Ep 20: How to manufacture your own product

[00:00:00] Ash Heather: I think the key is as a small business, if you're thinking about getting into your own manufacturing, as I said, you have to model it out and then, you know, if you can create a good model with inputs and outputs, then you can kind of make the cost benefit analysis to: is this worth it? Because as I said, if once you say, yep, let's do it, it's still a long road to go down and an expensive road because, you know, it could be a year or two till you're actually churning out product here. So you kind of keep your existing suppliers going, but you're also behind the scenes creating your own sort of supply chain. So it's an expensive exercise. So for a small business, they need to weigh up. Is it worth it? In a lot of cases it may be not worth it.

[00:00:43] Host: Hi, This is Small Business, a podcast by Amazon. I’m your host, Andrea Marquez. This is one of our This is Small Business Minisodes - shorter episodes for those of you who want a quicker binge. On this episode, we talk about how to get started if you want to manufacture your own product.

[00:01:00] I'm speaking to Ash Heather, Co-founder of Epic Water Filters. Of the many small businesses I have spoken to, Epic Water Filters is one of the few that decided to try manufacturing their own product. This is Ash telling us a bit about how Epic Water Filters came to be.

[00:01:16] Ash Heather: I spent a long time living in Asia, mostly in Singapore. I had 10 years in Singapore. And one of the things that struck me was the amount of plastic bottle pollution, especially, you know, on the rivers and the beaches. And so when I moved to the US, I kind of naively thought, well, maybe I can try and do something to try and alleviate the problem. So I started Epic Water Filters with the idea of, you know, one providing people with an option for safe, healthy drinking water, but also to stop people using single use plastics for water.

[00:01:48] Andrea: So, depending on the product, entrepreneurs can shy away from building their own product from scratch, doing something completely new. Let’s talk about what happens when you do decide it’s worth [00:02:00] manufacturing your own product, like you did for Epic Water Filters. Why did you decide to manufacture your own filter?

[00:02:08] Ash Heather: We've been going for say, six years buying filters and you know, the products from other suppliers and that was good. But you know, there's been a few factors that have led us down this path of making our own filters. One is logistics issues, especially over, you know, the last few years with Covid, et cetera. Two, products we were getting from China, so the pitchers that'd come over to the US with a tariff. And that was really starting, you know, obviously it hurts the bottom line and even our US suppliers were letting us down a little bit. You know, they had supply chain issues, you know, some choke points, et cetera. So there was a few factors that led us down this path and, you know, we think if we can pull it off, then, you know, we've removed a vulnerability from our business in terms of we can control our own destiny, you know, in terms of supplying ourselves with filters. Hopefully it'll alleviate supply chain issues, et cetera, [00:03:00] as long as we execute it well. I guess the idea of the tariffs was trying to bring a lot of production back to America. So we're a case in point. It's kind of working, at least for us. So, you know, a lot of factors, but as I said, you know, executing is the hardest part.

There's a lot of planning involved, setting up the manufacturing facility, designing the product, in our case, the filters. And it takes longer than you think. There's a lot more involved in it. You know, things like, possibly looking at patents, you know, design patents, utility patents, all those things have to be taken into consideration, trademarks. And then obviously you wanna make sure once you're set up and you're actually making the product, whether it's any kind of widget or filter, that you're actually making a high-quality product. So a lot of testing involved, et cetera. So it's a long process. So a bit like building a house, whatever you think it's gonna take, I'd probably double that and double the budget.

[00:03:54] Andrea: Is this something you think product-based businesses should consider?

[00:04:00] Ash Heather: I think initially, unless you've got a very unique product or an invention, you should look to get the product made by a manufacturer. So find a supply chain and then prove the concept, you know, you wanna make sure that the business you're starting is sustainable because once you jump into manufacturing it can be expensive. It generally is expensive, you know, in terms of capital, equipment purchases, you know, injection molding tools, blah, blah, blah. So, that's what I would recommend is don't go straight into manufacturing yourself, especially if you have no experience in it, which I didn't.

[00:04:30] Andrea: So the reason you decided to try to manufacture your own product is because your need wasn't being met with what was available out there in terms of suppliers, so you thought it would be more efficient and effective to do it on your own.

