Entrepreneur Interviews: Starting a Hardware Business While Employed

I do a whole lot of 1:1 mentoring sessions for budding entrepreneurs, and the trouble is I haven't found a way to distill them into general "business advice" blog posts. The advice is often so dependent on their context and their situation.

So I've started this series, until I'm able to figure out how to write better general business advice. After every 1:1 mentoring session I do for an entrepreneur, I'll try to ask them permission to anonymously post the conversation here and I'll post it if they say yes. Hopefully this way, I'll be able to share advice in a more helpful way.

Let's call this budding entrepreneur Michael. He wants help starting a hardware business.

Michael: Hi!

Me: Hi, nice to meet you! So, tell me a bit about your situation.

Michael: I graduated from university not too long ago. I studied a lot about hardware and worked in a lab there. Now I have a full time software job. I want to start a hardware business.

Me: Got it. First, do you know if laws in your region allow you to start a side business while employed?

Michael: Yes, I can do this. I can do it so long as it doesn't compete with their product or so long as I don't solicit their customers away from them, which won't be happening. So yes, I can have a side business.

Me: What's life like outside work? Is work stressful? Is the job pretty stable and well paying? Do you work long hours?

Michael: It's a good job. Very stable, and not long hours at all. It's not a stressful job, I don't come home really exhausted. Evenings and weekends I have lots of free time-- I don't have other commitments outside of work.

Me: Whoa, you certainly have a nice situation going on.

Michael: Haha, yes, I do.

Me: Hmm. Okay, so you have the ability to start a side business and it's completely possible to do with your current job, so long as you stay very small/manageable while working it and then when it gets busy you make enough money to quit. So let's then just talk about your product. Do you need a lot of equipment to get started? I'm not so familiar with what it's like to build a hardware product.

Michael: For my particular product, I do have setup costs, but not too much. It'll take me maybe 1-2 months to save up enough money to get started.

Me: Wow, that's not so bad. So you have the ability to start a side business, and it's not too much money for you either. Now you need customers. Why is someone going to come to you for business, and not someone else making a similar product?

Michael: Hmm. There are other solutions out there. I do have one advantage of being able to charge cheap rates because of my current privileges with my full time job.

Me: No, that is no good. You want to survive on your own-- trust me, once orders start piling up you will not want the burden of your full time job anymore. You want to charge enough to make a living. Plus, charging more sometimes can be better for business! It increases perceived value. So let's think about other advantages you have here. Do you have special expertise?

Michael: It's so hard for me to say that confidently. Yes, I know I can do this well, and I've studied it in depth, and I've done it before, but I'm also not too far out of school.

Me: You have to remember advantages you can have on the people side of things. For instance, you can give people excellent support, redo your work if you make a mistake, really gain people's trust and be known as being the reliable manufacturer to go to. Also, referrals. You can go to just any manufacturer, but a company you trust recommended this one because they've worked with them and they know they're good. You'll go with the referral! Remember people-oriented advantages.

Michael: Yeah, that's true.

Me: Do you have anyone you know who would use your services, even for free?

Michael: I do, actually. The university lab I used to work in would use this. I still have contacts there.

Me: Wow, great! Would they pay you money?

Michael: Yes, they probably could.

Me: That's a good first contact then. What you want is you want a small initial group of customers you trust. You can charge them cheaper rates. The goal of that initial group is to get feedback, mess up, build up your confidence, and get those referrals that'll get you more business. You can then go out and do a whole lot of outreach and say, "Hey, I have customers. Here they are. My product's proven. Buy it."

Michael: I am definitely a bit scared of messing up.

Me: We all mess up at first, in different ways. I've definitely made a lot of mistakes. It's why you should start small and grow slow in this case.

Michael: I'll reach out to the university, but I'm not sure it'll happen very quickly. What else can I do to get that initial group of customers?

Me: Networking-- going to meetups, joining online communities, etc. You're fortunate in that there are a lot of meetups in your area. In your case, I think you should look for companies doing embedded work, especially startups. But it's tricky, because when you want that initial group of customers you don't necessarily want to be spreading the word super publicly and widely about your product. You want to do that once you're more confident and have those initial customers. You also want to have confidence that you can do this well, and work out kinks in your process. I'd recommend going to these events and joining these communities and meeting people and if you find someone that might be a good first customer, ask if they'd be willing to try it.

Michael: Got it. I think I have a good plan now.

Me: The key is moving forward. Move forward. You will be successful, but keep taking steps. The first step is saving up money to get that initial equipment while getting those initial customers lined up. Keep in mind that getting customers can take a whole lot of time, so it's okay to start finding those initial customers right now. Then once you have them onboard, we can talk pricing and then doing wider sales. But you know what the next step will be at least.

Michael: Yep, thank you!

Me: Great, hope it was helpful!

Michael: It was, I have a plan now and I was mostly unsure of how to make that plan and next steps. I was also worried about the cost of messing up. I feel confident now.

Me: Keep me posted, alright?

Michael: Will do, talk with you later!


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