By Ed McLaughlin with Wyn Lydecker

As you develop your business model, you need to ask: What will it take to create, manufacture, and deliver your product to your customers? For a manufactured product, this step forces you to think through and learn about your requirements for raw materials, labor, machinery, inventory, and distribution. For a service business, you’ll look at how you will service your customers: staffing, travel costs, response times, and reporting expenses.  

Some questions to consider in determining your production and distribution costs include:

  1. Are you creating a prototype or samples to help you sell to wholesalers or retailers?
  2. What materials, labor, or equipment are needed to manufacture your product once you have orders?
  3. Who will make your product?
  4. Where will you make your product?
  5. Where will you buy your raw materials?
  6. Where will you get the labor?
  7. Will you outsource or manage the production in-house?
  8. Will you work in an office or out of your garage?
  9. Once you’ve made your product, where will you store it, and how will you deliver it?
  10. What will all of this cost?

Figuring out the answers to these questions will help you line up the resources you will need to start and grow your business. Understanding what the resources will cost and how you will employ them to help the business run is an essential part of building a solid business model and figuring out how you will generate a profit.


Ed McLaughlin is currently co-writing the book “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit” with Wyn Lydecker and Paul McLaughlin.

Copyright © 2014 by Ed McLaughlin   All rights reserved