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How To Go From Prototype To Production

Chris Porteous
Chris Porteous

Learn how to take a rough draft product to a final, sleek, polished and marketable item.

Developing a hardware product can be a challenging prospect and is even more time and labor-intensive than a software product. Unfortunately, many hardware manufacturers close down because they underestimate the amount of effort they'll have to put into getting their products from prototype to production. The Lily Drone, which, despite raising $34 million in preorders, shut down because the owners misunderstood their own company's abilities.

Many new entrepreneurs of hardware manufacturing businesses think that product packaging design is their largest hurdle to overcome. In reality, moving from the initial design to a final, marketable product takes many iterations and experimentation within the process. In this article, we'll examine what a business should do to help themselves move from a rough draft product to a final, sleek, polished and marketable item.

Start with the bill of materials

Without fail, one of the most challenging things for new entrepreneurs to wrap their heads around is the initial cost of a single product. It's because of this underestimation that a bill of materials is necessary. A bill of materials (BOM) outlines each individual part needed to create a particular item. Developing a BOMgives you insight into how many of each element or raw material unit is required to craft a single product. In the BOM, you should also ensure that you factor in labor and shipping costs for each of those component parts. When you outline each of those parts' prices, you have a rough idea of how much it would take to produce a single product.

As the business gets larger and product demand increases, a business could seek discounts for bulk purchasing. However, initially, your purchase volume will be small compared with other companies. It helps if you use the current purchase price to help you determine what your initial sale price will be. You should never use the lowest possible price, since you're not guaranteed to get materials at that price all the time. Set a high enough sale price that you can afford a profit, but not so low that a shift in supply lines would render your product unprofitable.

Your distribution is also something to pay attention to. If you intend to outsource your product to retail stores, you'll need a larger buffer zone (or margin) for your price, since those stores will claim some profit as part of their distribution. If you're planning on a direct-to-customer model, a decent margin would be around 50-60% to cater for fluctuations in the market and the supply of raw materials. Once you have a good idea of how much your company needs to invest in manufacturing a product, you can set a price for the sale of the item that's fair yet competitive.

Take the worst-case scenario under consideration

For small business owners, it seems like there is never enough time and resources. Estimating a delivery time on something should always come with the understanding that you add 50% of the time onto the estimate. Several parts of the manufacturing process may require a similar massaging of the estimated numbers to give the company ample time to deal with a potential shortfall. Among the areas that a business should look at when it comes to estimating and worst-case scenarios are:

Regulations

There's no telling how long it may take to get permission to manufacture your product. Depending on the industry you are in, you may need FCC certification, UL inspection, verification or other certificates to prove the product's safety. To achieve these certifications, the governing bodies will require you to correct your development with each iteration, and each one will take time to implement to the needed level.

Shipping

Supply chains and logistics can break a company's back if they aren't taken into account. Import and export taxes, duties, and schedules all factor into moving your product from your warehouse to the distribution network or the client. Shipping cost estimations should also include a generation 50% increase to cater for unforeseen bottlenecks. If your product can't be shipped by air and needs to go by sea, you'll need to add even more time to your distribution schedule.

Production

You won't stumble across an efficient manufacturing process or product packaging design right away. Developing one takes time, and the business needs to factor this into its estimates. From varying specifications for your raw materials from suppliers to your manufacturing process's complexity, each of these can take an unspecified amount of time to sort out. You need to get them worked out before you start marketing your product for consumption, or else you'll run into some angry customers.

Scalability and extensibility is crucial

A minimum viable product (MVP) is the most basic version of a product that a company wants to launch into the marketplace. It contains a simple set of features that is easy to implement but which demonstrates the uniqueness of the product. The MVP is a starting point that the business can iterate on to produce a more refined product before it gets to production.

It's no surprise that many companies start with a series of ideas they want to incorporate into their item. The problem is that many of those features and additions aren't necessary, and adding them in can increase the complexity of your manufacturing process. The more inherent characteristics a new product has, the more difficult it is to manufacture. Feature creep, the idea of continually iterating on improvements before releasing a product could doom the company's vision.

Instead, a business should be looking at scalability. Additions can be efficiently designed to be added later. The MVP is a barebones product, but it can be spruced up with better exterior design and form. The company can then dedicate itself to a refined manufacturing process to create these products for consumer use while planning additions that may come out later. The business can secure a line of income that will help it to develop and produce better products in the future. Scalability offers the company a chance to expand by releasing upgrades to a product or new product lines when the company figures out the manufacturing details.

Keep assembly in-house

Many businesses are tempted to outsource their assembly, but you may want to keep it in-house as a cost-control measure. In-house assembly also offers a company the chance to lower their overhead through "just-in-time" manufacture of parts, ensuring that the business manufactures products with the highest levels of efficiency. You also get the benefit of rapid turnaround time in your manufacturing process. Companies that assemble in-house can also exert their own quality control on the manufacturing process, guaranteeing quality in every single product.

Learn from others

There's no better teacher than experience. The real world offers many lessons, but if you're running a company, learning one of these may leave your business bankrupt. Luckily, many others have come before you and have gone through the arduous trek to learn these truths. Learning from them gives you your best chance of success.

The tips in this article can help you keep your business running, but it's up to you to innovate so that these tactics work. If you're simply trying to copy another existing product, then you'll face disappointment. For true innovators, these bits of advice can allow your business to grow and expand.

Image Credit: AndreyPopov / Getty Images
Chris Porteous
Chris Porteous
business.com Member
I'm a serial entrepreneur and owner of three internet ventures, including My SEO Sucks. A contributor to ZeroHedge, Entrepreneur.com, Forbes, Inc.com, and dozens of other media outlets, I believe in SEO as a product. I developed a proprietary technology fueling the #1 rankings of My SEO Sucks clients. In guest speaking ventures across North American, I advocate for organic search traffic as the backbone of any comprehensive digital marketing strategy.