Entrepreneurship 101 returns after the holidays on January 6, 2016. Join us then for our Lived It Lecture with Greg Kiessling, Co-founder, Bullfrog Power. Greg will share his entrepreneurial experiences as a tech entrepreneur, a cleantech entrepreneur and a social entrepreneur.

Last week at Entrepreneurship 101, Catherine Choi, Founder, SoYoung Inc., spoke about what she has learned as an entrepreneur about contract manufacturing.

My first product run is a cautionary tale in how badly things can go wrong.

I had been sampling my inaugural product—a diaper bag—for one and a half years with six different factories. By the third round with my chosen manufacturer, I finally got a great sample and gave the go-ahead on a PO, burning with anticipation for when I would receive the bags and finally be in business.

But, four months later, when I tore the tape off the first box and took out the diaper bags, I almost cried. The entire shipment consisted of downgraded bags based on the wrong sample that had their closures sewn in backwards. This was the moment I realized the extreme risks of what I was getting into.

While I knew nothing when I got into it, I’ve learned a lot through through trial and further error over the past nine years. Here are my seven biggest pieces of advice for anyone considering contract manufacturing:

1. Rely on references

Everyone knows someone who knows someone who produced something in China, India or wherever you might be sourcing. Ask them if they can connect you with the person they know for general feedback on their experience with the factory, including quality, timing and pricing integrity. While some people are very protective of their manufacturing contacts, other are very willing to help.

2. Explore sourcing agents

Sourcing agents can be a good avenue, but again, rely on references. See if they will take a fee upfront and pass the factory onto you after the initial run. This can save you a whole lot of time and money in ongoing pricing negotiations with your manufacturer.

3. Gauge quality through initial interactions

The timeliness and thoroughness of initial responses from factories is a good first gauge of the quality of a factory. If timelines are frequently unmet in the sampling phase, there is a good chance that the production will go the same way.

4. Visit the factory

Whether you work with a sourcing agent or not, it is a good idea to visit the factory in person if at all possible. Meeting face-to-face will establish goodwill and indicate that you take your business and relationships seriously.

5. Mark your samples

Ensure that once a sample is approved that it is clearly marked as an approved sample permanently so that there can be no mix-up. Ensure that your external QA team (see below) also has a marked approved sample to check production against.

6. Use an external QA team

Always use an external quality assurance (QA) team, and determine the level of quality check they will do, as well as what constitutes a fail. Ensure the QA team sends photos of their findings while still at the factory so that you can make final call.

7. Develop strict quality standards

Even if you have one good production run, this is no guarantee that the next one will be just as good. Ensure you have strict processes in place for a quality-standards check for each and every run.

It takes effort, diligence and time to do things right. But getting it wrong can cost you your business

As I’m reviewing these suggestions, I’m thinking of times when I didn’t take my own advice. In the rush to get your products to market, it’s always tempting to want to cut corners and get the lowest price possible. It takes a lot of work, diligence and time to do things right—but it’s essential. Getting it wrong can cost you your business.

Want to see Catherine’s presentation at E101?

Catherine Choi joined Harvey Coleman (Volunteer Advisor, MaRS Discovery District) and Miriam Tuerk (Co-founder & CEO, Clear Blue Technologies) as panelists at our E101 session on contract manufacturing. If you missed their presentations, you can watch the excerpts below.

A Guide to Contract Manufacturing

Manufacturing Your Hardware Product

Seven Lessons from Manufacturing in China

Entrepreneurship 101 course resources

And search “Entrepreneurship 101” on iTunes U.

Catherine Choi

Catherine Choi is the founder of SoYoung, a Canadian line of bags and accessories for the modern family. See more…