9 Lessons from a Design Entrepreneur
Sometime in 2006, I decided that if I were going to be designing commercially successful products and strategies, I would need to know what it is really like to run a business, a business that would rely on the type of products and strategies that I would come up with.
Not only that, if I was going to run a business, I knew I would have to bootstrap it. By investing my own hard earned savings into my business, I could better understand the pain my clients felt whenever they spent their money on my ideas or on me.
So why am I writing this?
Firstly, I strongly believe in learning by doing. Therefore I do encourage those that would like to be similarly enlightened to take that step into design entrepreneurship. However design entrepreneurship is hard, so I though it might be a good idea to share some of my (painful!) learning experiences here on Design Sojourn.
Secondly, the feedback I got after running an informal poll on whether I should start a site on design entrepreneurship, made me realize that many of you are interested in design entrepreneurship.
Thirdly, with the large number micro financing or crowd-funding sites on the Internet such as CKIE etc, the financial barriers of entry for product development have never been lower. It is now all about hard work, good design, and great ideas.
So here are some of my thoughts on life as a design entrepreneur. Oh, do consider getting a cup of coffee before you read my article, as it came out longer then I expected!
1) Expect a Huge Learning Curve
One key skill that a design entrepreneur needs to have is the ability to work with or leverage on partners to get the job done. Fortunately, most designers are actually well equipped to be design entrepreneurs as they have the ability to empathize with non-designers and also wear many hats.
The difference here (and this is where the learning curve bit in) is between owning the process and working within a process. Design is only approximately 20% (or less) of the entire product development process. And when suddenly you have to make the calls for the other 80% of the process, things get hard very fast. Once that happens, many other factors such as confidence, initiative, and knowledge come into play.
The good news is that starting out in design entrepreneurship can be done relatively risk free. You can easily work on your personal design projects in your spare time, rather that quitting your day job to do so. Once you have brought your design into the market, stabilized your development and process issues, you can then decide if you want to be a design entrepreneur full time.
2) Designing for the Retail Shelf
Unless you sell your product exclusively online, your will probably need to consider making sure you design works in a retail space. Many designers forget that designing for retail is almost as crucial as designing for the product itself. Designing for retail can be a whole different ball game, and often what is good for retail may not be necessary be good for the product or customer. The best designers will need to make sure they can find a good balance between the two.
Here are a few tips to get you going. Is your design good enough to stand out after you apply the 3-second rule? Is your design easy to understand or use when the customer engages your product superficially? Is your design durable enough to withstand the wear and tear of retail? Does your design radiate the value of the product or communicate it clearly enough?
3) Be a Quality Hound
Rightly or wrongly, I was completely obsessed with perfection and in making sure every product was as close to my ideal specifications as possible. Needless to say my behavior drove my suppliers and manufacturers crazy, even though it was necessary to ensure that every product was up to standard. My activities included 100% inspection runs on all production pieces. This was a very tedious affair especially when having to check the quality of thousands of products.
Every piece you throw away is a waste of money, and as I’m self-funding this project, the money could have been used for other things like lunch with the family. Just make sure you are upfront with your manufacturer on your target percentage of waste per production run, so that they would know the quality levels you expect.
This is something that many designers may not be used to, as many never have to worry about the details of their product’s quality requirements. Much of it is institutionalized and designers often just need to give the once over and then defer to quality engineers to resolve problems. This is logical as many quality issues stem from production problems. So design entrepreneurs will need to be prepared to take over the work of quality engineers, and to also be prepared to pay the price for constant vigilance.
When dealing with quality issues, there is something I like to call “perception bias” that needs to be managed. Perception of what is good quality differs from designer, manufacturer and consumer. Designers often stand at the end of the strict quality scale, with the manufacturer at the other end of the relaxed quality scale. Disagreements happen when both the designer and supplier have different views on what they consider as good quality. The best way to align quality perceptions is to look at the consumer and determine what they view as good or good enough.
4) Love your suppliers
I have found that your suppliers or vendors are key to your success. Despite recognizing this, companies still treat suppliers as…well…suppliers, by squeezing them for better profits and shorter time frames while often forgetting that they have a business to run as well. On the contrary, by creating a win/win relationship with your suppliers, you will gain a longer-term advantage instead of shorter-term profit gain.
However, don’t make the same mistake I made by liking your supplier too much. I found myself trying to find ways to work with a particular supplier that I liked and had built a long-term relationship with. I was even willing to compromise my design because they could not achieve what I wanted! At the end of the day, this is all about business, and if it does not make business sense, perhaps it is time to look outside of the box.
5) Budget, Budget and Budget!
The one big things I learnt about self-funding my projects, is that success is all about how you manage budget and control cash flow. On the flip side, designers love to tell the business that the extra cost you put into a design can justify its selling price. Sometimes this is true, but if you don’t put on your pragmatic hat, it will spiral out of control and so will your profits. I always remind myself that having limited resources forces me to make very hard decisions on what is important to the end consumer.
