You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your robotics company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a robotics company?
Launching a robotics business requires an office, a production center, computers, printers, high-speed Internet and raw materials like steel, aluminum, copper, bronze, brass, foamcore, PVC, and plexiglass. Though it is unnecessary to hire engineers if you are capable of creating robotics on your own, a team of talented robotics experts will prove essential to your business as time progresses.
What are the ongoing expenses for a robotics company?
Robotics companies require an array of computers, modeling software, printers, insurance, utilities, all sorts of parts and materials, personnel, an office space and a production center. It is also necessary to take business trips to meet with clients in need of robotics. Expect to spend at least a couple thousand dollars per year on travel expenses. Budget in a minimum of $5,000 per year for computers, software, and printers. Utilities will likely cost several hundred dollars per month. Raw materials and circuit boards are necessary to build your robotics. Though the cost of these materials hinges on the number of robotics you plan to produce, it is prudent to budget in at least several thousand dollars per month.
In terms of personnel, your engineers will command significant salaries. These professionals typically earn between $70,000 and $200,000 per year, depending on experience. Office receptionists and administrators will likely require a salary in the range of $25,000 to $35,000. Marketing and accounting professionals should be compensated with a yearly salary between $30,000 and $60,000. Plan on spending several thousand dollars per year for workers' compensation and general liability insurance. Your office rent will likely run between $800 and $1,500 or more per month. The cost of your production center hinges on its size. This space will likely cost several thousand dollars per month to rent and maintain. Don't forget to budget in a sizable chunk of money for ongoing research and development costs. Your engineering team needs a steady supply of money to fund new robotics ideas. Ideally, you will dedicate at least $2,000 to $5,000 per month to research and development efforts.
Who is the target market?
The preferred client is a large business that needs robotics to manufacture goods. Some robotics companies cater to the general consumer market. Create a robotics product with mass appeal and people across the world will fall within the scope of your "target persona".
How does a robotics company make money?
Robotics companies make money by creating highly complex robotics and selling them to other companies and everyday people for industrial use, consumer use, and other purposes.
How much can you charge customers?
There is no concrete price for robotics. Most of these incredibly complex machines require tens of thousands of dollars in research and development spending. Secure business relationships with manufacturers and you will likely negotiate contracts in the range of several hundred thousand dollars all the way up to millions of dollars. If you develop robotics for consumer use, the price range will likely be somewhere between $20 and several hundred dollars. The price depends on the complexity of the device, its purpose and the cost of competing products.
How much profit can a robotics company make?
The sky’s the limit. Plenty of robotics companies have become publicly traded companies that generate billions of dollars in profits. The profitability of your robotics company hinges on the merit of your creations, your ability to establish inroads with those in need of robotics for production purposes as well as general consumers. Research and development costs often hamper robotics businesses until a successful machine or device is brought to market. It will likely take a year or two to generate a profit of six figures.
How can you make your business more profitable?
It is possible to make extra money by providing consulting services for clients and other robotics companies. Some robotics experts teach part-time at nearby colleges. If you over-estimate the number of parts necessary to construct robotics, it is possible to sell the excess to other robotics companies and manufacturers.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your robotics company is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to start a robotics company. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information:
- Check with your town, city or county clerk’s office for information about local permits and licenses
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
In business where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service.
Robotics companies should require clients to sign a services agreement before starting a new project. Such agreements clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership (who will ultimately own the robot and/or its components). Here is an example of eleven such service agreements.
Informed Consent Agreement
An informed consent agreement, also known as a liability waiver, may be needed in cases where a customer operates potentially dangerous equipment. Though waivers should be custom-made, the attached example of a robotics education robotics education waiver can be a useful template.
Labor Safety Requirements
It is important to comply with all Occupational Safety and Health Administration. For more information, read this guide from osha.gov.
Certificate of Occupancy
A robotics company is generally run out of a warehouse. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a physical location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a robotics business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a physical location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your robotics company will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a robotics company
The typical robotics company does not run an extensive marketing campaign as most of its machinery, robotics, and electronics are sold to other businesses. However, robotics companies that create consumer goods conduct marketing campaigns. It is imperative that you establish your business as an authority in the field of robotics. Your website should be infallible. Regularly update your blog and social media accounts with insightful content regarding your company's latest developments, happenings in the robotics industry and general information regarding progress in automation. Contribute guest blog content to other respected websites. All of your online inbound marketing endeavors should be optimized with keywords and key phrases for search engine optimization (SEO) so prospective business partners and clients can find your robotics company online with ease.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Establish business relationships with company owners and managers who can benefit from your robotics. Key in on developing a rapport with professionals who make purchasing decisions at manufacturing and consumer products companies of all varieties. Find out the strengths and weaknesses of the competition's robotics and adjust accordingly. In the end, your robotics company will succeed if your robotics make clients' production processes faster and/or cheaper.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Robotics Company In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
An individual who has a background in electrical engineering, product development, electronics, physics, and/or general engineering will stand a good chance of launching a successful robotics business.
What happens during a typical day at a robotics company?
The typical robotics owner has a busy workday involving activities like performing research and development, engaging in client interactions, pricing parts, engineering new robotics, marketing the company's creations, and staying abreast of developments within this highly dynamic industry.
What are some skills and experiences that will help you build a successful robotics company?
Most successful robotics companies are kick-started by well-educated individuals with a mechanical aptitude. These intellectual powerhouses understand the nuances of engineering, electrical engineering, and product development/design. It is also important to have a clear vision of how a prospective robotics machine/device will enhance functionality from the purchasing business or consumer's vantage point. Key in on functionality and efficiency over aesthetics and your robotics company will stand a better chance of becoming successful.
What is the growth potential for a robotics company?
Robotics companies have the potential to grow quite quickly. All it takes is the development of an in-demand product for a robotics company to expand in a rapid manner. The key is to develop machinery, electronics or another robotics device that businesses or consumers demand. Such an offering can hasten the company's growth, allow for extensive hiring, the development of new products, and the opening of new offices and production centers.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a robotics company?
The core of every robotics company is its team of engineers. Hire uber-talented individuals who are creative and well-versed in the intricacies of mechanical engineering, electronics, physics and product design. Always build robotics to serve a purpose. Key in on solving the problems of businesses and consumers and you will have no shortage of customers.
How and when to build a team
It is possible to create a robot, machine, or electronic device on your own, market it, and secure the business of clients. However, the support of a team will prove essential to the business's growth across posterity. Begin by adding engineers. Salespeople will be necessary to market the creations of the engineering team. A receptionist is necessary to answer calls, welcome visitors, and prepare for meetings. The next step is to add a marketing guru along with an accountant and possibly an administrative assistant.