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Small business co-manufacturing spaces including co-cloud kitchens

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Shubhankar Kulkarni
Shubhankar Kulkarni Oct 10, 2022
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Co-working spaces are on the rise. The next obvious step is creating co-manufacturing spaces including co-cloud kitchens.
How it works?
A co-manufacturing space with rooms for individual businesses is constructed. It also has common areas where some commonly used machines are placed by the owners. These will also include stationary and printing services. Any small business that rents a room can use these common machines. A booking system is set in place for their usage. There is also a cafeteria and a few meeting rooms which can be booked and used. The property also has a warehouse on the ground floor.
Businesses bring their materials and start creating (research and development) and selling stuff from the co-manufacturing space. They can keep any special-purpose machines they have in their rooms. If other businesses want to use their special machines, they could also charge them. The businesses sign an agreement with the owners where they pay monthly rent (which includes cleaning services, maintenance of the common machines, general maintenance, electricity, etc.) Another type of agreement is that the rent is reduced but the owner either gets a royalty per product or equity in the business.
As an example, if the co-manufacturing space is a co-cloud kitchen, each kitchen in the premises will be provided with the necessary instruments in a typical kitchen like a refrigerator, gas pipeline, stove, preparation table, cabinets, etc. The common area will host machines like a fermentor, -20 degree refrigerator, hot air oven for drying utensils, dishwasher, etc.
Why?
  1. It will be a boon for small manufacturing business owners and startups until they can scale. Small manufacturing businesses are usually working from their houses, garages, etc., and cannot spend much until they grow. This is an uncertain period where they don't know if their venture will work and if should they invest in a larger space and machinery.
  2. This is a business idea for funding agencies. They construct a co-manufacturing space and lend it. They earn from the rent and also from royalties and equity.
  3. Businesses can better collaborate with other businesses in the co-manufacturing space. The product of one business could be the raw material for the other. Such businesses will save a lot on transportation.
  4. Other services like legal, advertising, etc. will be cheaper if the space has a designated outsourcing agency.
  5. Unskilled labor could be employed by the owner and they could work for any of the businesses that need an extra person.
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Creative contributions

Basics on co-manufacturing business model

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Marco Agudelo
Marco Agudelo Oct 26, 2022
For a brief on requirements on a co-manufacturing in the aim of keeping it short can be based on a similar model of a co-kitchen business model with some key concepts I have identified based on my experience. So let's start with the brief comparison with the kitchen model and after complete with the suggested details for the business model.
At least the following requirements should be met:
  • Smart scheduling for reservations and clear users traceability.
  • Accurate billing system on using machinery and spaces employed.
  • Statistics for client management (on this concept I will latter complement)
  • User friendly and safety policies.
  • Facilitate an environment for entrepreneurs, emerging companies, investors, ventures and alliances.
For a deeper explanation on previous points please feel free to ask or check general comments and references of this main idea.

Now getting into the detail of what make it different and viable, lets output the following:
  • Co-manufacturing main solution/business-offer is to provide a non fixed asset investment for manufacturing small MVP , prototyping, small quantity orders and R&D projects .
  • Clients should have their own machining cutting tools, because of the enormous possibilities they are depending on what to manufacture and because of the wearnes during use, that could be parametrized on computerized manufacturing process .
  • Clients should provide their own materials. But the co-manufacture would benefit from having stocked material from suppliers to sell on site. The business model could include suppliers partners that can consign material for sell on demand.
  • Co-manufacturing should supply licenses for an affordable set of softwares in order to concatenate the design to the manufacturing process, facilitate software validation, manufacturing administration and computer assisted design tools.
  • Requiring proven technical skills for machinery manipulation per each machine clients want to use. This incentive hiring and partnership both with professionals and technical members. If the user can’t make it to have it on the team, then the co-manufacturing could offer the manufacturing as a service (extra: on non lavouring hours with the highest automated manufacturing process available based on budget).
  • The co-manufacture could protect fixed assets investments if it partners with an insurance company that handles the users session.
  • Offer to clients a paid service for financial and accountability administrations to ease the creative process of startups. Offering an updating five year financial projection based on users feedback and statistics from client managment.
  • Offer to clients the possibility of fundings rounds based on: (1) only legal established societies or one person owner business, because of the need of clearly defined owner percentages. (2) co-manufacturing users' financial statements.
  • co-manufacturing incomes are at least from renting spaces and machines, selling materials and cutting tools, providing additional services, and commissioning on fundings rounds.

What is the next step?
What else do you recognize is distinguishable from a collaborative manufacturing business?
What would be your must-have equipment and manufacturing facilities required?

