How the cost of failure is holding back the inventors of tomorrow
Is the cost of failure putting off the inventors of tomorrow? Teddington MD James Henderson explores the issues.
2018 has been heralded as the ‘Year of Engineering’ by the Government. Initiatives, programmes and activities have been designed to inspire young people and students to follow engineering career paths. It’s also intended to get engineering facilities to be both current and conversant with industry needs.
While any initiative aimed at encouraging young people into engineering should be applauded, as an industry we must ensure the benefits are not short lived and that the programme has a lasting legacy.
To get engineering back to the forefront, we need to address two serious inhibitors which are preventing people trying out new things and becoming industry leaders. These are:
- The cost of launching an idea is too high
- The cost of failure is too high
Let’s pretend you’re an entrepreneur with a great idea for a product and your time is ‘free’. You might spend six months or more developing your idea into a prototype. The ‘costs’ might be negligible at this point, but you’re now convinced that you have a product that is worth taking further.
Let’s then pretend that this product will end up in a bespoke plastic enclosure with some form of wireless communications technology contained within it (well, it is trendy for that sort of thing now!).
Realistically, you’ll now be spending tens of thousands of pounds getting your idea ready for the all-important process of approvals and testing.
Test house fees are now very high, especially for IoT connected devices. This is compounded by the fact that the equipment used to perform the tests is so expensive that only a few test houses can actually afford them, thus reducing the options open to you.
This is a ‘must do’ stage, but to the entrepreneur it is not a value added stage. It simply costs money and adds significant delays to the development process. If this stage fails, then you might be back to the drawing board for another pass. The bills can start to add up fast and you will be surprised at how much it costs.
Learn more about Teddington's unique five-stage development process
However, let’s proceed assuming that this has all gone swimmingly. You now have a product that’s ready for pre-production and a decision to make on how to take it forward. If you happen to have a lot of money, then this is less of an issue, but we’re discussing the concept of encouraging grassroots engineering, so let’s scrap that notion.
Do you form a company to take this forward? Do you employ people to help? Can you find funding? This is where the real obstacles come in that can quickly put people off.
Employing someone isn’t easy. That first person now comes with a huge amount of red tape including the tax, pensions and other regulations that you must keep on top of. As a business owner, I know this can be a daunting process if you are unprepared.
You now need to fund a production readiness process which – depending on your product – can be as long as a piece of string. An investment of up to £100,000 might be needed.
Unfortunately, nowadays, this usually means that a loan will be required and will more than likely have to be secured. Again, most likely, this will be against your house.
Before you realise it, you have quite literally bet your house on your product succeeding. Many simply cannot afford the risk.
Before the product has even got off the ground the cost of failure is too high. I know first-hand that this is putting people off.
If we can encourage thousands more people to actually try and get their brilliant ideas to market – and not penalise them so heavily if the idea doesn’t take off – then a few of those might then be able to rise to the top and become inspirational leaders.
This will have a much bigger and longer reaching impact for all of our futures.
James
Read James' previous blog here: Greater partnership working key for manufacturing success in 2018