Top 6 Reasons Hardware Startups Struggle to Scale

So why do so many hardware startups struggle when transitioning from prototype to production? Let’s call this we failed so you don’t have to, here’s the top 6 things experience has taught us.

1. Inadequate Documentation

Documentation is how you communicate to suppliers, it’s best to speak their language. Scaling without complete, accurate documentation that conforms to industry norms really leads to problems downstream.

• Unverified BOMs lead to sourcing nightmares—outdated or incorrect part numbers, obsolete components, and single-source dependencies can all grind scaling to a halt.
• Duplicate or conflicting MPNs create confusion and sourcing mistakes that drive up costs.
• Poorly documented Do Not Populate (DNP) items can result in unnecessary purchases or production errors.
• Lack of version control especially in PCB designs means you risk manufacturing the wrong revision of your board.
• Missing PCB sourcing files: You need at minimum Gerber files, a drill list, and a drawing (or at least detailed notes) specifying material requirements and workmanship standards.Try to use ODB++, it’s in KiCad 9.0 now.
• No workmanship standard: You need to specify workmanship, like IPC610 Class 2, or Class 3 for high reliability. Also specify cleaning, no-clean is pretty standard these days. 
• Vague assembly instructions cause unnecessary back-and-forth with your manufacturer, increasing lead time and the risk of errors. Use the Notes block in the drawing.

When documentation isn’t complete and well-structured, suppliers and manufacturers are  forced to make assumptions—not good.

Pro Tip: Run a BOM health check early and often to catch obsolete parts, long lead times, and single-source risks.

 2. Ignoring Compliance Until It’s Too Late

Turns out you can’t just build a product and start selling it. Without the right certifications, you won’t be legally allowed to ship it. Compliance is a slow, expensive process, and ignoring it early can cripple your timeline.

• UL certification is required for anything that plugs into AC power, runs at high voltages, or uses lithium batteries. Read more at UL Labs.
• FCC compliance is mandatory if your device has a microcontroller, generates electromagnetic noise, or transmits wireless signals. Learn about Class A vs B. 
• CE marking is needed to sell in Europe and covers electrical safety, electromagnetic compatibility (EMC), and radio emissions.
• Medical and aerospace devices have even stricter regulations, including ISO 13485 and AS9100.

Testing can take months and cost tens of thousands of dollars. Fail and you pay for another round. But if you start compliance planning as soon as your design is stable, you’re way less likely to end up with a product you have to scrap because it’s non-compliant.

3. Ignoring Environmental Regulations

Beyond safety and emissions, your product also has to meet strict environmental regulations that dictate what materials you can use and how you handle waste, especially if you intend to sell into the EU.

• RoHS bans hazardous substances like lead, mercury, and cadmium in electronics.
• REACH requires tracking and reporting of thousands of chemicals in the EU.
• WEEE makes you responsible for electronic waste disposal and recycling.
• Prop 65 in California forces you to label products that contain even trace amounts of certain chemicals.

Non-compliance exposes you to fines, blocked shipments, expensive redesigns, and unhappy investors. Even if you don’t sell in Europe or California today, you probably will in the future—definitely smarter to design for environmental regulations from the start.

4. Underestimating High-Compliance Markets

If you’re building a medical, aerospace, or defense product, you probably know to expect significantly more regulatory oversight. But are you really truly aware of the full impact?

• ISO 13485 requires full traceability for medical devices, meaning every part must be documented and auditable.
• AS9100 applies to aerospace manufacturing and enforces rigorous quality and documentation standards.
• FAR and DFARS (Federal and Defense Acquisition Regulations) define strict requirements for selling to the U.S. government, particularly for contracts above the Simplified Acquisition Threshold ($250,000), which triggers additional compliance, reporting, and bidding requirements.
• ITAR (International Traffic in Arms Regulations) restricts access to technical documentation related to defense-related products. Design files and manufacturing documents cannot be shared with foreign nationals or overseas suppliers without a U.S. State Department license.

You know their coming, but did you plan for them from day one? 

5. No Production Planning System

Scaling production without a planning system is like trying to run a restaurant without a menu—you’ll have no idea what to order, when to order it, or how much to buy. This is probably going to crush your soul just like it has every other new hardware startup.   

• Manual tracking in spreadsheets leads to errors, shortages, and over-ordering.
• Failure to plan for lead times results in production halts when key components run out.
• No buffer stock strategy means you can’t handle supply chain disruptions.
• Lack of sales forecasting leaves you buying too much or too little inventory.
• No or poor traceability: If required,components and finished assemblies must be serialized or batch-tracked to identify manufacturing history.

Hardware startups are lean mean machines ruthlessly focused on present priorities. A result is on-the-fly planning that leads to on-the-fly planning tools, basically a whole lot of Excel spreadsheets. This problem will bring scaling to its knees, get in front of it.

6. Mishandling Components

Guess what everyone does with sensitive electronic components? We put them in a closet. Or the garage, or an office shelf, basically we treat them like office supplies. But improper storage and handling can silently compromise components, leading to failures like ‘popcorning’—or worse, latent failures that show up after your product is in the field.

• No ESD protection means static electricity can damage sensitive semiconductors, leading to latent failures that only show up after deployment. ASNI S20.20 is the relevant standard.
• Improper moisture control causes problems for moisture-sensitive devices (MSDs), especially ICs and BGAs, which can absorb humidity and crack during reflow soldering. Check out our Expert Guide to MSL.
• Lack of temperature control can degrade components over time, particularly batteries, adhesives, and certain polymers.
• Poor labeling and tracking make it easy to lose components, mix up part revisions, or install expired materials.
• Poor kitting practices cause delays and confusion at the contract manufacturer—missing reels, partial quantities, and mixed packaging formats lead to extra labor costs, errors, and stalled production.

Handling components correctly isn’t just about organization—it directly affects reliability. If your startup doesn’t take ESD and moisture protection seriously, you’ll end up troubleshooting bizarre failures and costly rework down the line.

Pro Tip: Store moisture-sensitive parts in dry cabinets or vacuum-sealed bags with desiccants. Use ESD-safe bins, wrist straps, and grounding mats in any area where components are handled. When kitting materials for a contract manufacturer, ensure everything is labeled, in the correct packaging, and matches the expected quantities.

Leader of the Pack

We hope this helps you avoid these mistakes. Yes, there are more tripwires out there (it’s super fun to use a shake table to see if all the parts stay on, and then more fun to drop test from 10 feet to see how the packaging performs) but these 6 will keep you out of the most common time sinks and frustrations when it’s time to scale.