5 Early Stage Decisions - Hardware Startups
Updated: Feb 19, 2021
It is a well-known fact that taking the right decision early requires a lot of expertise and experience. Unfortunately for startups where cash is expensive getting that expert advice is not easy. That makes the journey of a hardware startup a bit of a hit and miss. If you are lucky and you took the right decisions you will achieve your scale easily. On the other hand, if you do not take the right decision the journey you experience will be constantly battling against change and trying to avoid correcting the mistake. But there is always hope that you can make the changes in time and still achieve scale.
It is very easy to cut corners and always think this can be handled later. But it is very important to invest in sharpening your tools before you go any further. In the long run, it will turn out to be the best decision.
Here are 5 early-stage decisions you should consider for your Hardware startup:
1. Knowledge makes you wiser
Hire the right attitude and when you notice a gap - start by investing in educating your comrades. Enroll them in different courses and certifications which then can be used to improve your product. It also helps them get the required confidence. Find out about quality over quantity courses. Use grants/scholarships if available.
2. Find quality partners / suppliers over cost
Yes, it may sound counterintuitive but that is true. An expensive supplier may not look like the best option. Or you tried finding it but they are not interested because of your small order/business. Fortunately, these Big suppliers are under constant pressure from competition and staying relevant in keeping up with new demands and new technology. All you need is to demonstrate your growth potential. Treat them like your Investors. Impress them.
3. Understand the market and Cost Tolerance
Even if you are developing the best / first/unique product you need to start from what will the customer / end-user pay for it. Once you get that go further to calculate your total COGS at a defined scale. Set budget limits early on that it should not exceed. If due to technology used it is going to be expensive to start working on reducing that by early supplier involvement or start working on a strategy that will increase the market cost tolerance.
4. Slow and steady wins the race
It is important to get to market fast! Do not launch your product half-baked. It is a hard reality. Once launched if it fails it will take even more time/money to re-launch it. If it does not fail, it is only a matter of time where all the resources will be spent in rectifying it and the overall growth of the company slows down. Instead, keep it simple but fully functioning for the first version. And then over time keep adding more and more complex modules. This gives you a great start.
5. Plan / Budget for Returns & Spares Ecosystem
It is a hardware product. A certain % is going to fail and come back. This is not considered in the budgeted costs - return shipping > storage > shipping replacement > scrap > write off's .etc. Invest in good quality end of line testing and use the latest software to track. But it will still come back.
In my experience, these are some of the decisions which are important for a Hardware Startup. If you are running a Hardware Startup and need my guidance to solve some of your ongoing issues Get in Touch.