Formaspace Can Help Make Your Manufacturing Relocation a Success

When you are ready to build, renovate, or expand your manufacturing operations, you should involve Formaspace early in the process.

Our Formaspace Design Consults can work with your architect and space planners to lend our extensive advice on how to make your manufacturing facility as efficient and productive as possible — from the executive office to the production floor to the warehouse. The process starts with a Formaspace Rapid Plant Assessment : our manufacturing experts review your plans and make recommendations on ways to improve efficiency, from implementing lean manufacturing methods to proposing technical furniture solutions, such as custom manufacturing workbenches , to make your manufacturing plant more productive than ever.

Find out why Fortune 500 companies like Dell, General Electric, and Lockheed Martin turn to Formaspace to help them create productive spaces that can have a major positive impact on their bottom line.

Learn more. Contact your friendly Formaspace Design Consultant today. Just fill out your information in the quick contact form below, and get the conversation started.

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Penske plans auburn hills paint factory for special edition mustangs, broncos.

Kurt Nagl is a reporter covering manufacturing — particularly the automotive industry's transition to electrification, the impact on the supply base and what it means for the state — as well as the business of law. Before joining Crain’s Detroit Business, he reported in Iraq and China and for various publications in Michigan.

Penske Vehicle Services plans to invest $6 million and add up to 130 jobs in Auburn Hills for a custom paint factory for new special edition vehicles by Ford Motor Co. and possibly other automakers.

The company intends to build out a “state-of-the-art vehicle painting facility” in a 115,000-square-foot building within a supplier park near I-75 and M-59, according to a site plan submitted to the city.

Site developers Dembs Development Co. and Schostak Brothers & Co. Inc. are seeking approval for tree removal and a special land use permit, which the Auburn Hills planning commission is scheduled to consider Wednesday. The 10-acre site is zoned for technology and research, but the Penske plant would involve light industrial use.

Penske Vehicle Services, a subsidiary of Bloomfield Hills-based Penske Corp., is looking to use the building for its paint film program after winning contracts with Ford to customize special edition Mustang and Bronco models, according to details submitted to the city.

Penske Automotive Senior Vice President Tony Pordon told Crain's that while nothing has been finalized, the expectation would be to open the facility in the first part of 2025.

Penske might also use the building for its wet painting program, which involves disassembling parts of a vehicle, such as doors and hoods, for a custom paint job — think black stripe down the middle of a Ford Mustang Shelby GT500 or a Lincoln Navigator Black Label series topped with a black roof. Plans include about 6,000 square feet for office space as well.

In addition to low-volume paint operations, the space could also be used for customizing show cars, modifying EV products, addressing quality holds, vehicle retrofit and prototype assembly.

Per site plans, Penske expects to process around 32 vehicles each day to start, with the expectation of up to 60 vehicles per day. The plant is expected to operate on two shifts, staffing 75 employees before ramping up to 130. It would join the other dozen locations around the U.S. and Canada, including two already in Auburn Hills, housing similar operations.

A paint shop was not the original vision for the spec building at 2150 Executive Hills Court. The empty plot was approved for development in April 2019, and a shell was erected within a year.

“The facility was initially proposed to house a high-tech research and development company utilizing an equal mix of office and laboratory/shop space,” according to a memo submitted with the site plan. “However, Dembs/Schostak has been unable to secure a tenant with those specifications over the past four years due to changes in how many companies utilize office space since the COVID-19 pandemic.”

Schostak and the city ran into similar trouble with the former Palace of Auburn Hills site. The property was pegged as a research and technology park, touted for its access to metro Detroit’s main throughfares. Now, the property is set for a $278 million, 960-job parts sequencing factory servicing the nearby General Motors Orion Assembly. Piston Group, the country’s largest Black-owned auto supplier, was tapped to operate the plant, marking a homecoming of sorts for Vinnie Johnson , the former “Bad Boy”-era Detroit Pistons guard turned auto supply titan.

At the proposed paint factory, Penske is anticipating business growth into two additional Ford models and other OEM vehicles, the site plan said.

Ahead of the planning commission’s vote Wednesday, the plan received a thumbs-up from the police and fire department, engineering consultant OHM Advisors and the city of Auburn Hills’ woodland consultant, contingent on the developer providing 176 trees and paying $199,120 into the city’s tree fund to satisfy an ordinance.

“We have completed the site plan review for the above referenced project and the site plan appears to be in substantial compliance with City of Auburn Hills requirements,” OHM said in an email to the planning department.

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