startup-costs2 years ago, I built an ultrasonic device to measure water in tanks for home use specific to a particular country. My device is the cheapest of its kind in the global market. My device costs around US$25. The competition costs nearly US$150. My device makes no sacrifices in quality of the materials used.
My problem is with manufacturing, there is no plastic factories here to build boxes for my device or PCB printing here, for that I used what I have here, and customize every box we order, and that’s take a lot of time.
So shipping things from out side is something impossible if I want to keep my device cheap.
I know people will ask me why you still want to work there anyway?! my reason is there is a big opportunity here, just imagine every home want a device, it’s need not something luxury, also I am the only one in the market. we sell everything we made very fast.
I don’t have a lot of money to bring machines or to chip big orders to make it cheap, My company moving too slow, It’s not a big profit, and I can’t put other price on my products, It’s not acceptable from people, so my profit around 4$ on every device.
I am lost, and really need a big advice here
It seems like you are facing a scaling problem and it is something many small businesses face as they grow. The solution is two step. Figure out what you need to scale to solve your problem and then figure out how to achieve that scaling
What needs to scale
a. Convince someone else to go into the business. Since there is nobody doing it, and there is a demand (your startup being an obvious customer) convince a friend or a business to make a custom plastic parts business in your area. You can commit orders to him and even partner with him to get a cost advantage
b. Make boxes yourself using molded plastic. Plastic boxes are not hard to make. If you get the raw materials, you can use vacuum forming and use thermosetting plastic to make cheap and easy parts. (Look on youtube for vacuum forming.) If you want more professional ones, you can look for a used or small injection molding machine
c. Make boxes yourself from pieces. You can make the boxes by gluing acrylic pieces together as well. Or you can use a material other than plastic that would meet your requirements that is easier to work with.
Resources for scaling
Labor - In many parts of the world, it is feasible to substitute machinery with labor at least in the small scale. If your volume requirement is small and labor is cheap and available, you could hire extra workers to to help you make these parts.
Raising capital for scaling
If you require new investment to scale, do a cost study and find out how much you need to raise to accomplish your scaling requirement. Remember you want to scale to keep up with realistic sales forecasts or market demand and you do not want too much extra capacity which would lay idle.
If you require capital for hiring more workers or buying equipment, then you could
a. Raise capital through equity - You can raise equity capital by investing more money into the business from your own pocket. This way, you keep your share of the business. If you are unable to do so, you can try to bring an investor for a percentage share of the business
b. Raise capital through debt - The easiest way to get debt financing is through a loan. You can see if your friends and family is interested in giving you a loan. You can also approach the government business development boards or a commercial loan. Look for interest free loans and grants. Remember if you are unable to pay back the loan, you could lose your business.
c. Mixed mode. You can combine your capital requirement with part equity and part debt.
Things to keep in mind.
Scaling organically or scaling as your business grows by reinvesting profits is the best way to scale as you do not have to go into debt or loose ownership stake of your company.
As long as your product is functional and meets the customers needs, it does not matter how your product was made. The customer is not going to know or care if your product was hand made in your garage or if it was made with million dollar equipment in a state of the art factory as long as the product works and meets the customer’s expectations
Make sure you make a profit. An important factor that goes along with having cheaper products than the competition is whether you can make a decent profit selling cheap. If you cannot make a profit, your business would not be able to grow and sustain itself, and sooner or later, competition with more capital can come in and remove you from the market.
Be realistic of your market assessment. Lack of competition may also mean that others do not think they can make a profit in the market or they maybe seeing inhibiting factors that you have missed. Be thorough and prudent in your assessment.
It sounds like you have 3 issues:
Commitment - Being an entrepreneur is hard. You’ve got to believe in what you’re doing, even with the whole world against you. If you don’t believe, and you can’t find it in yourself to believe, then you’re going to have a hard time succeeding.
Pricing - You say, your “customers wont accept it”, but you also say that your competitors are $125 more expensive than you. Those 2 things are at odds. If your competitors are that much more expensive and this is a necessity product (not a luxury product), then your customers have to accept it! Raise your price.
Cash - Don’t know enough to address.
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