When inventors contact my company about Due Diligence I like to clarify the reasoning with a simple example. Think about it this way, if a manufacturer is getting ready to decide to develop, manufacture, and market a new item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would definitely take their time to make sure that they may be making a good business decision in advancing with all the product (i.e.: have they done their homework on the product). Therefore, you can sum up “homework” as the process of gathering all the information necessary to make a good business decision prior to making the large financial expenditure. It can generally be assumed that the additional time, effort and money (i.e.: “risk”) that a company must spend to develop Inventhelp Invention Idea, the more they will evaluate the potential license. Stay in mind that even if a product seems to be easy and affordable, the whole process of developing and manufacturing is rarely simple and low cost. Companies will evaluate such criteria as customer opinions, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they need to perform Research on their own invention. As discussed, this may depend on the option you have elected when planning on taking your product or service to advertise.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention on your own, then yes you need to perform homework. Essentially, you become the producer from the product and for that reason you ought to perform the homework on your invention just like other manufacturers would. The situation which i have found is the fact many inventors who choose to manufacture their own inventions do little, if any marketing homework, that is a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i then believe you can minimize your research efforts, because prior to any company licensing your invention, they will likely perform their particular homework. Should you be employing a company such as Invention Home, the expense to advertise your invention to companies can be minimal – therefore it could cost you more to completely perform research than it would to just market the Inventhelp Store Products to companies (which, is ultimately your very best kind of due diligence anyway). Remember, you ought to have taken time to accomplish your basic researching the market and a patent search earlier in the process to be reassured that your product or service is worth pursuing to begin with (i.e.: the item will not be already on the market and you will find a demand).
Let me summarize. If you are intending on investing a large amount of funds on your invention, then it is best to analyze the opportunity first to make sure it’s worth pursuing; however, should you can actively market your invention to companies with minimal cost, you can be confident that an interested company will perform their own due diligence (not rely on yours). Note: it is usually useful to have marketing homework information available while you discuss your invention opportunity with prospective companies; however, it is far from always easy to obtain this information so you need to balance the effort and expense of gathering the data using the real necessity of having it.
I also will provide you with some homework tips.As discussed, the idea of marketing homework is to gain as much information as is possible to make a well-informed decision on making an investment in any invention. In a perfect world, we might have all the appropriate information about sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details is not always very easy to come across.
Should you be not in a position to cover a professional firm to perform your marketing evaluation, it is possible to perform research by yourself; however, you must know that research should be interpreted and used for decision-making and on its own, it offers no value. It is what you do with the information that matters. Note: I would recommend that you just do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as being a “starting point” (they’ll usually approach you again with the expensive “marketing” package), the information is largely useless as it is not specific research on the invention. Rather, it is off-the-shelf “canned” industry statistics, which will possibly not help you make an informed decision.
Before we reach the “tips”, let me clarify that “homework” can come under various names, but essentially they all mean exactly the same thing. A number of the terms which i have experienced to describe the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each of these terms is basically talking about the study to assess the chance of the invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, however, you can perform some steps to assist you better understand the likelihood of success.
Again, if you are planning on manufacturing your invention by yourself, you should consider performing marketing due diligence on the product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing homework are highlighted below.
1. Ask and answer some elementary questions
– Is the invention original or has somebody else already develop the invention? Hopefully, you might have already answered this question inside your basic research. Or even, check trade directories or the Internet.
– Can be your invention a solution to a problem? If not, why do you think it can sell?
– Does your invention really solve the issue?
– Is your invention already on the market? If so, precisely what does your invention offer on the others?
– The number of competing products and competitors can you find on the market?
– Exactly what is the range of price of the products? Can your product or service fall into this range? Don’t forget to factor in profit and maybe wholesale pricing and royalty fee, if any.
– Can you position your invention as being a better product?
2. List the pros and cons that will impact how your invention sells and objectively evaluate your list
– Demand – is there a preexisting interest in your invention?
– Market – does a market are available for your invention, and if so, what exactly is the scale of the current market?
– Production Capabilities – will it be easy or hard to produce your invention?
– Production Costs – can you have accurate manufacturing costs (both per unit and setup/tooling)?
– Distribution Capabilities – will it be easy or challenging to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, ease of use)?
– List Price – have you got a price point advantage or disadvantage?
– Life – will your invention last more than other products?
– Performance – does your invention perform a lot better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – is it difficult or easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are there special laws that really must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts in the field.
– Demand objective feedback and advice.
– Speak with marketing professionals.
– Ask sales representatives within the field.
– Ask people you know in the field.
– Speak to close relatives and buddies that you trust.
– Ask for input on the invention like features, benefits, price, and if they could buy it.
During the diligence stage, existing manufactures provide an advantage in that they have the ability to talk with their customers (retail buyers, wholesalers, etc.). Within my experience, one of the most key elements that a company will consider is if their existing customers would get the product. If I took Inventhelp Phone Number to a company to go over licensing (assuming they could produce it on the right price point), there is a high likelihood that they would license the item if a person of the top customers agreed to sell it.
Whether a retail buyer has an interest in buying a product is a driving force for companies considering product licensing. I’ve seen many scenarios in which a company had interest in an invention nevertheless they ultimately atgjlh to pass on the idea because their customer (the retailer) did not show any interest within the product. Conversely, I’ve seen companies with mild interest in an idea who jump in a cool product when a retailer expresses interest within it.