There are literally dozens of considerations for entrepreneurs, small business owners, and others to think about when starting up a new company. One of the most important questions is: “What tasks need to be accomplished within the company, and which can/should be hired out?” As it relates to design and engineering for consumer products and other industries, there are generally three options. Let’s discuss:
What are the options available to startups who need design and engineering skills?
As anyone who has started a business knows, staffing your organization with the right people is the keystone of making a product or service succeed. It can be difficult to find the right people for your culture who also have the required skills (or the ability to learn them quickly). When this happens smoothly it can be a great boon for the startup. When it doesn't, the effort can turn into a major bust. What are the options available?
- Go through the hiring process. Ever wonder how you bring someone into the company? Hiring people means legal liability. The employee's salary is just the beginning of the expenses you'll incur by bringing them onboard. On top of wages are major items like payroll taxes, benefit expenses (healthcare, 401K matching, stock options, etc), and different rules for technical items like exempt and non-exempt employees. It is no small thing to hire full-time employees...especially those with sought after skills. Is your startup in a position to be offering the kind of salary or regular wages you'll need to draw these professionals away from their other opportunities? Also consider the major investment you'll be making in a new employee. What if this person decides to quit three weeks in? Forgetting money for the moment, consider the investment you'll make in time just finding and getting them in the door. Will you use an agency, post the job online and scour through thousands of resumes, or work your referral network? What can you offer your future employee to incentivise them? Make sure you consider current and forecasted sales. Do you have enough to justify a hire? If not, do you have sufficient financing? If so, for how long? Staffing and sales can be a chicken-or-egg scenario for many startups, and for this reason, it might be a good idea to consider other options when hard to find reliable design and engineering skills are required.
- Subcontract the work to freelancers. Rather than hire a full- or part-time employee, some startups contract work out to W2 workers, freelancers, or contractors. While you may find more competitive pricing or flexibility when working with freelancers, this method of talent acquisition is not without its shortcomings. Issues that may arise include uncertainty surrounding ability and reputation, task and time management problems for off-site (oftentimes less accountable) workers, and difficulty coordinating effort across a cross-functional team. What if a freelancer hired by your startup inappropriately uses a competitor’s intellectual property when designing your product? Who is ultimately liable? It is probably a good idea to have well-written contracts and liability insurance established before you jump head first into development. Or, consider the third option.
- Establish a partnership with a team of experienced design engineers from an established firm. A third alternative is to subcontract all of your design and engineering projects to a design and engineering firm. As business partners, your startup is not liable to provide benefits or pay payroll taxes, but you get the benefit of continuity, teamwork, and trust gained over time. Another benefit is that a design and engineering firm will most likely have a variety of engineers with diverse backgrounds and an established track record of reliability. It's really important to know you can count on your people and oftentimes paying a little more for a professional firm is the best money you will spend. Lastly, outsourcing your work to an engineering design firm enables you to focus on what’s even more important: how to manage and grow your startup. Letting design and engineering experts handle the technical components of your business is an effective division of labor that leaves you with peace of mind.
Creative Mechanisms has a proven track record of helping businesses & entrepreneurs succeed - let us help your startup, too.
We have put a talented team of design engineers and problem solvers together to create elegant solutions to complex problems for our clients. In fact, many of our clients are repeat customers, testifying to the benefits of partnering with a good design firm early on. For example…
- “Tony helped engineer several products for me always on time and on budget. In every project, Tony and his team always made our product significantly better through smart suggestions and clever approaches to design.” Jeffrey Slater, Nomacorc
- “We save our toughest projects for Creative Mechanisms. They understand our business and are pros at utilizing their technical creativity to consistently deliver effective and producible 3 dimensional mechanisms from our 2D designs. They literally translate our ideas into reality.” Senior Design Director, Mattel
- “Tony has constantly delivered exceptional New Product Development for my projects while I worked at Tyco Toys, K'nex Construction Toys, Maclaren Juvenile Products, Disney Toys and Jakks Pacific Toys covering almost 20 years.” Peter Santaw, multiple companies
If your startup requires design or engineering skills, consider whether Creative Mechanisms might be a good partner to send your work to. Please reach out to us if you have any questions, or would like to pursue a partnership together.