How to start a home business (for Electronic Engineer)

[Icarus]

Hi folks;

I wonder what is the best choice for EE to start a home business (or a no budget business) ? Or what should I do to obtain market information ?

I'm good with technical stuff but I've zero knowledge about how to sell things or what should I produce ? provide services ?

I humbly request your guidance

[dr.diesel]

In what aspect, complete design of widgets, software, etc?  Do you have any qualifications, related experience?

[Icarus]

I've technical experience and qualifications. BSc in Physics and EE. I designed mostly embbedded systems, high speed systems and a little bit of RF

[rx8pilot]

You have to start with an idea, not the desire. Then analyze the idea for business potential. Next, figure out if it is pracrical for a one-man-band to operate.

Sent from my SAMSUNG-SM-G890A using Tapatalk

[free_electron]

do you want to create your own products, IP and sell that ?
or do you want to be a for-hire designer. Meaning someone has an idea for a product but does nto know how to build the electronics that is needed. ?

First case is hard ot scrape a living. prepare for long hours long days lots of years to stamp out something successful and not get your lunch eaten prematurely.

second is equally difficult. prepare for annoying customers that do not know what they want, its always too expensive, have unreasonable demands, so you get to spend long hours, long days ...

[KJDS]

First, work out how you might get customers, real ones, with enough money to pay you well. If you can't work that out, get a real job.

[rx8pilot]

do you want to create your own products, IP and sell that ?
or do you want to be a for-hire designer. Meaning someone has an idea for a product but does nto know how to build the electronics that is needed. ?

First case is hard ot scrape a living. prepare for long hours long days lots of years to stamp out something successful and not get your lunch eaten prematurely.

second is equally difficult. prepare for annoying customers that do not know what they want, its always too expensive, have unreasonable demands, so you get to spend long hours, long days ...

I have personally experienced both of those cases in both mechanical and electrical engineering and manufacturing. For the moment my business is focusing on a single product family for a niche industrial market. I just woke up this morning after having to do a 30 hour day. Yes, 30 hour day. Right now, my big push is automation, automation, and more automation to prevent the ultra-long days but that is nearly its own full time job on top of everything else. Phone calls, emails, website, trash cans, deliveries, bill paying.....all keep me away from the 'real' job until about 6 hours into the day. At that time I can begin work on whatever design or manufacturing task needs to be done. I could probably write a 1000 page book on my 10 year experience of starting and operating a small manufacturing business - but of course there is no time for that.

In the end, I would not trade it for a real job. At this point I have made myself unemployable because I can't work with anyone that is not capable of doing 1- different jobs. It is really nice to not have to commute, in my case that saves about 1.5hrs per day. I have my 'system' that no one will question or mess with. Lots and lots of good reasons. My average income is not bad when you look at it over large spans of time, but it is VERY dynamic making it difficult to plan anything. When I have a big inrush of work, the only option is to put the money aside to cover the inevitable slow periods.

There is good and bad in starting your own home based business. Of all the people I have known in my entire life, VERY few of them would be willing to put in what it takes to make it happen.   

[rob77]

First, work out how you might get customers, real ones, with enough money to pay you well. If you can't work that out, get a real job.

couldn't agree more with KJDS above. the PAYING customers (actually well paying) are the essential part of any business. don't fool yourself with "they will come later on"... they won't... either you have customers from the very beginning or your business is doomed in it's inception.

[rx8pilot]

This is true. For my efforts, I already had the customers attention from previous businesses that I started. I contacted a few and told them what I was planning and they were receptive. on nights/weekends I made a few prototypes of simple stuff and they were well received. Over time, I learned more and created more sophisticated stuff and eventually made the leap to being a full time gig. It was slow, difficult, and scary.

Without the initial customers working with me, I would have moved on.

[tggzzz]

Understand what your customers need in order to satisfy their customers, and then explain to your customers how you can help them satisfy their customers. You have a 30s "elevator pitch" in which to get them sufficiently interested that they want to hear more.

Also, have a look at http://hardware.slashdot.org/story/15/09/04/202244/brady-forrest-talks-about-building-a-hardware-startup-video

[marshallh]

Get customers first, then start the business once you need to do so for paperwork.
I wouldn't even bother unless you have people you know first. In my case it was a result of word of mouth/friends and networking.

