Know-How Exchange : Strategy

Damon,

I am in PA have helped clients with similar questions as what you present. I can't promise that I can assist you without talking with you, but I would be glad to have a conversation. And I have a diverse network of associates who might be able to help you if I can't.

I would be glad to talk with you on specifics if you would like. Click on my name above and you can find my contact information (email and on my website, phone number). Feel free to contact me.

Wayde

Hi Damon,
I am from South Africa and specialise in Business Plans.
I cant really help you by phone but can give you some pointers.
1. Costing.
Step 1. Do a flow chart of the production process. This identifies the steps taken to produce a product.
Step 2. List the spare parts or items needed at each step with the cost price of each.
Step 3. Work out how much time is taken at each step of the production process and apply a rate per hour - this must include all your labour and supervision cost in the production broken down into an hourly basis. At the end of the flow chart add up the cost of the spares and the cost of the labour used. Thgis will give you a cost of prodcution. To this you can add a percentatge to cover overheads or you can price the sale value of the product by mutliplying the sum of the two costs mentioned above by various factors. In SA we sell to three channels: Distributors, Trade and Retail. We usually multiply our costs by 1.8 (= 44% margin) to sell to Distributors; 2.5 (60% margin) to sell to Trade and and 3.25(69% margin) to sell to Retail.

2. Your second question is in fact your first question. You cannot do anything until you have decided this.

3. When you do the flow chart make sure that you identify what equipment you need at each phase.
4. Once you have done the flow chart you will be able to estimate space needed as each phase of the flow chart will say what needs to be done and this will help in deciding the space.
5.I cant help with this. You will have to go to a company that makes molds/moulds(sic). There must be Plasric Injection Moulding companies in Pennsylvania
6. There is a break even formula that is: Total Fixed costs = total Overheads in the factory/margin.
So if your total costs per day are $2000 and you make a
a margin of 44% selling to Distributor you then divide $2000 by 44% and that tells you how much money you need to sell to cover overheads =2000/44% = $4545/day. If you sell your product at $500 each you then need to sell $4545/500= 9 Units of product.

I hope this helps.

If you need any further help send me an email with your flowchart to info@mjfgroup.co.za
I am also on Skype mfreestone5209. You can download Skype for free and we can talk for free. I also have a mentor called Carl Gould at www.cmtmentors.com -carlgould@cmtmentors.com - who is in America. When you contact him give him my name.
regards,
Michael Freestone.

Given the breadth of the plastics industry and the sheer number of specialist sectors in it (Kompass specifies over 600 SIC codes to categorise this sector) your question is really too broad for anyone to give you a meaningful answer. I mean, should we advise you to build an injection moulding plant to make plastic toys, or would you like to go for vacuum forming with PET for the food industry? Or the road transport industry?

If you want to know how your question reads, for “plastics” substitute “food industry” and see how it reads – would you like fries with our advice or would you prefer a packet of biscuits!?

For that reason, I am going to make the assumption that you know what you want to do and just aren’t used to asking questions to clarify your plans. If Phil is right in his assumption, my only suggestion would be to do something else. Even Michael’s valiant advice is a stab in the dark – it fits one production model in a narrow segment of the whole industry.

If you have a detailed idea of what you want to build, then by all means describe it here and a few of us will be able to offer you advice on the best ways to market and sell your product. Some of us, like wnelson and WMMA (Randall) have expertise of venture capital and other methods of funding, but please be warned – they are straight talkers and if you are dreaming, you will be brought down to earth with a bump. Still, that’s better than you and your family losing your houses because you used them to secure funding of a non-starter.

Manufacturing technique is not covered by the MP Forum and even where we have relevant senior managerial experience (I can think of over ten of us) we can’t advise you on the basis of what you have written.

Please come back with more details. If disclosure of details is a problem, then choose the precise sector the product belongs to and define your view on what the application for it is. Once we know that we can suggest ways of determining the market. Right now, for all I know, you want to manufacture dolls eyeballs rather than plastic crash barriers.

Best wishes


Steve Alker
Xspirt