Once you have set your budget, you have to stick to it. If not, it will be a moving target that will make running a business difficult. For example, I put my Spaces for Ideas: Collection 2 on hold as I was not able to meet my budget and cost targets. Pushing the project forward would have put my company in great financial risk.
All that being said, don’t forget that it is also very important for you to figure out what your ROI or return on investment is going to be. Or at the very least how many pieces you would need to sell to recover your cost.
6) Pricing is a Science and an Art
It would be a good time now to touch on one of the hardest thing to figure out as a design entrepreneur, how to price your product.
There are a lot of things to consider when you are working out your pricing strategy. They include: Will your customer be able to afford your price point? Is the selling price high enough to make you enough profit? Is the pricing flexible enough for you to give discounts during a sale? What about wholesale pricing? What about standardizing your pricing across your various distribution channels? Then how does everything reflect back to recovering your initial investment? (See previous point.)
Here is another tip on pricing; you make money when you sell your product. While this sounds rather painfully obvious, it is a subtle change in mindset. If it’s anything I’ve learnt from the best Marketing minds I’ve worked with, we need to adopt a market-in approach to find the price points where consumers will bite. Despite this many people still make the mistake on focusing on cost plus pricing strategies, rather than working backwards to the cost after achieving the right price vs. product offering.
7) Having Inventory can be Bad
I quickly learnt that excess inventory is the enemy of profit. A lot of designers don’t actually get much of a chance to experience the actual physical space volumes of completed product take up. Trust me, I have sketchbooks in every nook and cranny in my home!
If you are not selling your products fast enough, not only have you locked down your investment into a product, you would likely be paying extra for storage space. I’m lucky to have a good friend with a spare room to house the rest of the sketchbooks I can’t fit in my home.
If managing inventory is not easy, stock take is even harder. Throw in being a quality hound; you have a nightmare in the making. Just imagine having to unpack, check, and repack every product you ordered, 100% of the time! At the end of the day, if you can get your inventory under control, you can achieve good cash flow management. And the best way to do this will be explained in our next point.
8) Strive for Creative Manufacturing
The whole concept of manufacturing is all about economies of scale (volumes) and repeatability. When that happens, the process we have to adopt is one that requires structure and standardization. So with that in mind, the term creative manufacturing is a rather obvious oxymoron, as it is all about allowing flexibility, such as color or materials options, during the process of manufacturing. These days as designers push the boundaries more and more to create exceptional work, creative manufacturing will become a vital enabling factor in allowing designers to do what they do.
The other thing about manufacturing is that big is not always better. While the big boys often have the right machines, quality processes and speed, they often have their hands tied up in terms of overheads, flexibility and costs. Therefore, depending on your design, working with a smaller manufacturer could be a better option for you. Smaller outfits have the flexibility and perhaps are more willing to try something different. However smaller manufacturers may not be as up to date with the latest skills and equipment or lack organization and a strong process. This could impact response time and consistent quality.
9) Don’t take no for an answer
At the end of the day, success is all about finding the right balance of all the points we have discussed and also a never say die attitude to keep pushing and finding for the most ideal circumstances for your business.
After painfully deciding to put Spaces for Idea’s second collection on hold, I took time away from the project and regrouped. By taking the project off my development cycle, I actually gave the project some space to breath and time for more ideas to mature.
After a break of a few months, I quietly started talking to people about the project again. I also had some time to really reflect on what the problems were and how I could find a solution around the problems I had. I realized that to make the second collection a reality, I had to slaughter some sacred cows such as moving on from a well-loved supplier and reconfiguring some long held notions of manufacturing processes. Sometimes we can be our own roadblock. Just don’t take no or impossible for an answer and find creatives ways around the problem!
With that being said, I’m very happy to re-launch the Spaces for Ideas Collection 2. It has been a tough and bumpy road with many challenges, some of which inspired this article. This collection consists of a new look Story Book that has been redesigned from the ground up, and an Elastic Bookmark made from new materials. Check out the photos of rough prototypes below! The Iteration Book, introduced last time, is on hold and may be launched as part of Collection 3.
Click for a larger image of the prototypes!
The Story Book and its matching Elastic Bookmarks are made from 3 different 280 gsm colored (Yellow Cream, Chocolate Brown and Deep Blue) material. The 20-panel accordion fold is available with black (120 gsm) and white (140 gsm) paper. The paper in each book is intentionally heavier to create more structure in the accordion fold. It is also lovely to draw on. This new design has a modified hand made manufacturing process that allows flexibility by having a range of different cover colors and paper.
As production has already started, I’ll try to have pictures of the first production prototypes as soon as I can get my hands on them sometime at the end of this week.
Click for a larger detailed image of the prototypes.
So what to you think of this article as well as the newly revamped Spaces of Ideas Collection 2? I would love to hear your feedback and thank you in advance.