How Money Saving Psychology Became an Expensive Affair
Don’t cut corners everywhere — a lesson I learned from building a business
Around 8 years ago, my friend and I played a game of Laser Tag for the first time. We loved it so much that we started thinking of opening our own Laser Tag arena.
When we inquired about the equipment we realized that the equipment was too expensive. We saw an opportunity there and wanted to encase it.
We pivoted before starting and started developing our own equipment. Plan to have our own arena was on as well.
We wanted to have our own arena to showcase our equipment to potential buyers.
Development from Scratch with Our Own Funds
We started developing Laser Tag from scratch. Two software developers building an electronic product that involved a lot of mechanical design was not easy.
We were developing with no help and weekends were the only time we were spending on the project. And on top of it, we decided to build the product with our own money.
Today I know we should have raised funds, but back then we were naive.
We took shortcuts and chose cheaper options in most of the decisions we had to make, primarily due to a shortage of funds. Due to our phycology of saving money that we developed gradually, we made few bad decisions:
- Outsourcing the layout of the electronic boards to inexperienced engineers.
- Hiring an affordable designer, certainly not a good one to design the Laser Tag Gun.
- design of the arena.
We were short on money but never wanted to raise funds. We started spending conservatively on everything. We never thought how much these decisions will cost us in the future.
We were so much deep in the thought of saving money that we took decisions that solved our immediate requirements only. We never thought we would have to pay a big price for this.
The target date and the money we spent from our pockets were standing like a mammoth in front of us. We could not see beyond that.
A Bunch of Improvements Needed After Launch
We launched the equipment at our own arena. The equipment was not in good shape, we had a lot of loose ends electronically and mechanically. The only good — and most important — aspect was we launched on time.
We jumped into two businesses at once, the Laser Tag arena and the equipment. Customers started coming in to play the game, but we had a lot of issues with the equipment. We used to fix the issues in the laser tag guns right after a game is over.
Our bad decisions were hurting us. Few inquiries started coming in for the equipment but we were scared to sell due to the issues we had.
Till then we did not have a single customer for our equipment. But we spent more money to fix the issues with the equipment. Few of the issues were easy to fix while others like fixing the mold of the gun required capital. We did not have much capital left with us, so we did few workarounds.
We started realizing how our decisions would hurt us in the future, but we could not help it.
Sales
In few months we got few customers. These were the businesses that wanted to set up their own Laser Tag arenas.
Around 50% of the issues were gone by then. Other 50% were not easy to fix and we had to deploy in 3–4 arenas. We deployed and hired a couple of men to service the equipment fast so that our customers do not bleed.
While we were keeping the customers happy, we continued to bleed in terms of service cost. We made some money, so we started fixing the issues that needed capital.
We tighten a loose end and in few days another loose end would pop up. But we consistently fixed these issues and the equipment was 90% stable in a year.
More sales came in the very next year, we had more than 25 customers who bought our equipment.
Our key differentiator was our post-sales service. At the same time, it was our weakness as well because of bad design.
Takeaways
We could not fix everything. The shortcuts we took in the beginning, continued to eat up our profits for many years.
We did workarounds to fix few issues in our hardware design. These changes were not easy, but we could save some money.
Nevertheless, it was a great journey. I learned a lot from the ups and downs of building a product, selling, and service.
When you start a business, you tend to get into this psychology of spending less on everything. From my experience, I have learned a few lessons.
- When you are developing a product, especially an electronic one, don’t just think about the present, have some foresight and spend accordingly.
- Go for funds, do not put all your money.
- Hire talented individuals to get your work done.
- Quality is often expensive. Plan for it.
- Always account for the service cost you might have to incur after the launch.
