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Building a hardware startup is serious business
These days, software companies get all the attention, but it doesn’t have to be that way. The modern miracles we all know and love wouldn’t be possible without PCBs and the businesses that bring them to market. If you’ve got an idea for a great hardware product, then you’ll need to take some important steps before you’re ready to start marketing and selling it to the masses.
Before you start producing prototypes and planning your first major production run, there are some important steps that hardware startups should consider before moving their product into the marketplace. These steps are intended to help get you to the product design phase and maximize your chances of success in your new venture.
Market Validation for Hardware Startups
A cool design rarely sells itself. This means you need to take some time to validate the market for your new idea. Market validation is about much more than just estimating the number of units you can sell per year. It really comes down to weighing the costs involved in producing your products, the costs to market your products, and the revenue you stand to see as a result. The profit you produce from this can then be put right back into growing the business.
In addition to market validation, you’ll need to consider the type of startup you want to build. The range and number of products you plan to create, the links between them, and whether you are marketing to end consumers or other business will determine the best methodology for validating the market for your products. It will also determine your overall product development and growth strategy; this will be discussed in a future article.
Driving Innovation: Demand-push vs. Technology-pull
The drive to innovate a new product can take two forms: technology-push and demand-pull. Regarding the former, new technology allows an entrepreneur to create a product that the market might not know they even need or that is not currently in demand. The latter drive for innovation addresses a real need that is demanded by the market and is currently unsatisfied.
If you can identify a demand-pull innovation, then you have immediate market validation for your idea. Unfortunately, chances are that other companies and entrepreneurs have also identified this opportunity, unless you are targeting a niche market. This means that the first company to successfully create and market a working product will have serious first mover advantage and is likely to see major success. At that point, it is up to you to differentiate your product from that of your competitors and differentiate your product by targeting specific pain points in your market.
In contrast, a technology-push innovation is not always obvious to potential competitors. This also means it may not be so obvious to your potential customers. The problem is that you will spend more time educating customers and convincing them that your product is a better solution to their problems compared to existing products. The market for this type of innovation is more difficult to validate as potential demand for the product is not so obvious.
Ditch the external oscillator before adding the new MCU
Sales Volume Estimation
Perhaps the most important point in market validation is to estimate potential sales volume and customer acquisition costs. If you are designing a piece of technology that is essentially an upgrade of an existing product on the market, it is easier to estimate the market for your product based on existing sales volume. You can then get an estimate of marketing and advertising costs using search engine data.
Once you have an idea of the potential market size, you’ll have to accept that you can’t satisfy the entire market from day one. You’ll need to set a realistic sales target once you launch your product. A good plan is to target a small segment of the market, normally a few percent. Once you have an idea of the number of potential market size, you can get an idea of your customer acquisition rate. This is where you can use search engine data to estimate your marketing costs for targeting your desired segment of the market.
In order to estimate sales conversions from your advertising efforts, you should devise best-case and worst-case scenarios. If you assume an average 10% conversion rate, then this means that only 1 in 10 visitors to your website will buy your product. If each click in a search engine costs $1, your click-through rate is 1%, and your only marketing strategy is pay-per-click advertising, then you will need to reach 1000 people and sell a single unit for $10 plus manufacturing costs to break even on a single sale. Obviously, you need to take this and your other advertising strategies into account when devising a marketing strategy, as there are plenty of other marketing strategies hardware startups can use to market their new products.
Defining Design Requirements
As you go through the process of market validation, you’ll inevitably get some better ideas of what your market desires and how your product should function. After validating your market and determining the functionality it desires, it’s time to start defining rigorous functional requirements for your new product. These functional requirements should define the capabilities required to produce the desired user experience. Initially, you need to focus on what the product can do, not on how the product is built.
Once the user experience and required capabilities are rigorously defined, you can start defining the technical requirements for your device. This is where you need to start thinking like an engineer; you’ll need to consider how data moves throughout your system, how the system interfaces with the outside world, and how it interfaces with other devices. This will inform the next step in the design process, where you start creating block diagrams and schematics for your device.
Hierarchical schematics take you closer to your PCB layout
Creating a schematic is the first step in designing a PCB to support your new product. This is where you select the components in your system and start linking them together to produce your desired functionality. This where you need to consider the design software you’ll use to create your product. Working with browser-based software is a cost-effective alternative to other desktop-based design programs as it provides automated backup, version control, and collaboration features within a single platform.
As you venture down the road towards turning your new idea into a prototype and eventually a finished product, you’ll encounter plenty of design and production challenges. With the right design tools, you can take a design from start to finish and overcome these challenges. The browser-based PCB design platform from Upverter® provides all the tools any hardware startup needs to build create their next electronics product and plan their production runs. This online design platform includes all the standard features designers have come to expect in electronics design software. You’ll also have access to an extensive library of electronic components for building your next product.
You can sign up for free and get access to the best browser-based PCB editor, schematic editor, and component database. Visit Upverter today to learn more.