This post is one of many more to come that describes an entrepreneurial project I am undertaking and how the process works.
I arrived here in Austin last summer and was surprised at how this whole town is the University of Texas’ biggest fan. At least half of all cars here have the Longhorn silhouette on the hood of their trunk. I stepped foot in the University Co-op bookstore by campus and was awed by the amount of UT paraphernalia there – Longhorn confetti, dogsweaters, you name it. If there was a product out there that could bear the University’s marks or colors, it was in that store. I knew then that one of my first ventures was going to involve getting into that store.
At that time I had a key chain that I rather liked that I purchased in Alaska. It is in the shape of a moose and when you squeeze its rubber body, a silicone poo comes out of a hole in its ass. The idea didn’t come to me until a few months later, but one day I thought “why not a pooping Bevo, our mascot?” What the hell, make the poop maroon in order to bank on the UT-A&M rivalry.
The idea has since morphed. There is no way the University would let me produce a product that had their proud mascot, Bevo, shitting at every squeeze. But I still have a differentiated product from anything else out there, and am chasing down all potential venues for selling my product. Here is how the process went:
I first wanted to have an idea of who could manufacture it for me and how much it would cost. I contacted one toy manufacturer in the United States to get an idea by calling their custom project department. They couldn’t give me any detail because I did not have any drawings done, but the guesstimate they gave me seemed too high. I decided I should try China, and so posted a project on Alibaba.com. I only said that I wanted a key chain made out of rubber or plastic and that I was located in the United States.
I wasn’t prepared for the responses I would receive. I ended up getting over 100 emails a day for a week. People who say capitalism is dead are fucking morons. There are thousands of firms over there that are SO eager for your money. Most of the responses went something like this:
We would like to introduce ourselves Wenzhou Crescent Craft products CO.,LTD mainly produce various cartoon stickers, taboo stickers, Christmas stickers, sponge soaked stickers, decorative stickers, acrylics stickers, shopping bags; various magnetic notebook phonebook, cartoon paper bag, data volume and other stationery; various prints, color gift box, puzzle, calendar and so on; various size promotion gifts, handwork craft and so on .Products mainly sold in places as far away as North America, Western Europe, Southeast Asia, the Middle East and South America countries, and Own various international certification system. There is continuous expansion in domestic and international market.
Crescent has special design and scheme group, professional printing experts and trade team, whole full line produce equipment, the advance printing machine-Heidelberg. In company we follow quality control, unify plan, concentrate marketing.Explore, beyond, harmonize, efficiency are Crescent spirit. All for customer demand, pursuit excellence is our company the main goal. Based on integrity, innovate to get deep develop, customers are first are Crescent spirit; satisfaction, trust, support, are Crescent desire; mutually long-term beneficial is Crescent target. We will join hands with you heartedly to find new century splendor.
Wish we can cooperation in the future business.
Looking forward to hearing from you ASAP.
Look at that third to last sentence again: We will join hands with you heartedly to find new century splendor. Come on! These people want to get rich with you! Most emails had English as bad or worse than this email had. Also worthy of note is that 99% of all emails I received from them signed off with Best Regards.
I am a sympathetic guy so I did respond to most of the emails. I would say I either found another firm or am just not interested in pursuing a project with their firm, but thanks for responding anyway. I filtered through the emails and narrowed down a list of ten companies that seemed to manufacture products similar to what I was looking for and had coherent, professional sounding English.
The next step towards having a product was to have some graphic art for which the firms could quote me on a mold price as well as per unit cost. With the type of key chain I want, it is typically made by injection molding. This is where a reverse of the shape is cast in some type of metal, and the mold material, either a plastic, rubber, or polyurethane foam, is injected into the 3D space.
I created a project on Elance and received six or so bids. I checked out the bidder’s portfolios and weighed it against their quoted price and ended up going with a guy with lots of experience and a good price, $170. I ended up with some great drawings of a nice looking product that I can show potential retailers and to manufacturers.
The basic groundwork for this type of project is pretty easy and fairly complete. I know who I am going to sell to and have narrowed down a few manufacturers. With Chinese manufacturers the difficulty lies in getting the product over here. By air freight I can get a 40 pound carton to Austin for $120, through customs and everything. That is called an EMS service. For cheaper freight services one has to find a good sourcing agent, which can be easily located by Google search. When you are receiving quotes from firms they often say something like “FOB Shanghai.” FOB stands for Free On Board, and my understanding is it means that the product is the manufacturer’s responsibility up to that point, and it is the customer’s responsibility to handle all logistics after that location.
For my project, the mold quotes I have been receiving range from $200 – $2,000. The per unit costs range from $.30 – $1.00. Generally a higher mold cost means lower per unit, and vice versa. These prices are for various materials.
Where my project is slowing down now is where licensing and insurance gets involved. As my product will reference the university here, it must be licensed through the Collegiate Licensing Company and be approved by the school. I am in the middle of this process now and so will have to write about it later.
Takeaway so far: This idea was the morphing of two others, which is so common in other products one sees. Projects like this do take more time as one would like, and often change over time. The customers I thought I would be selling to at the beginning are radically different from where I am heading to now. Things to consider when developing a similar product, and when in dialogue with potential manufacturers, are: minimum order quantity, unit price, materials, mold cost, shipping terms, sampling cost, logo placement, and packaging.
Incorporation: I simply filed a DBA (Doing Business As) for $14 with the county clerk. This allows me to use another name as if it were a corporation. For dealing with American firms, and potentially opening a business checking account, I got a Federal Tax ID number, or EIN (Employer Identification Number), which I filed for $30 with Tax9er.
I will post more on the project as it advances further.