Skip to main content

How to Start a Hardware Business and Beyond: Electronics Tips for Your Realities

Man working on a circuit board with a screwdriver


There has been a group of kids doing lawn mowing around my neighborhood for years now. It started off as neighbors and friends asking them to mow while they were on vacation, but now it has turned into a full group of six kids mowing a few lawns a day on the weekends. It is downright inspiring to see these teenagers develop a business so steadily. 

Sometimes I like to wonder what would happen if one of them needed a day off - do they have a system in place for sick leave? What about vacation time? And what if they get customers who are willing to pay more, but don’t have mowers of their own for the kids to use? And don’t get me started on if another group moves into the neighborhood and starts competitively pricing their services. 

While mowing lawns is a bit lower risk than forming a hardware startup, these same concerns largely apply. For your business, you’ll need to think about branding, client needs, and financial responsibilities. Taking an idea to a polished, packaged product is a major undertaking that will require a team of experts in several areas. But thankfully, you have access to guides that are here to instruct you on how to start a hardware business. 

Step 1: Building Your Team

If you’re building a hardware startup, you are most likely a very technical person and have a good sense of what it takes to build a new product. But you might not have experience in other areas like sales or marketing. It is important to identify your weaknesses and find co-founders that have strengths in those areas. Any successful hardware business begins by assembling a team of co-founders.

It can take time to convince someone to join your team, especially if you haven’t received funding and are operating on a shoestring budget. Convincing a business development professional to join your team early can help ensure that you don’t neglect the non-technical parts of building your startup. This will require a major investment in time on the part of your team members. 

Aside from skills and experience, the most important factor to gauge in your team members is their commitment. When you start out you will be operating on a razor-thin budget and your co-founders will probably have to continue working their day jobs. Working on the startup full-time means greater financial risk. It is generally agreed upon that founders taking more risk should get more equity.


Group of people comparing papers and sitting in a circle with a diagram overlaid

Divide company equity among founders based on risk


Once you’ve formed your team and apportioned equity among the co-founders, agreements will need to be memorialized. Potential salaries will need to be contingent on receiving funding from investors and positions within the company will need to be negotiated. This is extremely important when you register the company. You will need to think about the best legal structure of the company as well.

Step 2: Branding and Brand Development for Your Hardware Product

Branding can be difficult for hardware startups. As an engineer, it is easy to convince yourself that features and specs will make the product sell itself. Most engineers do not take marketing courses in school, and viewing a product from the perspective of building a brand may seem like a foreign concept.

Sure, some customers will appreciate the fact that your device runs leaner and meaner than the competition. But most customers are not so sophisticated. Hardware startups that forget to think about the brand image and enhancing the user’s experience can stumble when their product hits the market. Thinking about the brand and the market from day one and discussing this with your team will help ensure success down the road.

Some keys to building a successful brand will always be found in consistency of voice and image, and being aware of the audience that you are speaking to. If you’re building a better sprinkler, it’s not quite on-brand to try and market your product as if it will solve the mysteries of the universe and set up a settlement on Mars. Similarly, it would be difficult for those lawn mowing kids to try and gain customers from an apartment complex without yards. 

Step 3: Carving a Market Niche and Product Empathy

Some entrepreneurs forget to market their product with their market niche in mind, and this can make targeted marketing difficult. You want to keep the needs of your target market in mind when building your team and designing your product. In-depth knowledge of your customers’ wants and needs will inform your design and will ensure that your product is embraced by your target market.

Perhaps the worst mistake you can make is to assume that your intended customer base is just like you. Some hardware startup founders want to build products that solve a personal pain point that may not be relevant in the broader market. While applying your personal pain point to your potential customer base is a good place to start, it can limit creativity and lead to overestimation of the market size for your product.

Market research data

Learning about your customer base will ensure your success


Step 4: Acquiring Funding for Your Hardware Business

Up to this point, VC funds will probably not be willing to give you a cent until you have a reliable and functional prototype, developed a manufacturing budget, and matched your product to a real need in the marketplace. The reality is that building a working prototype based on your idea will almost always require your own investment in time and money.

Once you have built a reliable proof of concept, thoroughly tested it, determined your manufacturing budget, and developed a targeted marketing plan, you are ready to seek VC funding. Investors want to know that you have a plan for success and that their investment will help you take your proven design to manufacturing and, eventually, to market. This funding is designed to catapult your company into that critical stage of moving the product to market.

If you’re looking to start developing electronics and hardware, you’ll want to have strong circuit design software that can simulate and model your designs and their output before you get into the costly production stage. Utilizing Cadence’s suite of tools within OrCAD PCB designer you’ll be sure to get what you need to get your product off the ground. 

If you’re looking to learn more about how Cadence has the solution for you, talk to us and our team of experts