One month's deposit on a loft. Unfortunately, these success stories tempt the inexperienced and undercapitalized to enter the field. And while it is possible for the manufacturer to begin with relatively little capital, he still needs substantially more to stay in business and grow. Ideally, he should have enough money to run his company for two or three years. It ordinarily takes that long to acquire a reputation for fit, delivery and customer acceptance.
Few manufacturers show a profit the first year.
The manufacturer must anticipate sour seasons and perhaps one bad year out of every two or three. Stability will depend on adequate capital to ride out economic storms or a losing streak. The amount of working capital a manufacturer will need depends on his sales volume, expenses, and receipt of income. The minimum should cover regular monthly cash expenditures, not including materials and purchases, for about four months. Monthly costs will differ considerably, depending on the size and type of operation.