How To Start a Manufacturing Business in Phoenix, AZ
Phoenix, Arizona offers a strategic location and growing economy for entrepreneurs looking to establish a manufacturing business.
This comprehensive guide will walk you through the essential steps to get your manufacturing company up and running in Phoenix.
Initial Planning & Market Research for Your Phoenix Manufacturing Business
Phoenix is a growing hub for many manufacturing industries like electronics, metal fabrication, medical devices, and renewable energy. If you’re thinking of starting a manufacturing business in Phoenix, it’s best to begin by familiarizing yourself with the industry landscape.
Before jumping in, narrow down and define which manufacturing industry you want, do some market research, and create a detailed business plan for your new manufacturing company.
Defining Your Manufacturing Niche in Phoenix
Think about what kind of product you want to manufacture to find your niche in Phoenix. Some popular manufacturing areas to consider are contract manufacturing, custom fabrication, or mass (high-volume) production.
Investigate the industries that are already thriving in Phoenix, some examples include:
- alternative energy
- semiconductors and computer parts
- healthcare and medical devices
- aerospace parts
- plastics and ceramics
Becoming familiar with manufacturing companies already thriving in Phoenix will help you identify gaps in the market where your company can flourish.
Conducting Market Research in the Phoenix Manufacturing Landscape
Getting to know the competitive landscape is a great way to find out what other manufacturers in Phoenix are offering. Through market research, you can see how they’re pricing their products, who their customers are, and where your business idea fits in the market. There are a variety of ways you can contact potential customers:
- Conduct online surveys using services like Google Forms or SurveyMonkey
- Host small focus groups at a local restaurant, hotel convention room, or other open meeting area
- Attend a trade show or local business expo to meet potential customers face to face
- Find and join online forums or social media groups specific to your chosen industry
- Set up interviews or questionaire calls with potential buyers
Use your survey or questionaire to find out what challenges they’ve faced as customers, what they think of your business idea, and what they’d be willing to pay for your product. Their responses will help you sharpen your business proposal and sculpt your sales approach to match their needs.
There is also a wealth of local Arizona resources that can help you find valuable insight into your chosen industry:
Round out your research by looking at import/export data to get a bigger picture of trading trends and demand for your product:
- USITC DataWeb— U.S. import/export data by state and commodity
- FRED (Federal Reserve Bank of St. Louis)— They hold Arizona export data
- Arizona MAG Export Reports— Metro Phoenix export analysis reports
- WITS (World Integrated Trade Solution)— They make international trade comparisons
Reviewing these sources alongside the data you receive from potential customer surveys will give you an incredible understanding of your market. This in turn will help you create a solid business plan that inspires confidence and trust with investors and lenders.
Developing a Comprehensive Business Plan for Your Manufacturing Company
A comprehensive business plan is your guide to turning ideas into business reality. Whether you’re looking for funding, planning business operations, or just using it to get organized, a business plan will keep you on track. Below is a guide for building your manufacturing business plan:
| BUSINESS MODEL, PRODUCT DESCRIPTION, & OPERATIONS STRATEGY Define what your business does, what products you plan on manufacturing, and the structure of daily operations. This section provides a “big picture” view of your entire company and the value investors and customers will receive. |
| MARKETING PLAN & TARGET AUDIENCE How do you plan on attracting and retaining customers and investors? Describe your ideal buyers/investors and how you plan on reaching them. Explain the marketing, advertising, and communication channels you plan on using. |
| PRODUCTION PROCESS, SOURCING, & FACILITY REQUIREMENTS Provide a detailed description of how your products will be made. Include a list of required raw materials and where you plan on sourcing them. Also give a description of the physical space your manufacturing floor will need. |
| STARTUP & MONTHLY OPERATING COSTS Create a detailed budget of what it will take to get your business rolling! Also include what your projected costs will be per month (building and equipment leasing, payroll for employees, utilities, supplies, etc.) |
