Today I'd like to talk about some of the reasons why we are making some of our product in our garage and when it makes sense to manufacture yourself and when it makes sense to move on to a co packer. The two main reasons why I'm doing the manufacturing in my garage is speed and cost. When you work with a co packer or a manufacturer, it takes time to build that relationship and it takes time to get everything going.
It takes time to send the product, to mix the product, to schedule time on the line, to coordinate, to pay, to ship, everything. It just takes time. It just takes time when you are a young scrappy business like we are we are not a big business. The one benefit of being at that size, it means that we can iterate and adapt and work really quickly. Like I'm not kidding. I can literally like develop, manufacture, and launch products within weeks, if it must be done.
And that's because we have the ability to manufacture ourselves. The second thing that I want to talk about is the cost. Each touch point in the manufacturing process incurs a cost, whether it's line itemed out on your invoice or whether it's not unpacking the pallet, loading them into the machine, QI'ing them, packing them into boxes, loading them back onto a pallet, shipping them out, getting them to the customer. The more touch points you have, the more expensive it's going to be.
And at a certain point, your costs can only go so high. So low. When you have everything under one roof, like us, we can get our raw materials at my house. I can mix the maker's magic together. I can then bottle the product and ship it out literally in the same day, in a matter of hours, because all of that happens under one roof. It allows us to save money. We save a bunch of money in freight and shipping costs. We save a bunch of money in.
And just energy spent and time, but we also save a bunch of money in like manufacturing costs. Each one of these units costs us a dollar to get manufactured at a co packer. Each pound of material costs us a dollar to get mixed by a co packer. So already you're at like a dollar 50 per unit in cost by using these two other pieces of the supply chain manufacturing system. So the cost savings is actually quite significant. And especially when you're looking at like a 1. 50 a unit.
And when you're selling a 10, 20 unit, that really starts to add up and can really affect your bottom line. So the unique combination of speed and cost savings is what pushed us to originally manufacture the first batch ourselves. There's a few other reasons too, which I'd love to get into. And one of those other reasons is the ability to get feedback and iterate quickly because I have the product because I'm mixing the product because I'm the person in charge.
I have the ability to take the feedback from our customers and implement it like instantaneously. Whether we need to titrate an ingredient or whether we need to change the recipe slightly or change the packaging, I have that power. Whereas if I wasn't manufacturing, I wouldn't have that power because I would have to go through other channels and other people to execute on that.
There's also a fourth benefit that a lot of us don't think about or ever talk about, but it's something that we really leverage heavily. And that's content behind the scenes content. I'm literally showing people how their product is made. I'm showing them the, the trials, the tribulations, the ups, the downs, the suffering, the greatness, the good times, the bad times, the W's and the L's like I'm showing all of it. And that creates a human connection with your audience.
It really humanizes your brand. Because the landscape is changing, man. Like, people don't want to buy from businesses. They want to buy from people. They want to, they want to buy Evan's product. They don't want to buy Scorchmarker's product. And so it's my job to humanize us as much as possible, and I can do that by creating content and filming the behind the scenes.
So, after saying this, you know, I, I, I'm putting myself in your position, and I'm thinking, okay, well, Well, it makes sense for everybody to manufacture then, right? Like everybody should do this. No, everybody shouldn't do this. Let me elaborate on what kind of circumstances would mean it would be a good idea.
Let's break that down a little bit because there are certain situations where it doesn't make sense to manufacture at home, but there are other situations where it makes a ton of sense. So let's talk about that. There's two ways to look at this, and figure out if manufacturing is something that's feasible for you. The first is how easy the process is. Is it hard? Are there a lot of regulations in place? Is it difficult to achieve? The second is the volume. How many units are you creating?
What type of numbers are you putting up? Like, how many units do you have to make? That's how we're going to look at it. So let's talk about the ease of manufacturing first. For people that are in food or consumer packaged goods or pharmaceuticals or nutraceuticals or some of, you know, that other stuff. Stuff that's regulated, stuff that needs clean room, stuff that goes in or on your body. Probably not going to work to manufacture these things yourself.
