Toll Converting for Small Businesses: How to Scale Without the Investment

What Is Required to Scale in Manufacturing?

Scaling doesn’t start by simply increasing your manufacturing output. Instead, it begins with a series of adjustments to your current operations—adjustments which often carry heavy financial burdens. Here are the four key components typically involved in scaling:

Additional Facility Space

Increasing square footage is often the first step needed to accommodate higher production demands. This may include:

• Larger production floors to accommodate more equipment
• Increased warehousing space for additional inventory
• Expanded back/front office space to support a growing team

The cost of leasing or purchasing larger spaces can quickly add up, making this a significant barrier to scaling.

Upgrading or Purchasing Equipment

Scaling usually requires either investing in new machines or updating existing equipment to increase capacity. This type of investment also carries a high upfront cost and can be a long-term financial commitment, depending on the amount of equipment needed.

Hiring More Staff

Scaling means more work—and that requires additional labor costs. These costs include:

• Recruitment and hiring processes
• Training programs for new staff
• Ongoing payroll and benefits

For small businesses, these expenses may pay off in the long term once the financial benefits of scaling are realized, but they can present a significant obstacle in the short term.

Larger Material Purchases

Finally, to meet higher production demands, businesses often need to make larger material purchases.

Each of these costs on its own is a challenge, but combined, they can present a seemingly insurmountable obstacle to scaling, especially for a small business with a limited budget.

How Can Manufacturers Scale Without Large Capital Investment?

The easiest solution to this problem is outsourcing, which allows small businesses to scale without many of these added costs. Outsourcing critical components of the manufacturing process through strategic partnerships can help you save thousands (if not more) in capital investments, all while allowing you to scale effectively.

Identifying areas of your production process that can be outsourced—whether upstream or downstream—can alleviate financial and operational pressures and open doors for growth.

One popular outsourcing solution for small businesses is contract or toll converting.

What Is Toll Converting?

Toll converting is the process of outsourcing specific manufacturing services, such as material cutting, slitting/rewinding, laminating, or coating, to a specialized third party. Instead of purchasing expensive equipment and hiring skilled labor in-house, you partner with experts who already have the tools and expertise to handle the job.

Contract converting allows small businesses to scale production without the upfront costs associated with facility expansions, equipment upgrades, or additional hires.

How Does Outsourcing Help You Scale?

Here are some of the key benefits toll converting can bring to your small business:

Savings on the Upfront Cost of Machine Purchases

Toll converting eliminates the need to purchase and maintain costly machines. By outsourcing, you can still meet increased production demands without taking on the financial risk of buying high-cost equipment.

Reduced Labor and Training Costs

Operating complex machinery requires significant hiring and training expenses. Outsourcing to a toll converter means you leverage their experienced workforce, saving both time and money on the hiring and training process, not to mention the ongoing labor costs like wages and benefits.

In addition to these primary benefits, toll converting also gives you the flexibility to shift production levels down if needed without laying off staff and letting the costly machinery you’ve invested in sit idle. It also allows your small business to focus on what it does best, whether that’s product design, innovation, or marketing.

How to Choose the Right Production Partner

Partnering with the right toll converting service will lay the foundation for your success, and this requires spending the time on vetting them properly. Look for companies with a history of working with businesses like yours; they should demonstrate longevity and a track record of successful converting.

Make sure your partner can handle all your converting needs, from slitting and laminating to coating and more, to simplify transportation logistics and reduce costs. Quality control is paramount, as you’ll be putting your brand’s name on the final product, and transparent communication is also critical for seamless outsourcing.

The Bottom Line

Scaling your manufacturing business doesn’t have to mean making massive upfront investments. By turning to toll converting, small businesses can scale up while keeping costs manageable, helping them maintain their competitive edge and setting themselves up for long-term success.