| PRICING MODEL BASED ON COSTS, DEMAND, & COMPETITION This is where all that pre-startup research comes in handy! Create a pricing guide for your product that will cover your overhead costs, meet the market demands, and compensates yourself and investors while also staying competitive. (Pro tip: find a good business accountant for help with this step!) |
| S.W.O.T. ANALYSIS (STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS) This method of identifying potential business pitfalls was developed in the 1960’s and is still used today by big corporations. This is basically an evaluation of your business’s advantages and possible challenges, its opportunities for growth and the risks it may face. SCORE (Service Corps of Retired Executives) provides free information for how to do a SWOT Analysis for your business plan. |
| SHORT & LONG TERM GOALS & FUNDING NEEDS Define your goals and objectives along with your step by step plan for achieving your company’s growth and success. Include an entire section that identifies the amount of capital you’ll require to meet your goals. |
| FIVE-YEAR FINANCIAL PROJECTIONS: P&L, BALANCE SHEET, CASH FLOW This is where you provide detailed projections for your expected revenue, expenses, profits, asset acquisition, and cash flow over a five year period. P&L stand for “profits and losses.” You’ll need to include this section to identify your biggest areas of profit and your plan for recovering from losses. |
| BREAK-EVEN ANALYSIS Provide a calculation for when your business will begin to recover all its start-up expenses, as well as pay for all its monthly costs. When do you think your company will become profitable based on your projected sales? |
As you can see, a business plan can help you stay focused, stay organized, score funding, and anticipate problems. A well-written business plan is essential to turning your manufacturing business dream into a sustainable reality.
Legal Structure and Registration in Phoenix, Arizona
Before you cut the ribbon on your new business, you need to make it official with the State of Arizona. This means choosing a legal entity structure, like LLC or corporation, and completing all the paperwork with the state, IRS, and the City of Phoenix.
Selecting Your Business Legal Structure (LLC, Corporation, etc.)
Choose the legal entity type that best suits your needs. LLCs have a flexible management structure and provide you with limited liability protections (keeping your personal assets separate from your business). Corporations also offer liability protection and include provisions for outside investors, but have firmer management and control structures.
If you’re wondering which entity type is best for your business ideas, consult with a business lawyer or an accountant to determine the best structure in terms of taxation, liability, and growth.
Registering Your Manufacturing Business with the State of Arizona
Once you decide on an entity type for your business, you’ll need to get it registered with the Arizona Corporation Commission (ACC). File the Articles of Organization for an LLC, or Articles of Incorporation for a corporation using the ACC’s online portal. For federal tax purposes, you’ll also need to acquire an EIN from the IRS. Each entity type requires some kind of internal business structure plan that stays private in your business records. LLCs need an Operating Agreement, and corporations will draft by-laws.
Handling the business formation paperwork can be a tedious distraction from the other business tasks only you can perform. This is why many business owners hire a statutory agent to handle this step. Your business is legally required to appoint a statutory agent, so why not catch two fish with one hook? Let Arizona Statutory Agent handle all the state paperwork for you and serve as your statutory agent! Or, follow the steps in our free guides linked above to DIY it all.
Obtaining Necessary Licenses and Permits in Phoenix and Arizona
While the State of Arizona and the City of Phoenix do not require a general business license, manufacturing companies may need specialized permits for their particular industry. Some special permitting you may need:
- Environmental permits from Maricopa County or ADEQ (Arizona Department of Environmental Quality)
- Fire and safety inspections
- Building and zoning approval for industrial use
- TPT (Transaction Privilege Tax) license from the Arizona Department of Revenue
To see if your particular manufacturing industry requires more permits or licenses, check out the Arizona Business One Stop. Their step by step process for starting a business will help you identify the required documentation you need. Or, review the Arizona Commerce Authority Small Business Services website to find more information about licensing in Phoenix.
Setting Up Your Manufacturing Operations in Phoenix
Now that the business formation paperwork is out of the way, it’s time to build your manufacturing operations. The location you choose, how you source the equipment needed, and how fast you find suppliers and customers will set the stage for your business’s big opening.