[1]Agustín "Flowalistik" Arroyo, 2020, wikifactory, https://wikifactory.com/+wikifactory/stories/everything-you-need-to-know-to-about-hardware-mvp

[2]Will Kenton, 2022, Research and Development (R&D) Definition, Types, and Importance, https://www.investopedia.com/terms/r/randd.asp

[3]STEMA professional profile, 2022, R&D Hardware Engineer, https://stema.io/annuncio/gefran-s-p-a-brescia-profilo-professionale-hardwarista/

[4]minaprem, What is a Cutting Tool? Examples, Classification and Materials, http://www.minaprem.com/machining/cutter/introduction/what-is-a-cutting-tool-examples-classification-and-materials/

[5]Mei Tian Xiong, 2019, Classification and Selection of Cutting Tool Materials, https://www.linkedin.com/pulse/classification-selection-cutting-tool-materials-amanda#:~:text=Currently%2C%20cutting%20tool%20materials%20are,are%20commonly%20used%20in%20machining.

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Shubhankar Kulkarni
Shubhankar Kulkarni22 days ago
Regarding the billing system, I thought that the rent should include the usage and maintenance of the machines the clients will be using. At least the machines that are for common use. What do you think? The electricity and cooking gas bill should be paid by the clients separately. This will require gas and electricity usage measurement devices fitted for each rented space.
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Marco Agudelo
Marco Agudelo16 days ago
Shubhankar Kulkarni Yes to my appreciation usage and maintenance should be included on rent. Following a granted hours package per month model. Maintenance is indeed a professional task to allow equipment to be in an initial condition, which will work to all rent users of the co-work regardless if it is the cloud kitchens or co-manufacturing. You will require a good initial state of equipment you are about to use.
Considering cloud kitchen and co-manufacturing could have different business models, maybe it could be an advantage to analyze them both in separate scenarios. So I will add one comment specifically to co-manufacturing and it is about the usage.
Usage is a key concept for pricing in machining. Because of the wear of mechanisms of the machine itself and the wearing of tools; this last point about tools I commented on my creative contribution.
So in order to be profitable about the machinery and equipment investment, the rent should include a granted package per month (based on the business model) but should tariff extra time as well. Here instrumentation could be installed to each machine or equipment in order to be measured with further detail usage or could work too a basic price per time model. This could be analyzed with detail based on usage expenses variation.
In my opinion all public utilities expenses (electricity, gas, water, cleaning public areas, etc) must be included in the rent business model. One key concept of the co-work services could be to maintain as simple as possible the balance sheet statement, so as possible all expenses that aren’t directly related to selling should be included on rent. And as I suggested on my creative contribution the co-work service administration could offer keeping the balance sheet statement and use it as well for investment rounds.
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Shubhankar Kulkarni
Shubhankar Kulkarnia month ago
All great points Marco Agudelo!
To add to it, I have worked in institutes where the common equipment had a booking system. The easiest one was to keep a register next to the equipment. A new user approaches the equipment and checks the record. They then understand when the instrument is free and can book it. More sophisticated methods exist. For example, Google calendars, where you check when an instrument is free and book it. To avoid overuse by a single client, rules like "not using a machine, which has bookings from multiple users, more than 3 hours at a stretch and more than 6 hours in a day". So, a client will be blocked automatically if they try to book beyond 6 hours. There can be exceptions. For example, if only one client uses a specific machine that no other contemporary user needs, they could use it for longer durations. Also, if a particular procedure requires 4 hours on a machine, an exception could be made.
Newer companies or machines are advertised by providing free service and trainings. This could be utilized by the co-manufacturing space owners. There could be specific hours when a technician from the product company visits the space and provides free service on a certain machine. They could also be called upon to provide training to newer clients once they rent the place.
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General comments

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Michaela D
Michaela Da month ago
This is a great idea for small businesses that are mostly virtual and don't want to invest in buying space. Kitchens are a great example and I have already seen "kitchens" to rent/share.
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Marco Agudelo
Marco Agudelo2 months ago
Both. Materials and machining tools should be ported by co-manufactured space users at least on the co-manufacturing space. I liked the idea very much. Developing the business model would be marvelous. About the co-kitchen I think all utensils could be supplied by co-work business owner. I found this on cloud kitchen .

[1]Ashley Colpaart, 2019, Everything You Need to Know About Cloud Kitchens (aka. Ghost Kitchens) in 2020, https://www.thefoodcorridor.com/2019/12/05/everything-you-need-to-know-about-cloud-kitchens-aka-ghost-kitchens-in-2020/

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Shubhankar Kulkarni
Shubhankar Kulkarni2 months ago
Marco Agudelo I am glad you liked it. Thank you for sharing the resource. Yes, the owner can also provide the regular utensils for the co-cloud kitchen idea. All the things that the owner will buy and let the cloud kitchens use will add to the amount of rent paid by the kitchens. There will need to be some optimization there.
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Marco Agudelo
Marco Agudelo2 months ago
Shubhankar Kulkarni check this kitchenware idea for the cloud kitchens.
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