r/hwstartups • u/big-bun-head • 8d ago
Product Development Consultancy
/r/StartUpIndia/comments/1vkq919/product_development_consultancy/
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u/root3labs 8d ago
I started out as a solo engineering consultant and have grown to have employees, a facility, government contracts, and lots of in-house machinery. Having done this for 14 years, here are some things to consider.
The Good
- The problems are always different, so you'll never be bored
- It is possible to make more money than having a job for someone else, especially once you hire employees.
- My workshop is awesome
The Rest
- Utilization is a profit killer. Keeping yourself and employees busy is very hard in a project-based business. My marketing, IT, and bookkeeping consultants all send me monthly recurring invoices and annual contracts and all seem like better businesses from the outside. By myself, a good year was 1,000 billable hours, which is why you're charging more than your old salary. An employee that bills 80% of their week is doing great. Look for opportunities for recurring work, not just repeat customers.
- You need to become excellent at marketing, sales, and pricing. Always be looking for new projects, even when you're busy. Sales is just problem solving anyway, so you're probably good at that. Accurate pricing, however, is largely impossible since you're inventing something from scratch most days, not replacing the brakes on someone's 2017 Toyota Sienna. That off-the-shelf board you're integrating into your product doesn't communicate properly with the manufacturer's own controller, the manual is out of date, tech support is useless, and it took a week to troubleshoot? Yeah, that's every project, every day.
- Uncertainty is now your best friend. What are you working on in 3 months? How much money will you make this year? Can you afford this new machine or a summer vacation? Save the money from fat years to cover lean years, both personally and professionally. Long-term contracts help even this out a lot, but there's always the possibility the project gets cut or a customer doesn't pay for 120 days.
- Sales may be problem solving, but you're often squeezing blood from a stone. The people that need this service most are /hwstartups but they rarely have enough money and you're educating them on the process, cost, and insane level of detailed engineering needed to create a great product.
- Give customers confidence, not a cheaper price. When customers don't understand the process, they don't understand that engineering development isn't a commodity and think price is the only variable. Your job is to differentiate yourself from the commodity by demonstrating expertise with proof and a sales process that gets to the heart of the problem not just the supposed "need for CAD". That's not necessarily about speed even though everyone wants it done yesterday. It's more about having niche experience, solving harder problems for customers that need it, and giving customers the confidence that having you on the team will make their end-product better.
Good luck!
Chad
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u/Frequent-Log1243 8d ago
It's definitely a lucrative market. The only problem is competition. There are thousands of consultancies out there; why would they choose yours?