Finding the Right Manufacturing Location in Phoenix
To find the right manufacturing location for your needs, start by exploring areas in Phoenix that are zoned for industrial or light manufacturing use. As you examine each location, think about how easy it would be to get materials and products in and out, if there is sufficient parking for customers and employees, and what utilities are available. Here’s some resources to get you started:
- City of Phoenix interactive zoning map— Use this one to look up zoning by parcel and verify industrial uses
- Browse commercial real estate marketplaces like: LoopNet, Crexi, PropertyShark, and CommericalCafe for current listings of industrial/warehouse properties in Phoenix
- Zoneomics and the Phoenix GIS portal— Use these sites to filter available parcels by zoning code and download property reports
- Phoenix Zoning Information Guide— Here is a complete list of all the zoning codes for Phoenix
Don’t forget to check in with the City of Phoenix Planning and Development Department to make sure your plans line up with city requirements.
Acquiring Manufacturing Equipment and Technology
After you find a location, it’s time to move in with your manufacturing equipment. What kinds of machinery, tools, and software will you need to bring your products to life? Take the time to browse through the inventory of different equipment suppliers, like:
- Arizona Commerce Authority Resources for Growth
- Arizona Tooling & Machining Association
- National Association of Manufacturers
- Moov Technologies— a place to find high-quality manufacturing equipment at discounted prices
- U.S. General Services Administration (GSA)— for IT hardware and software, as well as other office equipement
- Thomasnet— connects buyers with manufacturers and suppliers from a variety of industries who need machinery, automation, or other materials
Get together with your budget and determine if it’s best to lease or purchase the equipment. Consider automation or “green tech” machinery, some of which qualify for tax incentives from the state and the federal government.
For example, the Sales Tax (TPT) Exemption on Manufacturing Equipment from the Arizona Department of Revenue can save you thousands of dollars on your manufacturing equipment, tools, materials, and utility service purchases.
Establishing Your Supply Chain and Supplier Relationships
Connecting with trustworthy local and national suppliers is the next big step in your manufacturing business’s success. Take the following into consideration when selecting your suppliers:
- How close are they to your business location?
- How fast can they make deliveries?
- Do their prices fit into your budget?
To find the right suppliers, use local networks like the Arizona Commerce Authority, Arizona Manufacturers Council, or trade platforms like Thomasnet. You can also contact the Arizona Small Business Association, Arizona Technology Council, and Industrial Quick Search to access supplier directories and discover other manufacturing business connections.
Once you’ve found the right suppliers, create and sign a service agreement contract with them. Using contracts is a great way to keep expectations clear and prevent any legal issues down the road.
Building Your Team and Hiring in Phoenix
Finding the right people for each position will be crucial to the success of your new manufacturing business. The right team can improve efficiency, ensure product quality, and help your business grow sustainably.
Identifying Your Hiring Needs in Phoenix’s Labor Market
Begin by making a list of the key positions your company needs– engineers, machine operators, computer technicians, quality control inspectors… a lunch lady? Next, look into the skills, certifications, and experience each role requires. Use the following resources to survey the wage range of these positions, and review the job descriptions other companies have used to recruit their employees:
- Greater Phoenix Labor Market Data (GPEC)
- BLS Occupational Employment & Wage Statistics (Phoenix, Mesa, Scottsdale)
- Federal Reserve Bank of St. Louis (FRED)— an economic data resource
- ZipRecruiter, Payscale, and other online recruiting websites maintain salary, wage data, and job descriptions
Once you have a list of positions, and an estimate for the salaries you can afford to pay, you’ll be able to create a competitive and sustainable payroll budget.
Recruiting and Hiring Qualified Manufacturing Personnel in Phoenix
Getting the word out about your job openings is easy. However, finding and interviewing qualified candidates is a little more challenging. Luckily, Arizona has a growing population of skilled people ready to work for you. Reach out to the following trade schools, colleges, and staffing firms to connect with qualified people looking for work:
- AZJobConnection.gov
- GateWay Community College
- Maricopa Corporate College
- Mangrum Solutions (Phoenix Manufacturing Recruiters)
- Reaction Search International (this firm has a location in Phoenix, AZ)
Keep in mind that offering competitive pay, benefits, and a safe work environment will go a long way toward winning the right talent for your business.
Funding Your Manufacturing Business in Phoenix
Every great business idea needs the right funding to succeed. Whether you’re looking to buy equipment, buy or lease a location, or hire your first employees, learning about your funding options can make all the difference. Fortunately, the City of Phoenix and the State of Arizona offer a wide range of programs, lenders, and investors to support new manufacturing startups and the expansion of established businesses.