[nctnico]

Get customers first, then start the business once you need to do so for paperwork.
I wouldn't even bother unless you have people you know first. In my case it was a result of word of mouth/friends and networking.

That is one way of doing it. The other way is finding a niche in the market, put a sales team and an engineering team together and work from there. Takes a lot of cash but the more serious businesses which sell a product get jumpstarted that way. Actually the engineering part isn't something you need 100% in-house. A lot of companies outsource that to smaller (single person) companies. I have several customers who only do sales and production. Engineering is outsourced completely.

[John_ITIC]

I have had three careers:

1) Professional EE employee.
2) Professional SW/EE Consultant.
3) EE Product development and sales.

1) Is absolutely the easier path if you already have a degree and experience. If you like to work with other people, don't mind having a boss, don't mind a fair amount of needless meetings and some overtime then an employer would pay more than you likely can make yourself in option 2 or 3.

2) Requires marketing and sales skills in addition to the technical skills. Introverted engineers with zero people skills would not do well here. You manage your time yourself and will likely work harder than scenario 1 for not much more money overall. It is really a choice for the "free mind".

3) Absolutely the hardest option. Successful businesses are not technological driven but marketing driven. Apple would not have happened if Steve Wozniak would have been in charge. Steve Jobs made it happen. Any business is about selling, hustling, people skills (again) and, sometimes, having an unfair advantage. Any business success is a result of its marketing, not what it delivers.

If you have no clue then start reading some books about marketing. A lot of boos are too theoretical so I like this guy:
http://www.amazon.com/Dan-S.-Kennedy/e/B000AP7EBS/ref=sr_tc_2_0?qid=1441402755&sr=1-2-ent

[rx8pilot]

Get customers first, then start the business once you need to do so for paperwork.
I wouldn't even bother unless you have people you know first. In my case it was a result of word of mouth/friends and networking.

That is one way of doing it. The other way is finding a niche in the market, put a sales team and an engineering team together and work from there. Takes a lot of cash but the more serious businesses which sell a product get jumpstarted that way. Actually the engineering part isn't something you need 100% in-house. A lot of companies outsource that to smaller (single person) companies. I have several customers who only do sales and production. Engineering is outsourced completely.

Putting a team together up front MASSIVELY increases risk. Outsourcing engineering at the beginning is a MASSIVE risk. I have unfortunate tales to tell on those topics.

For one of my companies, I needed a lot of CNC parts to be prototyped and then made in modest quantity. Sounds simple enough to get SolidWorks files over to a CNC shop and start cutting right? Not so fast. To get the part you are expecting you have to define every detail by making manufacturing drawings. Then you have to wait until the CNC shop has time for you. Next, they have to program and setup your part which is slow and expensive. They will program it in software that you don't have so if you need to make changes, it is a total pain in the ass followed by a discontinuity from what they are making and what you have designed. When the part comes back, it may or may not work because of a design problem or a CNC problem. After a few phone calls and emails, you have to drive to their shop with all the mating parts to figure out how to fix it. That will be followed by re-programming the new and improved part and machining it. It will go on and on until you run out of money or time or both.

If you are outsourcing the engineering, the engineer will blame the CNC guys and CNC guys will say they did not have accurate information. This example has many parallels in electronics as well - which I have also learned the hard way. When I started the mechanical design business - I purchased a CNC mill on the first day. I had no idea how to even turn it on, much less make a useful part. A couple of long nights a few broken tools later, I was machining what I wanted, when I wanted it. It was slow and inefficient at first, but overall much faster than outsourcing to the fastest shop on earth. At the end of the first year, I had prototyped about 200 parts or so and did small batch production on about 75 of those. The estimated bill for all that would have been more than I paid for the CNC and all the associated expenses that go with it - including the building I was renting. The more valuable part of that decision was that I learned how to design for the CNC process in detail. After that first year, I had flown far beyond all the other engineers that I worked knew because they only knew one single skill. On paper, they may be much smarter than I, but I can run circles around them because I design and manufacture with the same hands. I don't have to document or communicate anything to anyone - I just think of the part, design it, and machine it. Done. Easy. Fast. PROFITABLE! Low risk.