I mean, of course you can start that way, make a couple prototypes, you know, some body butters in your kitchen. But eventually if you want to scale this, you'll need proof on Amazon that you are who you say you are and you followed the correct regulations. So those industries are kind of not really a thing. Food industries, not really a thing.
Like you can make some stuff at home, but To make more than just like a handful of units and to actually, like, create a repeatable product, like, it's probably a good idea to work with a co packer or a manufacturer. There are some things, however, that don't go on your body or in your body that you can absolutely Make at home. It's actually a lot of stuff.
For example, we have a marker and a glue, any type of paints and like coatings or um, even textiles and wearables and garments and tchotchkes and widgets. And there's a lot of stuff basically. And that's like the first barrier. Like, do you have the actual ability to make this? Is it a complicated process? Do you need something injection molded? If that's the case, then maybe you can't make it at home.
I mean, you can, there are pieces of equipment that will allow you to achieve that, but only if the volume is low enough. And that's the second piece to unpack here. How many units are you selling? The setup that I have in my garage is good for about like a thousand units a week, maybe 4, 000 units a month. Like that's about the maximum that I can devote to the line and have it all be efficient and have it all work and have it make sense for us.
Anything more than that, I'm spending so much time manufacturing that I'm like, There is a hidden cost associated with this, and that's the opportunity cost of not being able to do higher leverage activities. Because when it comes down to it, manufacturing is a low dollar task. It's, it's low leverage. Anyone can do the task and the result is the same and it, you know, It doesn't create anything special.
The way that I've turned it into a high leverage task is by creating content while I'm doing it. So, I manufacture just enough to be able to create content, and the rest of the work is done by the co manufacturer or the co packer. That made sense when we knew we were going to be doing more than like four, five, six thousand units a month.
That's when we enlisted the help of a manufacturer and that's when we got the blender and set up the supply chain so that the stuff would get mixed, sent over to the co man, he would fill the bottles and then ship it to our warehouse. But you pay for that. It's expensive and it takes time. So in the beginning, We did the bulk of the manufacturing so we could have the speed and the cost savings to prove the business model to prove the product and then be like, Hey, it's working.
Will you help us grow this and make more of it with us? And that's every manufacturer is down with that. You know, something that's already been proven, something that's already working and you just want them to do more of it and grow with them. They get really excited about that. So it really depends on what you're making and how many units you need. In the beginning, I really am an advocate for getting scrappy, creating your own prototypes, making your own stuff, buying the tooling.
If you can spend less than a thousand bucks to make like A few hundred, a few thousand units and have a backup system in place. It is really powerful because it gives you the ability to be nimble, quick, and versatile, which a lot of brands can't be there at the mercy of their manufacturer. So when does it make sense to move to a manufacturer and stop doing it ourselves? As soon as the product had legs.
And as soon as we knew that we were going to be doing more than a few thousand units a month, that's when it made sense. So we actually work in tandem with the co manufacturer. They will do the bulk of the 8 ounce bottles of our Maker's Magic, but when we want to do promos, smaller bottles like the 2 ounce, or when we want to launch a new product, I'll do it.
I'll do it so I can have my finger on the pulse, so I can make content, so I can save the money, so I can move faster, and so I can iterate more quickly. Those five things have made it really attractive for us, and it's almost a no brainer. For example, we are launching a matte version of our Maker's Magic here at the end of National Craft Month, which is March. That would not be possible if we needed to. That would not be possible with our co packer.
That would not be possible with our manufacturer, our bottler. It's just too slow and it wouldn't work. But because we're young and we're scrappy and we have this setup that we have in the garage, I'm able to get the raw materials for the Matt Maker's Magic, fill it, bottle it, and ship it. All within the same day, which will allow us to stick to our timelines and get this launched at the end of the month. But had we not had this set up, it would be impossible.
We wouldn't be able to get it done. So there's a lot of pros and cons that go along with it. Cons definitely are the time investment and the money investment and learning a new skill and spending the money and tooling up If you don't have a separate business bank account, you need to get it done. The IRS does not like it when you mix all your money together. We keep things separate by having a business bank account and a personal bank account.
Now to open a business bank account, all you'll need is your LLC paperwork and your EIN paperwork. Those two things will allow you to get a free business checking account with Relay. Why Relay? They're free. By far my favorite bank. And I have accounts with more than 11 different places. I've tried a lot because I was looking for one that fit all of the things that I needed.
