If your startup is based on a new product, your relationship with a manufacturer could be the most important partnership you will form. Your manufacturer will strongly influence the quality of your product, your speed to market, and whether you can make and keep delivery commitments to retailers and to consumers.

 “There’s nothing that can move an entrepreneur with a product to the next level of business like a good manufacturer,” says Gene Pepper, a California-based small business consultant. “On the other hand, there’s nothing that can sink a new company quite like a bad manufacturing relationship.”

Here are three things you must do before establishing this crucial relationship:

• Do thorough research
• Consider using a rep
• Settle the overseas question

Do thorough research into manufacturers

There are thousands of contract manufacturers out there. You can do most of your research on the internet or at a library. And you can browse products that are related to your product at retailers to glean information about manufacturers from product packaging.

Start by determining which manufacturing code covers your product; a system called the North American Industry Classification System (NAICS) has superseded the previous Standard Industrial Classification (SIC) codes. Then canvass for manufacturers in that code. Contact trade associations. Get the help of a local SCORE (Service Corps of Retired Executives) counselor. Attend trade shows for the industry you’re about to enter, where manufacturers and their representatives typically would cluster. Search the Thomas Register online for U.S.-based manufacturers. With an internet search, it’s also possible for you to narrow in pretty effectively on overseas manufacturers.

Consider using a rep when finding a manufacturer

The job of manufacturers’ sales representatives is to find new accounts like yours to bring to the door of their contract-manufacturer clients, in exchange for a fee or a cut of revenues. So they can be very helpful if there happens to be a good fit for you in their customer portfolio. Industry directories and trade shows are great places to find them.

Some startups have had bad experiences with reps. “I found that they’ll promise anything, but not necessarily deliver,” says Rolf Scholtz, president and co-owner of Dero Bike Rack Co., a Minneapolis-based company that has dealt with several manufacturers since it went into business. “And with reps adding their markups, it can prevent you from being as cost-competitive as you need to be.”

Settle the overseas manufacturer question

One of the first questions you may have about your product is whether you can afford to have it manufactured in the United States. If it’s a highly complex product, its components are heavy and unwieldy, or you have short lead times, then making it in America is probably still the answer.

“It was very important to me to be an American company even though there’s probably a 10% cost penalty for me to do so, so I chose a manufacturer in Ohio,” says Tina Aldatz, founder of Foot Petals. “Plus, if I have to, I can be there in a heartbeat.”

On the other hand, you should consider a foreign manufacturer if your product is a low-margin item or a commodity, if you need it to be manufactured in high volumes, and if long lead times aren’t a huge problem for you. Overseas suppliers now can match most American companies in quality and reliability for these types of products.

Nan Siemer is very happy with the Chinese manufacturer of Pooptents, the bottomless-tent product that she invented to shield her dogs when they have to “do their business” outside. “I found a tent maker in China that I liked right away because he didn’t even want to talk about price until after we had established a relationship,” says Siemer, who is based in Alexandria, Va. “Besides, it was cost-prohibitive to make this product in the United States.”

But counting on a foreign manufacturer can also pose some problems. Chinese manufacturers, for example, are notorious for ripping off the intellectual property of their client companies in America and elsewhere. And shipping issues can loom especially large because of the length of your “supply chain.”

“In the startup phase, your volume might not be huge, and if you have to bring over a quarter of a container from China, that might be too much inventory to start with,” says Jim Anderson, a SCORE counselor in Orange County, Calif.

Our Bottom Line

Finding a good manufacturing partner is a crucial next step in bringing your invention or new product to market. Using the internet and old-fashioned networking, you can efficiently come up with good prospects, even if the best ones are overseas.