As things progressed, I continued to learn. The company got two 5-axis mills, advanced software, tools, etc. At that point I could make anything that a mill can make. That is when I sold them - goodbye CNC's. I know how it works and now can effectively outsource my parts. There is no machine shop that can tell me anything about how much it should cost, because I already know and the parts were designed with specific tools in mind. If I outsourced from the beginning (i tried) parts take forever and I am at the mercy of the generally poor suggestions the machinists have.

That became my strategy as I transitioned into electronics as well - learn as much as possible. I had hired a couple of EE's and the experience was not good. I did not know how to lead them because I only knew electronics at a hobby level. They were slow and expensive just like the CNC shops making the metal parts. When something was not going well, I could only listen to whatever reason they came up with and wait for them to figure it out. I decided to get rid of them and dive into electronics head first with the goal of integrating it into my career. Like the CNC shop, the learning curve has been steep and continuous. After about a year, I produced my first commercial product. The flood gates opened after that. I had learned to design, PCB layout, assembly, test, etc. Again, I did not have to wait on anyone for anything. Now that I have some experience and a few products under my belt, I can now outsource effectively. I know how and what to communicate.

The point is, outsourcing is not easy at all and a very expensive way to start a business. You may or may not get what you want, but you will definitely spend the money. My strategy of starting small and inching my way up works as the slow and steady method. I did not have much money up front and wanted to ensure short term survival and long term success.

Starting a small business where you have ALL the skills to go end-to-end is my recommendation. Build a foundation and get a head of steam before hiring people and outsourcing engineering.

[nctnico]

I don't have to document or communicate anything to anyone - I just think of the part, design it, and machine it. Done. Easy. Fast. PROFITABLE! Low risk.

That became my strategy as I transitioned into electronics as well - learn as much as possible. I had hired a couple of EE's and the experience was not good. I did not know how to lead them because I only knew electronics at a hobby level.

But all this doesn't scale very well. Finding someone you can work with can be hard though. Over the pas decades I have outsourced all kinds of jobs (manufacturing, programming, mechanical, etc) and the trick is to make someone responsible for a part of the system instead of letting them make one single component which -to put it bluntly- needs to fit in a hole. That just doesn't work. But you have to have the ability to convey your requirements clearly AND have to allow yourself to gain the trust someone else can do the job as good as you can or even better.

[wagon]

About 9.5years ago my wife and I decided to start a repair business, specialising in automotive electronics.  It soon grew, but the amount of automotive stuff I do now is probably 10% of turnover.  It's been a hard slog  for years and still is, but it's a lot better.  Once people know about you, they will seek you out if you're any good. People talk to people.  I too try to do as much as I can in house.  Keeps my profits up and gets things done much faster.  Do your homework first and be prepared to do it tough sometimes.

[rx8pilot]

But all this doesn't scale very well. Finding someone you can work with can be hard though. Over the pas decades I have outsourced all kinds of jobs (manufacturing, programming, mechanical, etc) and the trick is to make someone responsible for a part of the system instead of letting them make one single component which -to put it bluntly- needs to fit in a hole. That just doesn't work. But you have to have the ability to convey your requirements clearly AND have to allow yourself to gain the trust someone else can do the job as good as you can or even better.

There is no question this does not scale - it is the starting point which it the thread topic. There will be nothing to scale if the business never starts. Learning CNC machining and electronics design is only a means to an end. The end is have a super sharp team that is effective at making what I envision. They can be staff or outsourced. Now that I have a foundation that can survive on it's own - I am now looking to outsiders to help. Without knowing those other skills I would never know if my contractors were good or not. I have met a lot of people that can eventually get the job done - but too slowly. Others, just can't get it done, but I would not know if I asked for something impossible or I just hired the wrong person to design it. Now I know. I can pick the winners out of a crowd and hire them when needed with the security of a good informed decision and a business that can stand on it's own without them.

Working out of my house saves TONS of money. Being willing to do anything and everything makes my business profitable where a shop with a few employees would be an immediate fail. Super flexible to deal with the ups and downs of a normal business cycle.