[00:04:45] Ash Heather: Yeah. And we're trying to create a better product too than we were getting from our suppliers. You know, our product is good that we have been getting over the last years, but we're trying to make it better and then we'll own the IP of it as well. We’re putting design utility patents on our new filters, [00:05:00] trademarks, et cetera. So it's gonna add value to the business, and just like I said, we want to control our own destiny because, you know, over the last few years, every now and again, our filter suppliers would not be able to supply us. And that affected the business. You know, it affected our bottom line. I think in business the more you can control, you know, the variables, it makes the opportunity and chance for success a little higher.

[00:05:25] Andrea: You mentioned getting your patents and trademarks. What does that actually mean in this context?

[00:05:32] Ash Heather: You know, for utility patents and design patents, you need some point of differentiation especially for a utility patent. And the filters we are coming up with both the picture filter and the bottle filter. They have got some points of differentiation from any other filter out there. But you know, it's not easy getting a patent. There's a lot of legal work involved and design work, blah, blah, blah. So, you don't have to do it to go into your own manufacturing, but I figured its just a, [00:06:00] another sort of arrow to our quiver. You know, it adds value to the company and same with trademarks. You know, we're trademarking the filter technology we're coming out with as well. So it's just little things like that, that if you go down the avenue of doing your own manufacturing, you should explore because, you know, if you put all those elements together, it adds a lot of value to the business and probably allows the business to, you know, grow at a faster rate I'd imagine.

[00:06:25] Andrea: If this is the path I want to take, of manufacturing my own product, where should I start?

[00:06:32] Ash Heather: One of the first things we did was kind of model out the next few years in terms of how much it would cost to set up production, leasing the warehouse or whether you buy the warehouse, however you want to do it. You kind of have to model all the inputs. And then obviously the outputs being the filters for us. Probably for the next two years in terms of the bottom line, it's not gonna make a big difference to us because producing in the States is generally more expensive. You know, labor cost is higher than generally from offshore [00:07:00] but as we scale, you know, say in two, three years time we're making a whole lot more filters than we currently use. The economies of scale really kick in. So I think for especially a small business, you know, setting up manufacturing can be really expensive.

[00:07:15] Andrea: Being where you are now in the process, what are some learnings that have forced you to shift or reevaluate your decision?

[00:07:24] Ash Heather: I mean having no background in manufacturing or setting up a manufacturing facility and designing filters, et cetera. You know, cuz I've got smarter people than me that are working for us doing that. So, you know, obviously I've got Oliver to help with the e-commerce and warehousing logistics. And Joel, my co-founder, you want have a very good complimentary skill set as part of the team. And once we decided to go down the manufacturing avenue, you know, then we hired filtration engineers, warehousing people, experts at setting up manufacturing facilities. So I think that's the key is, just get people of a complimentary skill set in to help you. Don't try and do it all on your own cause it won't work out. [00:08:00]

[00:08:05] Host: That was Co-founder of Epic Water Filters, Ash Heather. Here are some of the key takeaways from our conversation:

• Is it worth it? This'll take a lot of time and a lot money, so you need to know why you're planning on manufacturing your product. Will it add value? Maybe you want to create a patented product. Or is there something wrong with your current manufacturer that you know you can do better? Do you want more control over your products? Model out the time and costs you would incur to make something like this happen. And to answer these questions you need to…
• Know your supply chain so that you understand the gaps and the right people you need on your team so that you don’t do it all yourself.
• Don't put all your eggs in one basket. If you're still trying manufacturing for the first time, have a plan B. If you can, keep your old manufacturer in case something goes wrong -- [00:09:00] which hopefully it won’t – but try to stay with your current partner suppliers until you're ready to fully move on. And though we didn’t talk about this on this episode, I wanted to introduce you to Amazon Ads. Especially, because Epic Water Filters is a small business that has found success using Amazon Ads resources. They offer a range of products and information to help you reach your advertising goals. You can learn more about them and how they can help your small business on our show notes.

That's it for this episode of This is Small Business Minisodes, brought to you by Amazon. On the next episode, we'll be talking about an experience that could be awkward for some: parting ways with your business partner. Meghan Wolfgram, CEO and Founder of SwiftPaws talks about her experience going through a business partner separation.

If you liked what you heard, make sure to subscribe and tell your friends about us by sending them a link to this episode. And we would love to know what you think, so leave us a review on Apple Podcasts. [00:10:00] It's easier to do it on your phone. Or send us an email at thisissmallbusiness@amazon.com with your thoughts.

Until next time – This is Small Business, I'm your host Andrea Marquez -- Hasta luego -- and thanks for listening!

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:10:25]