limited production :: hand crafted :: high performance :: rechargeable :: premium flashlights

This is my blog about creating a startup LED flashlight business. I'm a designer, fabricator, and strategist and I'm passionate about making ideas real. I believe that products are about people, that they should be built to last, deliver real value, and that we need to do a better job than we have in the recent past.

Most of my career has been contract or freelance work and I've crafted products and strategies for both big international companies and startups. I also used to work in the "industry" fabricating special effects for film and TV, along with the occasional hot rod. Bottom line, I love making things.

I'm starting this blog so you can follow along, from day one, and see what it's like to start a business, or fail in the process. Only time will tell, but I hope you find this interesting enough to stay tuned, comment, link, like, tweet, and (most importantly) participate in turning this idea into something tangible and valuable.

For a good place to get started with general info about who, what, why, etc., check out the "Stickies" on the left side of the page. Thanks for stopping by and please don't hesitate to ask questions and get involved!

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Thursday, March 3, 2011

infotuners Question Answered!

infotuner said...
"how are you keeping track of all of the automated machining operations as well as manual operations, jigs and fixtures and setup steps, bill of materials, tooling requirements and most efficient order of operations, labor and materials budgets, and the like so that you will be able to do things such as: properly price your end products while accounting for and allocating all of your costs (so that you are not operating at a loss or break-even), making sure that you can remember how to replicate the work that you've done with one batch on subsequent production runs (so that you don't have to 'reinvent the wheel'), figuring out what operations are most "expensive" in time or effort or materials so that you can simplify or improve them, keeping track of suppliers and placing orders with sufficient lead times while optimizing economic order quantities, and so on."

Whew, that really illustrates the complexity well :) As such, there is no simple answer...but I'll give one anyway. Answer: Your tolerance for ambiguity will tell you how fine the teeth on your comb should be. It seems like you have a much better grasp on what is actually involved in implementing something than most people do. The first step in this process is to be aware of the scope. Little details like lead time and product availability can make things really hard. (See one of my previous posts). When you start implementing, even the most simple things get complicated quickly.

You have to work with what you've got
That said, if you try to control ALL of the complexity you will never have time to actually get anything done. It's a trap. You'll spend all your time connecting dots and filling out spread sheets when you should be getting dirty and getting experience. If you can, start small and ramp up. I think a lot of people make the mistake of trying to go big out of the chute. Unless you've done it before (or several times) you are just digging a really deep hole.

The next step is probably budgeting. Start with your big number (for example, your credit card limit) and start breaking it down into the component parts. At some point you should realize you are counting pennies when you ought to be counting dollars. Dial the resolution back as needed. As an individual, or even as a few people, you'll never have the resources to count all the pennies...if you want to get anything done. That probably sounds like bad financial advice, but you can't have both timely execution and perfect information because they are mutually exclusive since they both require time.

So in terms of resources vs. resolution I think "individuals" and "companies" are pretty self explanatory. Even "veterans"...people who have been there and done that will have the ability to see more deeply with less information and to execute more effectively with fewer resources. But what about "celebrities" in the top left corner? In my mind, "low resolution" + "more resources" = I have a lot of money but don't have a when celebrities start clothing brands. I guarantee they hired a lot of veterans to do everything.

This was the first thing that came up when I typed "celebrity brands"
into Google and followed the first link...I swear. 
You are right, big companies have processes and resources (human and financial) to count pennies. That's because they are big companies. At some point you are just going to have to decide if the limit on your credit card is going to get you there or not. I guess I'm diligent, but don't over think it. The sweet spot is somewhere between those two ends of the spectrum. If you can't feel confident about your plan, given the level of detail you can achieve on your own, you probably need some help. Give yourself a big pat on the back when you (the royal you) realize that. I think a lot of people get into trouble because the don't know enough about what they are doing to know when they need help. That's why you can be successful if you don't know anything and can just hire everyone.

The other big factor is risk. At the end of the day, running a business is all about managing risk. If you are going to be any good at this you (the royal you again) need personal experience...or need to find someone that has it. I don't mean to sound high on my horse. There's a lot nuance and the best way to identify those small issues before they become big problems is having been there before. That's why they call it "field experience" and not "armchair experience."

The best way to manage risk is to know what to look for. For example, you asked about identifying resource inefficiencies in the manufacturing operations. Since I have a background in this (and I don't answer to anyone) I don't need a formal "processes" to identify and assess opportunities to save time and money...I can just see them because the complexity has not yet outgrown my experience. Since I'm doing the manufacturing myself, I'm totally isolated from one of the biggest sources of risk for a small company: Minimum Order Quantity.

You can get fancy with risk assessments, management strategies, and contingency planning, but you have to decide if that's really worth devoting resources to when your employee headcount is 1.
In terms of the little supply chain snafu I am still in the middle of...sometimes you are just at the mercy of circumstances. I tried to order more parts with plenty of lead time. The supplier had a bad production run, so they were out of stock and now I have to wait for the manufacturer. Couldn't have been foreseen. In the future I could order more parts but I don't have the money to do that or the sales to justify it. I could order further in advance but the same restrictions apply. I could come up with a contingency plan...but I can't think of one that is more financially feasible than buying more parts. So, given the circumstances I'm basically stuck...and that's fine because I'm starting out small. You can't see all risks and you can't avoid them. But if you strategy is sound, you can minimize the impact.

Maybe my real answer to your question is start small and manage the scope. Try things and see if the work, don't speculate. Prepare for disaster. Plan for growth. Find supporters and advisers. Double your expected budget and then don't outspend it. Quadruple the time you think it will take. Keep your head up so you can see what's on the horizon; conversely, don't get caught up in the minute details if they aren't important...given the circumstances.

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