Hardware is difficult. Not just a bit more difficult than software, but WAY more difficult (and is inclusive of software, usually at a lower level). For a small company at least the manufacturing is outsourced, and often the design as well. Who gets the IP and who has ultimate control are MAJOR issues that are often not given enough attention up front. Sure, every relationship is rosy at the start. But imagine that you have hit a major roadblock that prevents a release (because invariably, you will get stuck and have to find a solution), what happens now? Who gets to decide? This stuff needs to get hashed out before the first contract is signed. And often time the problem is going to be your outsourced design firm or manufacturer, so I'd say the contractor needs to stay at an arms length away so that you can change if need be, even if it costs more cash. The flexibility might keep your venture alive.