Hard choices face prospective manufacturers

Staff reporter - Manufacturing is an intrinsic part of any country as it contributes to the socio-economic development of the country by generating productivity, stimulating research and development, and investing in the future.

Seasoned businesswoman and managing director of Leap Holdings Group, Ally Angula, reiterated these sentiments during the recently concluded Start Up Grind event, which was sponsored by Standard Bank Namibia, in collaboration with Windhoek Chapter of Start Up Grind.

“Namibians are not creators (manufacturers) of things but that is the one thing they need/want to be …The only thing that will save this continent is if we make and consume our own products, as well as export them,” Angula says.

Keeping in line with these sentiments, Karen van der Merwe, head of business banking at Standard Bank Namibia, gave a few guidelines to prospective entrepreneurs who wanted to venture into manufacturing.

“Manufacturing is central to Namibia’s export strategy, based on value-added, labour-intensive tradable products that generate revenues that have a significant, positive impact on the balance of trade,” Van der Merwe says.

‘Not taken lightly’

Starting a manufacturing business is not a decision to be taken lightly, she says.

“It involves a substantial commitment as it calls for a heavy up-front financial investment for specialised facilities, complex equipment and raw materials. You need to ready yourself for a broad array of responsibilities to effectively coordinate the many steps of the manufacturing process,” Van der Merwe says.

Manufacturing also plays a critical and indispensable role as a driver of innovation and productivity growth.

The choice to become a manufacturer involves a lot more than just having the perfect product, she says. “Prospective entrepreneurs need to think carefully about several things such as the potential market take off of your product both locally and abroad, competitor brand value, consider how economies of scale in terms of raw material procurement and the team required to see the product you are manufacturing to fruition.

“Obviously, manufacturing processes come in all shapes and sizes. The size, complexity, and total number of products you want to manufacture will all affect the way you plan your entry into the world of manufacturing,” she says.

Several questions

It is imperative for the Start Up entrepreneur to ask themselves several questions to assess their readiness to move forward, Van der Merwe says.

“Questions such as do you have what it takes to be a manufacturer, what product you will manufacture, how will you protect your rights to the product and what is the most effective method to manufacture your product, to name a few.”

Van der Merwe also pointed out that one of the things prospective manufacturers need to know is that of not trading from their personal bank account.

“This (using the personal account) makes it harder to differentiate between your personal expenses and business expenses. It also doesn’t allow you to build up a credit risk profile for your business, which is an important factor should you ever want to approach a bank for financing. Rather, start trading as a business from the get-go by opening up a business current account,” she says.

Distinguish yourself

Distinguishing your business from your competitors and how your products are more unique with more to offer should be what the Start Up entrepreneur strives for.

“It helps, too, if your customers see something unique and special about you and your company, not just about your product. The way you operate your business and the way you relate to customers offers additional opportunities to extend the distinctiveness of your entire enterprise.

“It takes a combination of character and capability to make an impression on your customers. Just like you must give them a reason to buy your product, give them a reason for doing business with you and your company,” she says.

Manufacturing has direct employment creation potential and is the engine of rising per capita income and employment through its stimulation of the rest of the economy.

Young entrepreneurs should be encouraged to venture into manufacturing for its wholesome benefits, Van der Merwe says.

“Rising per capita incomes are particularly important for sustained growth and employment creation in the consumption-driven service sectors of the economy, which have become critically dependent on unsustainable levels of household debt.”