The True Costs Of Launching A New Factory

Most people have little or no idea about the costs they’ll encounter when starting out in the manufacturing world. In truth, it’s hard to predict the end figures for all your expenses. However, many entrepreneurs overlook them entirely. That is why we wanted to set the record straight on the situation with this article. We’re going to highlight some of the biggest expenditures you might face when launching a new factory in 2016. Some of you might have to handle other costs too, but the ones mentioned below are the most important.

Premises rental fees

There is no getting away from the fact that you will pay a lot of money for your premises. Depending on where you base your company, it might be possible to make savings. However, all commercial estate agents know the going rate, and you won’t manage to negotiate too much. On top of your monthly rental payments, you’ll also have to find money to cover power bills. As you can probably imagine, heating a factory costs a lot of cash every month. So, you’d better get the calculator out and do some sums before pushing ahead.

Equipment payments

In most instances, you won’t have enough money to buy new equipment for your factory. That is why you will have to rent during the early stages. At some point, you should have enough cash in your accounts to purchase the tools you need, but they’re still going to require investment. Consider the impact that a new machine would make to the production process and your staff members. Is a vertical lathe going to make life easier than using the traditional option? Maybe you need to put your money in robotics to automate certain jobs? It’s worth knowing the full costs ahead of time so you can make sure there is enough capital in your accounts. Your business might stall otherwise.

Employee wages

The cost of employing workers is always high. Even at the minimum wage, a decent team could set you back more than $5,000 per week. That means your company needs to start making a profit right now. However, there are ways you can decrease the cost of workers if you think outside of the box. Using agency staff will mean you pay a higher hourly rate. Even so, you can get rid of them whenever you want – so there’s no need for contracts. With a bit of luck, you could just hire some agency people as and when you need them. You can do that without having to worry about finding work for them during quiet times.

There are many other costs associated with running a factory. However, we’ve mentioned all the most critical ones on this page. Do yourself a favor and make sure you go to see a financial planner before walking down this path. It’s not like starting a home business, and many things could go wrong. We just don’t want you to make mistakes and lose your investment. People who don’t perform enough research could end up in a terrible situation. You might have to sell your home to cover debts if things don’t turn out as you expected.

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