I needed to be able to send checks and wire transfers and ACH and open multiple accounts and deposit and connect to QuickBooks and, you know, all the stuff that we need in a banking platform. Not only that, but they're the official profit first banking platform. And it's so much easier to manage that system. So as soon as I found these guys, I reached out and I said, Hey, We've got to do something together. More people need to know about you because this is incredible.
And that's why I'm making this video. So I can tell you about a banking platform that's been an absolute game changer for us. It is my primary banking platform. Now I've shifted everything over to it and I couldn't be happier. And the best part is that if I need somebody, I can call them or I can email them and they'll answer me. Try doing that with one of the bigger banks. Won't work.
So if you want to open up a free business checking account with Relay, click the link below, fill out the application, and within a day or so you should be approved and you'll be good to go. Even if you already have a business bank account, it's a good idea to have a backup. So give them a shot, try them out, and see first hand why they've become my new favorite business banking platform. the setup that I have in the garage is less than a thousand bucks.
I've already produced over 12, 000 units on that setup, and it's going strong. It still works great. It's awesome to have a backup, I had to go through the whole process and trials and tribulations of learning the equipment and spending a lot of late nights in the shop. You could argue that that's not the right way to build a business. You shouldn't be doing more yourself. You should be getting results through others.
And I agree, but I had to weigh that against the content creation, the savings, and the speed. So there's always a give and take. There's always a price that must be paid in order to work with a manufacturer or to do it on your own. There is one big takeaway that I do want to share with you that really changed the way that I think about things. If we go back in time to 2018, 2019, scorch marker days, I was still making all of the markers by hand. I was mixing up the fluid.
I was pumping it into each individual marker, capping each one, putting it in a shrink wrapper and a heat tunnel, and then labeling it and shipping it off to Amazon. I had hired some local workers to manufacture for me. They would pick up the stuff, take it to their house, and they would bring it back to me like done. I learned a lot during that process. What I thought came next, was a warehouse space. I'm like, oh, we need a commercial warehouse.
We need to have a place, a roof, to do all of this under, ship out of, and manufacture in. Episode of The Prophet, Marcus Limonis, and he was talking about manufacturing. And I don't remember what business he was talking about, but he's like, here's how it works. Originally, you make the product yourself, you figure out how you want it made, you figure out how you want it to look, and you dial in that first iteration, and you prove that you have product market fit.
What people then want to do is build out a manufacturing facility and bring it all in house and make all of it. That is a mistake. Unless you can operate that facility 24 seven, the overhead will outpace the savings that it nets you. So it is not worth it until you can operate a facility or a factory 24 seven. That's when it makes sense to bring things in house and make it all yourself. And that typically doesn't happen until around the 20, 30 million a year mark, if not later.
So what's the next step then? You've made it yourself. You've proved product market fit. Like where do we go from here? And that's when you move to a manufacturer or a co packer.
Rent time on somebody else's manufacturing line to fill your product and they'll give you a price They'll tell you how much it's gonna cost per unit to get it all done in a timeline and then you send it and you Hope that it all works out to your standards and you grow the business Using that system, you grow it and you grow it and you work on it and you iterate and you practice and you get better at sales and marketing and retention and customer experience. You become a better entrepreneur.
You have a better team. You work on the business. The business works on you way more and you become that person capable of growing the business beyond seven figures. Which is quite challenging, by the way. And then you go from seven to eight figures, which is a whole new version of yourself.
And then, finally, when you get to that twenty, thirty, forty, maybe fifty, even a hundred million dollar a year mark, that's when it makes financial sense to bring fulfillment and manufacturing back, in house, under one roof, where you have the control and the ability to, touch and use and take advantage of all of the, the benefits of doing that, but it doesn't make sense until you can afford to operate that factory 24 7.
Otherwise, you will have dead time and that dead time costs you money because factories and manufacturing facilities require utilities and overhead. They require rent, and power, and water, and gas, and staffing, and insurance, and those and those costs are fixed. They don't change when you manufacture more or less. They're there. They're fixed. And they can very quickly bankrupt your business if you're not paying attention to it.