[wagon]

Working out of my house saves TONS of money. Being willing to do anything and everything makes my business profitable where a shop with a few employees would be an immediate fail. Super flexible to deal with the ups and downs of a normal business cycle.

I wish sometimes I had the room to work out of my house.  The overheads kill profits.... BUT it gets me away from work when I go home.  Swings, roundabouts.

[free_electron]

As things progressed, I continued to learn. The company got two 5-axis mills, advanced software, tools, etc. At that point I could make anything that a mill can make. That is when I sold them - goodbye CNC's. I know how it works and now can effectively outsource my parts. There is no machine shop that can tell me anything about how much it should cost, because I already know and the parts were designed with specific tools in mind. If I outsourced from the beginning (i tried) parts take forever and I am at the mercy of the generally poor suggestions the machinists have.

That is possibly the BEST advice i have ever read !

Before you embark on something , make sure you know what it takes. If you don't : prepare to get ripped a new one each and every time !

Many times i have seen situations where, an inexperienced company or person , tries to get a board made and pays through the nose. Simply because they do not know what the real costs are and how the industry works and what the limitations are. The fabs won't tell you because their large income is form the rush jobs. the mass volume jobs are not really profitable and it's a dog-eat-dog world. Want a rush job, they'll be all over you like flies on shit if they smell you are clueless.And you'll end up the turd ...

The same goes for mechanical stuff. Knowing how things are done and applying small tweaks can save you tons of money. And, when in negotiations or talk about a contract you can immediately find out if they are screwing you or not.

A frriend of mine needed a mold made for a simple hinged piece of material. The injection molding company ordered an expensive mold. and billed them for machine time.

Modifying the design just a tiny little bit made the mold much much simpler and the injection time halved. When he confronted the molding company with that their answer was : we are not in the business to teach people mold making or injection molding.
We are in the business of delivering you what you ask on time at the best price. If you ask for something difficult we will still give you the best price for the difficult bit , but we will not tell you how to make it in an easier and cheaper way. That would be cutting our own throat...

And that is the same in EVERY industry.

Make sure you are familiar with production processes and technology , even if it is not your primary activity. just know the basics. Try things out for yourself. follow a few training courses, read literature, get field-specific magazines. talk to the machine operators.

just walking into a company asking them can you make this ... is a sure way to get screwed.
walking in a company telling them : i want this made , so and so , with this process (and with a good idea of the price in mind)  will yield a completely different result. Your contractor will go 'damn this guy knows about technology , we better not muck about , he'll know if we try to BS him.

I will give you a real life example.
When i moved to SJ , the division over there did their own design of the PCB and used an inbetween company to have the boards made. this inbetween company used various fabs and you never really knew what fab the board came from. This inbetween company mucked around with your designs to get them run in the cheapest fab. sometimes they would add copper thieving ( on 4GHz boards ? not allowed ... ) , sometimes they would change the layer stack or pick whatever dielectric they had laying around.
once they made me a 3 layer board ... cause they didn't realise there was one plane in there and did not read in the gerber for that plane... once the gold flash was so thin you could rub it off by swiping your finger across the board..

Their prices were outrageous, but nobody in that division knew any better. I had made boards with several fabs before. when i confronted them with their outrageous prices they were pissed off beyond belief.. they had to cut their prices in half !

Another situation was about a year ago. I needed a board with laser via's and 3mil track and gap. The company was going to have these boards made in a local italian shop. 50$ per board... That sounded a lot to me. I was going on a quest to find out more. i called a few of my 'old' board houses in europe. one of them gave me a strrange reply.: "is this the board for your italian division ?"
euh, yes .. why ? oh we have had requests from your contractor xyz to build this for them. this is the price.

so contractor didn't build that board. they didn't even have the machinery to do it so they, in turn , subcontracted it further, without letting us on. They had already made price negotiations...

I had a friend of mine , using a different company address place an order for a similar board using the same technology. HALF price !!!

i confronted them with this .. the answer was : well there is only really two companies in europe that can run this board as it requires machine xyz and there are only two of these in europe. ( maskless imagers )

So i called around here. in a radius of 20 miles there were 5 board shops that could make my boards ... 12$ was the cheapest , 14 $ the most expensive. The european board houses asked  25$ since only they had the equipment and knew you could go nowhere else. our subcontractor billed us 50$ ...

needless to say several heads rolled ....

