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7 Pitfalls of a Hardware Startup

DFRobot Sep 24 2015 191
Crowed funding has opened the doors for everyday inventors who want to take their projects to the next level. Not only do they provide funding but also a way to test the market. But it’s not all plain sailing. Newbie founders who fail to prepare for the challenges ahead are at a high risk of everything going pear shaped.

Alan Clayton who is an experienced entrepreneur and mentor told us what some of the common pitfalls of running a hardware startup are.

1. Unexpected local laws

Europe is a particularly hard place to sell products. Each country has its own laws and regulations which must be navigated. It’s recommended to start in one market; the USA or UK for example, where there are one set of laws and one language and take on different markets sequentially.

2. Large orders early on

Accepting a large order can be tempting, but issues can arise when your current manufacturer cannot fulfil those orders and you are required to find a new one. The ideal situation would be for these large orders continue, but there is a chance that they don’t and you’re forced to downgrade to a smaller manufacturer. Instead, grow gradually. Upgrade your manufacturer when demand for your product increases.

3. Overlooking customer service

Customer service might seem like a nice-to-have but problems can quickly materialise and along with it angry customers. You must be prepared to handle them with trained representatives.

Not only that, but customer service is becoming a vital part of marketing. Creating customers which love and talk about you is an incredibly effective way to spread the word.

Building a brand with customer service at its core also brings protection. Customers which recognise you as the creator of the idea are less likely to choose cheap knockoffs.

4. 5% of stock is never paid for

You can expect a percentage of stock to never be paid for from items lost in the post or being broken with no one to take responsibility.

5. Supermarkets will try their best get out of paying

Supermarkets have been known to deduct money from the bill for items found to be broken, whoever’s fault it is. Its up to you to fight for it.

6. Items which retailers don’t sell are sent back

Retailers won’t share the burden of items which don’t sell. You can expect stock which doesn’t sell to be sent back to you without payment.

7. Having your stock and customers in different countries

While usually unavoidable an ideal situation would be to keep your stock in the same country that your customers are in to avoid extra costs in shipping.