So when you're looking at your own facility versus working with a manufacturer, It's like, oh, it's only going to cost me 1. 50. per unit with the manufacturer. And I have none of the headache, none of the overhead of a facility. That's the goal. Make it yourself. Get good at it. Understand it, launch it, get product market fit, figure it out, then work with a co packer or a manufacturer.
And then Eventually when you're in the eight figure range, that's when it makes financial sense to bring it back. And that's even very loose, right? Those are loose guidelines. Like every business is different. Every business is different. So I'm really looking forward to getting this stuff out of my garage to a point where I don't have to make anymore. But in an effort to get these products launched and have, you know, a good release and be quick and nimble, like it makes sense. I got to do it.
Plus making content is really powerful. I. We'll probably not do this again. And I say that because when I look back in time, manufacturing scorch markers only lasted so long. And I had no idea that it was the good old days that it would be gone one day. And I didn't film enough. I didn't get enough footage. I didn't get enough pictures. I didn't do enough storytelling. I didn't document well enough. And I kicked myself for that.
And so while I'm doing this, I'm like, Oh man, I, I need to document this. I need to get videos. I need to make YouTube videos. I need to make content. I need to teach people what it's like in this moment because I won't come back here once I leave here. I won't come back here for a very long time until we build a facility and bring everything in house. So that's how I view manufacturing. That's how I view making the product yourself.
This is really what I wish I knew sooner because I see manufacturing changing in America, especially for econ brands like us, people who sell physical items. The goal is to make the thing and get it to the customer. Highest quality for the lowest cost. And that's not always easy. Especially with the way that prices are increasing and margins are getting squeezed. Like, it's not easy. But There's a lot of things we can do now to get scrappy and have fun and be successful at the same time.
Like I said, it's not easy, but in my opinion, I think it's worth looking into if you have the business that fits this mold. Like if you're doing essential oils or, you know, doing bath bombs or you're making textiles and clothing and equipment or tools and like there's a lot that can be done in a shop or with a co manufacturer. And I would encourage you to. Go down that path and explore it and see what it looks like, because you never know. You never know.
Is this something that you could get, a manual tool from Harbor Freight, modify it, and then you'll be able to stamp out all the pieces you need? Or is this much more complicated and something that you don't want to deal with? We don't know until we look, but I would encourage you to look at this type of stuff so that you can really feel the business and really get good at it.
Because when you know these processes and you're really dialed in on it, the manufacturer can do a better job because they then have a resource, someone whose vision is very clear on what they want. And that in and of itself is very powerful. But if we're talking about like the most powerful things we can do, content by far. Having this shop set up and documenting the journey while making this product, operating this brand has been a total game changer for us.
The literally the videos that I make in this shop talking about manufacturing have helped me achieve 200,000 YouTube subscribers. They've brought in a ton of business and they've gotten the word out to so many different people, all because I'm documenting what it's like, To build this business. It's pretty cool. If you have any questions on this stuff, you know what to do. I've got your back on this and it doesn't make sense for everybody, but it does make sense for a few of you.
And I'm really excited to see how it develops. If you need help or assistance or introductions to co packers or manufacturers, or you want to learn how I find them, I'd be happy to share that with you. In fact, I'll probably turn that into a podcast. Eventually all right, let's talk about some numbers. Since I've recorded these podcasts on the same day, the numbers are going to be just about the same, but that's okay. You'll get the gist of it.
Currently, Shopify is at 33, 000 with a 2. 2 percent conversion rate. Slow season, remember? Amazon, 65, 000 with a 12 percent conversion rate. We're doing a lot of interesting things on the Amazon side. I'm really excited to see how this changes, but already it's way better than last year's slow season. TikTok is at 756 for the last 28 days, 4. 2 percent conversion rate, and retail is at zero. I'm expecting some retail checks to hit this month. So that number will change by the next podcast.
But overall, I'm quite pleased with where we're at, especially being in the season we are right now. I'll see you on the next one. I'd like to take a moment to thank you for listening. Your attention means the world to me. It really does. If you've gotten to a point where you have any questions or you're ready to apply for the Operator Academy, shoot me a DM so I can take care of you. Otherwise, keep doing the boring work and be good to future you.