When inventors contact my company about Due Diligence I like to explain the concept with a simple example. Consider 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 most certainly take their time to make sure that they may be making a good business decision in continuing to move forward with the product (i.e.: they have done their homework on the product). Therefore, you can sum up “due diligence” as the entire 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 more hours, effort and cash (i.e.: “risk”) that a company must spend to develop Inventhelp George Foreman Commercial, the more they will likely evaluate the potential license. Stay in mind that even if a product seems to be basic and inexpensive, the process of developing and manufacturing is rarely simple and low cost. Companies will evaluate such criteria as customer opinions, list price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they have to perform Research on their own invention. As discussed, this may depend on the option you have elected for taking your product or service to promote.
Option 1 – Manufacturing by yourself – If you are planning on manufacturing and marketing the invention by yourself, then yes you will have to perform due diligence. Essentially, you become the maker from the product and consequently you need to carry out the research on your own invention just like other manufacturers would. The problem that I have found is that many inventors who opt to manufacture their very own inventions do little, if any marketing research, that is a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, then I believe you can minimize your due diligence efforts, because just before any company licensing your invention, they will likely perform their particular research. If you are using a company such as Invention Home, the expense to promote your invention to companies can be minimal – therefore it could cost you more to actually carry out the research than it might to just market the How To Patent An Idea Or Product to companies (which, is ultimately the best form of research anyway). Remember, you should have taken time to perform your basic consumer research and a patent search earlier in the process to be assured that your product or service may be worth pursuing to start with (i.e.: the item is not really already on the market and you will find a demand).
Let me summarize. If you are planning on investing a substantial amount of cash on your invention, then it is best to analyze an opportunity first to ensure it’s worth pursuing; however, in the event you can actively promote your invention to companies with minimal cost, you can be assured that an interested company will work their particular research (not rely on yours). Note: it is always helpful to have marketing due diligence information available while you discuss your invention opportunity with prospective companies; however, it is far from always easy to acquire these details so you should balance the effort and cost of gathering the data with all the real need of having it.
Furthermore, i provides you with some homework tips.As discussed, the concept of marketing research would be to gather as much information as possible to make a well-informed decision on making an investment in any invention. In a perfect world, we may have got all the relevant information about sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details might not be very easy to come across.
Should you be not in a position to pay a professional firm to accomplish your marketing evaluation, it is easy to perform the research on your own; however, you need to understand that research needs to be interpreted and employed for decision-making and on its own, it provides no value. It really is everything you use the data that matters. Note: I would recommend that you simply do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold being a “first step” (they’ll usually approach you again having an expensive “marketing” package), the information is largely useless because it is not specific research on your own invention. Rather, it is off-the-shelf “canned” industry statistics, that will not necessarily help you make an educated decision.
Before we reach the “tips”, let me clarify that “due diligence” can come under various names, but essentially each of them mean exactly the same thing. A few of the terms which i have experienced to explain the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Market Research
· Invention Assessment
Each one of these terms is essentially discussing the investigation to evaluate the chance of the invention’s salability and profitability. The question of whether your invention will sell can do not be known with certainty, however, you can perform some steps to assist you better understand the chance of success.
Again, if you are planning on manufacturing your invention all on your own, you should look at performing marketing homework on the product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
A few recommendations for marketing due diligence are highlighted below.
1. Ask and answer some elementary questions
– Is your invention original or has someone else already come up with the invention? Hopefully, you may have already answered this query inside your basic research. Otherwise, check trade directories or even the Internet.
– Can be your invention a solution to your problem? Otherwise, why you think it can sell?
– Does your invention really solve the situation?
– Is the invention already on the market? If so, precisely what does your invention offer within the others?
– The number of competing products and competitors can you locate on the market?
– Exactly what is the range of cost of the products? Can your product fall into this range? Don’t forget to element in profit and maybe wholesale pricing and royalty fee, if any.
– Can you position your invention being a better product?
2. List the pros and cons which will impact how your invention sells and objectively evaluate your list
– Demand – is there a preexisting need for your invention?
– Market – does a market exist for your invention, and in case so, what is the scale of the market?
– Production Capabilities – might it be easy or challenging 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, simplicity of use)?
– Retail Price – do you have 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 very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are available special laws that must definitely be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts within the field.
– Request objective feedback and advice.
– Speak to marketing professionals.
– Ask sales agents in the field.
– Ask people you know within the field.
– Talk to close relatives and buddies that you trust.
– Ask for input on the invention including features, benefits, price, and if they might buy it.
Throughout the diligence stage, existing manufactures come with an advantage in this they have the ability to talk with their clients (retail buyers, wholesalers, etc.). Within my experience, one of the most crucial elements which a company will consider is whether their existing customers would buy the product. Basically If I took How To Get A Prototype Made With Inventhelp to a company to discuss licensing (assuming they can produce it on the right price point), you will find a extremely high likelihood which they would license the merchandise if a person of their top customers agreed to market it.
Whether a retail buyer has an interest in purchasing a product is a driving force for companies considering product licensing. I’ve seen many scenarios in which a company had interest inside an invention however they ultimately atgjlh to pass through on the idea because their customer (the retailer) did not show any interest inside the product. Conversely, I’ve seen companies with mild interest within an idea who jump in a new product whenever a retailer expresses interest in it.