Exploring Funding Options for Phoenix Businesses (Loans, Grants, Investors)
There are many ways to fund your manufacturing business in Phoenix. Below are some great places to start looking for funding:
| Funding Source | Description |
| SBA (Small Business Association) Loans | Low-interest loans great for general start-up costs like equipment purchase, real estate, or other working capital needs. |
| National Bank of Arizona | Consider competitive equipment loans from a local lenders like this one with in-house decision making. |
| Angel Investors | Angel Investors can provide “seed money” to get your startup company the initial funds it needs. |
| Arizona Commerce Authority (ACA) Tax Credit & Incentives List ACA Arizona Innovation Challenge | The ACA has a comprehensive list of tax credit and funding opportunities available to all Arizona businesses. The ACA hosts a Business Plan Competition where winners can receive a minimun of $50,000 startup funding and three months of customized business support |
| Accion U.S. Network | Microloan and community lending organizations like Accion provide loans to small businesses from starting up through continued growth. |
| Arizona Founders Fund | Dedicated mostly to software and tech startup companies. |
There are many organizations that offer financial assistance for both new startups and established manufacturing companies. It’s worth the effort to search around for funding like grants and loans to pump up your budget.
Preparing Your Financial Projections for Investors and Lenders
Lenders and investors will want to see that you’ve done your research on your company’s financial potential. Many ask to see documentation that shows your expected startup costs, sales forecasts, monthly expenses, and potential profit margins. This documention should also include a timeline that shows how long you think it will take for your company to turn a profit.
If this sounds overwhelming, the good news is there’s free help online:
- SBA Business Guide has resources to help you gather all the documentation you need
- SCORE Financial Projections Template is an easy way to make sure your financial documents have complete information
- Bplans Free Business Template Library includes free fill-in-the-blank business templates and examples
- SmartSheet Free Financial Projection & Forecasting Templates are available through Excel/Google Sheets for projections from startup to up to 5 years
These free tools can help you set up your financial plan without paying extra. When you’re just getting your business started, it’s nice to save money wherever you can!
Marketing and Sales for Your Phoenix Manufacturing Company
Once your Phoenix operations are up and running, the next step is getting your products in front of the right customers. An innovative marketing approach can help you connect with buyers, build your brand and business reputation, and stand out as a strong competitor in your industry.
Identifying Your Target Market in the Manufacturing Sector
Think about who your ideal customers are. Do you plan on selling directly to consumers, or supplying wholesalers or other manufacturers? Identifying your customers will help you tailor your messaging directly to their needs.
To help you identify your target market, begin by analyzing the questionaires and surveys you conducted in your initial market reseach step. Take it a step further with free target market analysis templates, like this one from the Accion Opportunity Fund.
Developing Your Marketing and Sales Strategy
Having a strong online presence is a great way to help your customers find your business. Building your social media presence goes a long way to developing not only your company’s brand and reputation, but also the trust of your customer base. Many online shoppers will not buy from a business that does not have some kind of online presence. Take the time to make profiles on popular social media platforms like LinkedIn, Instagram, Facebook, or Reddit. The more visibility, the better!
Like most business owners, you’re probably too busy getting your business up and running to deal with building your own website. A good strategy is to delegate this task to a professional service. Fortunately, full website and domain services are part of what Arizona Statutory Agent can help you with! Our Business Presence Package includes your domain address, secure website build, professional email addresses, and business phone service.
In person connections are also very important for building your customer base. Attending or hosting a booth at trade shows like the Arizona Manufacturing & Supply Chain Summit will add a friendly face and handshake in connection to your business. Host dinners or your own small business/job fairs to share your sample projects and give short presentations to show prospective customers what your company can do.
Launching Your Manufacturing Success in Phoenix, AZ
Now that you’ve done the planning, the research, and all the other groundwork, it’s time to bring your business to life! Phoenix has the right stuff to get your business flying high. From its pro-business climate, close proximity to major markets, and almost endless supply of skilled talent, you couldn’t ask for a better environment to turn your vision into a vibrant business reality.
Your Phoenix, Arizona Manufacturing Journey Begins Here!
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