Lori Greiner and the other panelists on Shark Tank make it a practice to grill entrepreneurs who come onto the program to garner an investment. When it comes time to crunch the numbers, commonly pitchers will lay out how much they sell the product for and how much it costs them to make. Many will offer that they have attempted to reduce their costs by manufacturing overseas.
Entrepreneur is reporting that Greiner has advice for those who go outside the United States to make their product. While Grenier offers her own experience as evidence going offshore can save money, the process comes with inherent risks. Entrepreneur quotes from Greiner’s book, Invent It, Sell It, Bank It!, where the wealthy inventor and business person offers a word of caution.
“Bear in mind that when you manufacture overseas, you trade lower cost for higher risk, because you won’t be able to keep as close an eye on the production process.”
That leads Greiner to make a point about the difficult situations entrepreneurs are in if they cannot inspect the factory where their goods are made. The worst mistake, according to the Shark Tank investor, is not choosing a factory with a good reputation. But that alone isn’t enough. Failing a personal visit to a factory, Greiner recommends a professional audit of the facility before trusting its people to make a product. She lists SGS, Bureau Veritas, and Intertek as reputable audit service companies.
Entrepreneurs should be concerned not only with getting a high-quality product, but also that the factory complies with environmental and employment laws. A facility audit can look out for things like child labor, with which no business person wants to be associated.
In previous seasons of Shark Tank, the issue of overseas manufacturing has struck a chord with entrepreneurs who want to keep their manufacturing stateside in order to help the local economy. In January 2012, pitcher Donny McCall presented his company Invis-A-Rack, which produced a cargo equipment holder for trucks. McCall stuck firmly to his Made In America philosophy, while the Shark Tank panelists told him his company might not survive if he did not manufacture offshore. As the New York Post reported at the time, the sharks were sympathetic to his philosophy, and countered McCall could create jobs in the U.S. once the company was successful.
According to a later interview with the Shark Tank Podcast, McCall got a licensing and manufacturing arrangement with DeeZee that still complies with his “Made in America” principles.
Shark Tank airs Friday nights on ABC.