It pays to know the industry you need services from ...

[Psi]

 - First.. Product ready to sell
 - Second.. Business to sell/make more

Don't get too caught up thinking you need your product to be 1000% perfect before you start selling it.
A lot of engineers get into the mindset that they are going to have 100's of angry customers unless their product is perfect to start with and it's just not the case. (typical perfectionist)

Of course it does need to be priced well, if it's really expensive people do expect it to be up to that level of quality.
Luckily, if you start by getting your product working as your hobby doing most of the work yourself. Then you usually have the ability to sell it quite cheap compared to your competition due to having almost zero costs other than parts. And you can still make a good profit.
The only thing you don't have is the ability to make is large quantities. So you need to find a product that sells in the $200-500 range rather than trying to sell lots of $20 items.

You will always get a small amount of people who do stupid stuff and complain but the vast majority of people can work past minor flaws or those useful features that you haven't yet implemented.

Oh and finally, good customer service goes a long way to getting you more business

[Icarus]

Thank you very much for enlightening me.
But how do you discover niche market ? Audiophile market is filled with products, Fire detectors/alarms requires a lot of certification and filled with all kinds of things. In UPS/Power electronics, research is expensive and risky and price is very competitive. People don't care about efficiency but price. In LED lighting, money goes to LED manufacturer
What do you think ?

[fivefish]

But how do you discover niche market ?

Some niches:
Telemetry box... for the wanna-be rice boys, too fast too furious, car nutz, drag racing crowd
UAV, robots, toys, remote controls... for the big boys that still want to play with toys
photography, film, digital video... for the wanna-be film makers, photographers, time lapse obsessed
test equipment, standards/reference... for the measurebators, doing it everyday
potted plants, gardening, lawnmaster... for people obsessed with lawncare, gardening
solar, wind, ups, dc-to-ac.... for the doomsday preppers, greenpeace loving crowd
flashlights.... I don't get it... but yeah, some people are obsessed about stupid flashlights!

[nctnico]

As things progressed, I continued to learn. The company got two 5-axis mills, advanced software, tools, etc. At that point I could make anything that a mill can make. That is when I sold them - goodbye CNC's. I know how it works and now can effectively outsource my parts. There is no machine shop that can tell me anything about how much it should cost, because I already know and the parts were designed with specific tools in mind. If I outsourced from the beginning (i tried) parts take forever and I am at the mercy of the generally poor suggestions the machinists have.

That is possibly the BEST advice i have ever read !

Before you embark on something , make sure you know what it takes. If you don't : prepare to get ripped a new one each and every time !

Many times i have seen situations where, an inexperienced company or person , tries to get a board made and pays through the nose. Simply because they do not know what the real costs are and how the industry works and what the limitations are. The fabs won't tell you because their large income is form the rush jobs. the mass volume jobs are not really profitable and it's a dog-eat-dog world. Want a rush job, they'll be all over you like flies on shit if they smell you are clueless.And you'll end up the turd ...

The same goes for mechanical stuff. Knowing how things are done and applying small tweaks can save you tons of money. And, when in negotiations or talk about a contract you can immediately find out if they are screwing you or not.

There is a very simple trick to avoid all this: a cost driven process. A product only sells if the price is right. From that price you can determine the cost of the components. So if you outsource something you get quotes first. If they are over budget then you tell the supplier how much it may cost. That is how it works in the real world. But that is only for volume production. Who cares about the cost of a one-off board? The time you lost by looking for different vendors, getting your bosses all upset probably cost more than the savings.

[EEVblog]

You have to start with an idea, not the desire.

Yes, this.
Find a product niche that no one has filled, or isn't filling with a decent product.

[EEVblog]

Thank you very much for enlightening me.
But how do you discover niche market ? Audiophile market is filled with products, Fire detectors/alarms requires a lot of certification and filled with all kinds of things. In UPS/Power electronics, research is expensive and risky and price is very competitive. People don't care about efficiency but price. In LED lighting, money goes to LED manufacturer
What do you think ?

Do you have any areas of personal interest?