In October 2014, when Leo Bereschansky dreamed up a ring that lets users signal for help, he didn't realize he'd soon be on a mission to find a hired gun. But with hardware and software components to design, build, and integrate, he worked with three contractors and went through 140 design iterations before starting production. Nimb, his Wilmington, Delaware-based company, will ship its first rings in July, and Bereschansky's glad he got outside help.
"The advantage of a contractor is you don't have to gather a team," he says. "You don't have to worry about whether people will work well together or how you'll find a new person if somebody quits." It seems more startups are following this route. In the past three or four years, says Allen Nejah, CEO of San Jose, California-based contractor SunMan Engineering, "we've seen a lot more entrepreneurs." Here's how to get your idea built with the right outside help.
Time for talent
To find a great design or prototype contractor, get recommendations from your network
or search directories like ThomasNet and Maker's Row (or, for overseas shops, Alibaba and IndiaMart). Hit trade shows like the Canton Fair, the Consumer Electronics Show, or one of the AmCon Expos. Or go through a staffing agency--find contractors through a clearinghouse such as OnContracting.com. To vet shops, check with the Better Business Bureau and search public records to ensure the company is compliant with insurance and licensing requirements. A company that's worked with businesses of your size may prove the best choice.
"A lot of contractors are used to working with large brands that are very risk-management-oriented," says Lenny Lebovich, founder and CEO of Chicago-based premium beef company Pre Brands. For his packaged beef concept, "we wanted someone to bring us ideas in raw form and let us co-create." If you hire outside the U.S., make sure the company has English-speaking product managers, says Bryce Fisher, co-founder and CMO of outerwear maker Ravean, in Provo, Utah. "It shows they're doing international business," he says. Fisher contracted with Chinese prototypers and factories to produce Ravean's heated jackets and other products. "If they're doing only local business, they don't know the import regulations and safety requirements in Western countries."
The price of success
To keep your project affordable, ask for flexible financing. "With some startup clients, we're willing to defer payments to when they become revenue-generating," says JC Grubbs, CEO and strategy lead at Chicago software developer DevMynd. Or try offering equity in exchange for the work. That's what Justin Rothwell, co-founder and CEO of Raleigh, North Carolina-based predictive sensor manufacturer ProAxion, did with his contractor.
Most contractors bill by the hour, but "if you can clearly define tangible steps and requirements, you might get a fixed price," says Matthew Krieger, a mentor with Score, a nonprofit in Herndon, Virginia, that provides founders with business education, advice, and mentoring. Set time- and payment-based milestones for deliverables, he adds. Also, don't neglect business-side details, which can prove as crucial as product-related details. "Our most successful entrepreneurs have a larger customer acquisition and conversion strategy," says Greg Raiz, founder and CEO of Boston-based contract software designer and developer Raizlabs. "It often separates the people who take ideas all the way to production from those who don't."
Tick, tick tick...
"An experienced contractor can estimate the time and cost pretty precisely," Bereschansky says. Always be available for review and feedback. "Start your day with their needs. Make sure you're never their bottleneck," says Matt Bachmann, co-founder of New York City-based Wandering Bear Coffee, which used contractors for functions such as graphic design and supply-chain management. DevMynd's Grubbs will stop work on a project if the client hasn't checked in for three days. As soon as you have a minimum viable product, get feedback from potential customers, says Matt Lombardi, co-founder and CEO of Boston-based Grander. When creating his social sports app, he found "you might have a conversation with a user and realize, 'OK. That needs to change,' " he says. "Our contractor was great, because as we learned new things and changed, the price didn't get jacked up."
Out of One, Many
The production process starts before you even have a prototype. Nimb founder and CEO Leo Bereschansky says his first prototyper "had good engineers, but when it came to putting the product on a production line in China, they needed help." To partner with a manufacturer you can count on, consider the following.
A newer or smaller manufacturer may be more willing to meet your unique needs. "Pick one motivated enough that a successful product will impact its business, so it will make accommodations it might not otherwise," says Lenny Lebovich of Pre Brands, seller
of grass-fed beef products.
"Your prototyper should be able to help you spec out every detail a manufacturer needs," says Bryce Fisher of outerwear maker Ravean. "I do everything I can to have a firm prototype with the types of materials I want, and all the specs, before I go to China to search for a manufacturer. When you know exactly what you're looking for, it will save you hundreds of thousands of dollars. It helps you compare apples with apples when getting quotes."
Once you set it, don't forget it
Even the best manufacturers need constant oversight from someone who understands the process. "Our CTO works closely with our contractors on a weekly basis," says Justin Rothwell of ProAxion, maker of predictive software and sensors. "You need someone with technical ability to set benchmarks and monitor all the details as the job goes forward."