Learn which mistakes you should not make when beginning your hardware startup and how you can avoid them
Leading a startup is a big challenge for any new business leader. It can be a lonely and draining path. A company founder’s one job, which the other members cannot due, is get funding for the company so it can run. If you cannot do this, then it’s time to find a partner who can and you can focus on leadership and getting the product to the market instead. You will hear this said over and over again at conferences and business summits by Venture Capitalists and other experienced business leaders who have already run successful companies from the ground up. It is not new information, so why do so many founders still make the same mistakes over and over again? I will give you some insights into which mistakes hardware startup leaders make, and how they could have done things differently, so you will not have to make the same mistakes with your hardware startup. Read on to avoid ending up without funding and low employee morale.
1. Do not launch a crowdfunding campaign too early or overestimate the product delivery time to backers
If a founder does not have experience dealing with manufacturers they will not know how long it will take to get a product created, and all the steps involved which could lead to overestimating the delivery time to crowdfunding backers. So, what should you do if you are a new founder and want to launch a hardware product? Talk to founders who have succeeded and ask them questions so that you can anticipate and plan for unknown situations. Another thing you can do is take a workshop or online course if you have the time. The point is that you need to do your research; otherwise, you are setting yourself up for failure.
Talk to founders who have succeeded and ask them questions, so you can anticipate and plan for unknown situations
When it comes to launching a crowdfunding campaign, make sure you already have a working prototype and have already contacted manufactures to find out what the costs will be. Use the crowdfunding money you earn on the hardware, and not on other things. Save it for when you really need it. If you market your product too early and the manufacturing gets delayed, you will have to deal with unhappy crowdfunding backers, which could end-up tarnishing your brand and company’s reputation.
2. Do not overspend on marketing and budget accordingly
You do not want to be in a place where you cannot pay your employees nor pay for manufacturing, which is where too many startups end up. Make sure you calculate and budget for every single little cost. Don’t be the type of founder who when asked, not have an answer. Lead like you want your employees to work.
Don’t be the type of founder who when asked, does not have an answer.
Don’t spend money on social media ads and attend large expos, like CES, until you are just about to launch. A month or two before the product launch should be enough time to build up some hype around the product so that when it does launch, people will be interested and convert to sales. If you do not have the money available, or have not calculated carefully, do not spend it. All of the money spend on unnecessary marketing could be spent on production costs. The most important thing to do before launching is to focus on production. Furthermore, when you are starting to plan, be very strategic — do not spend money where it is not needed.
3. Not having a CFO when you need a person with those skills
What should you do if your CFO leaves after starting the crowdfunding campaign? At this point, you should start looking for a new CFO, and while you are looking have another person from your team step in who has what it takes to do the budgeting until you find a new CFO. It would be wise to have someone on staff who has the financial knowledge to be on board, for this type of scenario. This person could be your head of marketing or sales. A founder does not have the bandwidth to do everything.
A founder does not have the bandwidth to do everything.
He or she needs to be focused on getting funding for the company and getting the product to market, and a CFO can be there to help manage the financial planning and budgeting. Make sure you have someone on your team who is good at math as well as understands and can create business costs models to act as CFO.
There you have the three mistakes hardware founders can make and how to either prepare for if any of these were to happen or how to prevent them from happening altogether. Try not to worry about making mistakes. You will make mistakes, so learn from the ones you do make and grow. Be humble so you can listen to those with experience and those on your team who might see something you do not. Do your best to strive for your dream carefully and strategically. You will get there, it is just a matter of time until you do.
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