Should your startup hire a design firm?

Over the years PDT has partnered with many startups, but the explosion in popularity of crowdfunding sites like Kickstarter and Indiegogo has brought a whole new group of people to our door with financial backing to realize their entrepreneurial dreams.

Unfortunately, we've also witnessed some all-too-common mistakes by newly funded campaigns, starting from the most fundamental: don't begin your Kickstarter too early, before you've laid the foundation required for any successful product launch. Product development is an exciting but challenging and multi-faceted activity. It is not uncommon for an entrepreneur without previous manufacturing experience to be surprised by the cost, time commitment and rigor these projects demand.

So before you jump into crowdfunding, please consider a handful of critical points every startup should consider with respect to product development.

1. How far along is the product?

We suggest not launching on Kickstarter, Indiegogo or any other crowdfunding platform unless the product is already in the product development process and you have a realistic understanding of how long the development will take and the potential cost involved. Do not rush your product to a fundraising platform. The more time spent on the product's early development stages, the less time will be spent on it during later stages of production/manufacturing, where changes can make both timeframes and costs skyrocket. Since you will be developing in the public eye, you want to make sure you are prepared to meet the expectations of your backers.

Recommendations: Hire a Tech Development Specialist or Product Design Firm that has been through this process before. This person or team can both manage the technical development of the product, liaise with partners, and communicate accurately with backers on project status as it pertains to development challenges, changes or design decisions.

2. Do you have plan B?

You should always be looking for investors, whether for a plan B to a crowdfunding campaign or to combine with crowdfunded money. Even what are often considered successful crowdfunding campaigns fall short when product development is completely reliant on funds risen via crowdfunding. the cost of things like tooling, manufacturing and shipping tend to catch people by surprise when it's their first development project. Crowdfunding is a great way to get some funds for the product as well as raise awareness, but your budget will more than likely fall short. Always have a plan B and be developing plan C.

Recommendations: Many large metro areas now host "Shark Tank-like" events where angel investors seek out opportunities to invest in entrepreneurs and their ideas. Find these events and make your case there. If for no other reason, it will force you to organize your pitch that you will be giving to backers, retailers and your consumers.

3. What kind of testing does your product need?

It can take as long as 6 months to get FCC or UL approval, so you have to make sure to understand what testing your product will require before estimating delivery dates to backers. Additionally, regulatory testing facilities do not want to test a prototype; they have to test the actual product from the factory before it can get the appropriate approval mark. This will require you to manufacture a small sample size, possibly up to 1,000, for quality assurance testing and performance testing to meet Consumer Product Marking criteria.) (FCC, UL, CE, etc...) Plan for both the cost and time needed for this step.

Various other certifications may be necessary depending on the product

Recommendation: Hire a Product Design Firm or Tech Development Specialist that has been through this process.

4. Where and who will your manufacturer be?

China is cheaper... Sometimes. Consider these major barriers before choosing a manufacturer overseas:

Language: Obviously, if you do not speak the same language as your manufacturer, communication will be a huge barrier to overcome. One simple misunderstanding can cost thousands of dollars. Google Translate can be a good tool, but you have to use with caution. Certain words simply do not translate over to Chinese.

Recommendation: Hire a Product Design Firm or Tech Development Specialist that has been through this process. It is best to hire a Product Design firm not only for their expertise in the design field, but also the connections they have overseas and the dedicated professionals they have on staff for these programs.

Recommendation: Make sure this is in your financial plan.

7. Shipping?

While manufacturing overseas may save you money, shipping can eat away at those savings. Understand the costs and time required for both air freight and ocean freight. Also, if your product incorporates any sort of electronic or battery that require special testing or certifications before shipping, know that in advance. Click here for more information on international lithium battery regulations >

Ocean Freight: Ocean Freight is considerably less expensive, but plan for 3 to 4 weeks for your delivery.

Recommendation: Be sure to consider costs and timing when choosing how your product will ship.

8. Where do you intend to sell your product?

There are many pros and cons to both selling through a retail distributor and selling via the web, but we're going to focus on how this decision impacts the product development process here.

If you decide to sell exclusively on the web, there are not many impacts on the development process. However, if you intend to sell to retailers, you must plan for additional activities and costs. Retailers tend to follow a cycle during which different requirements for the manufacturer are expected to be met by a certain date. These vary by industry, so you'll have to do your research to understand your unique requirements, but we've included a sample process here to give you an idea of the scope and time requirements to expect.

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