When inventors contact my company about Due Diligence I like to explain the concept with a simple example. Think about it this way, if a manufacturer is getting ready to choose to develop, manufacture, and market a new product 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 are making a good business decision in advancing with the product (i.e.: they have done their homework on the product). Therefore, you can summarize “research” as the whole process of gathering all the information necessary to make a good business decision before making the large financial expenditure. It can generally be assumed that the additional time, effort and cash (i.e.: “risk”) that a company must spend to develop Inventhelp Success Stories, the more they will likely evaluate the potential license. Keep in mind that even if a product is apparently easy and low cost, the whole process of developing and manufacturing is rarely easy and low cost. Companies will evaluate such criteria as customer opinions, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Homework on their own invention. As discussed, this may depend on the option you might have elected for taking your product to advertise.
Option 1 – Manufacturing all on your own – If you are planning on manufacturing and marketing the invention all on your own, then yes you will have to perform due diligence. Essentially, you are the manufacturer from the product and for that reason you ought to perform due diligence on the invention just like other manufacturers would. The problem i have found is that many inventors who elect to manufacture their particular inventions do little, if any marketing homework, which is actually a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i believe you can minimize your research efforts, because prior to any company licensing your invention, they will likely perform their particular homework. If you are working with a company including Invention Home, the expense to market your invention to companies can be minimal – therefore it could cost more to completely carry out the research than it might to just market the Inventhelp Intromark to companies (which, is ultimately the best kind of homework anyway). Remember, you ought to have taken the time to accomplish your basic market research and a patent search earlier during this process to be assured that your products or services may be worth pursuing to start with (i.e.: the item will not be already on the market and there exists a demand).
Let me summarize. If you are intending on investing a large amount of cash on your invention, then it is best to analyze the chance 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 confident that an interested company will do their own research (not count on yours). Note: it will always be helpful to have marketing homework information available when you discuss your invention opportunity with prospective companies; however, it is far from easy to get this information so you should balance the time and effort and expense of gathering the information with all the real need for having it.
In addition, i will provide you with some due diligence tips.As discussed, the idea of marketing research would be to gain as much information as possible to produce a well-informed decision on investing in any invention. In a perfect world, we might have all the relevant information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details might not be easy to come by.
Should you be not in a position to pay a specialist firm to accomplish your marketing evaluation, it is actually easy to perform research all on your own; however, you must understand that research should be interpreted and used for decision-making and by itself, it provides no value. It is actually everything you use the information that matters. Note: I would recommend that you just do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold being a “first step” (they’ll usually approach you again with an expensive “marketing” package), the details are largely useless since it is not specific research on your own invention. Rather, it is off-the-shelf “canned” industry statistics, which will possibly not help you make an educated decision.
Before we reach the “tips”, let me clarify that “due diligence” can come under various names, but essentially all of them mean exactly the same thing. Some of the terms that I have experienced to describe the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
Each of these terms is actually referring to the research to assess the likelihood of an 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 help you better be aware of the chance of success.
Again, if you are planning on manufacturing your invention by yourself, you should think about performing marketing homework on the product. If you are intending on licensing your invention for royalties the company licensing your invention should perform this research.
A few recommendations for marketing homework are listed below.
1. Ask and answer some fundamental questions
– Is your invention original or has another person already think of the invention? Hopefully, you might have already answered this query in your basic research. Otherwise, check trade directories or the Internet.
– Is the invention a solution to some problem? Otherwise, why you think it can sell?
– Does your invention really solve the situation?
– Can be your invention already on the market? If you have, what does your invention offer on the others?
– How many competing products and competitors can you locate on the market?
– Exactly what is the range of cost of these items? Can your product fall into this range? Don’t forget to factor in profit and perhaps wholesale pricing and royalty fee, if any.
– Can you position your invention as being a better product?
2. List the advantages and disadvantages that will impact the way your invention sells and objectively evaluate your list
– Demand – is there an existing need for your invention?
– Market – does a market are available for your invention, and in case so, exactly what is the size of the market?
– Production Capabilities – could 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 hard to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, simplicity of use)?
– List Price – do you have a price point advantage or disadvantage?
– Life – will your invention last more than other products?
– Performance – does your invention perform better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – is it difficult or simple 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 inside the field.
– Request objective feedback and advice.
– Speak with marketing professionals.
– Ask sales agents within the field.
– Ask people you know within the field.
– Speak with close relatives and buddies whom you trust.
– Request input on the invention such as features, benefits, price, and in case they might purchase it.
Throughout the diligence stage, existing manufactures come with an advantage because they have the ability to talk with their potential customers (retail buyers, wholesalers, etc.). Within my experience, just about the most important factors that the company will consider is whether their existing customers would get the product. Should I took How To Get An Idea Patented to a company to discuss licensing (assuming they might produce it on the right price point), you will find a high likelihood they would license the merchandise if a person with their top customers agreed to sell it.
Whether a retail buyer has an interest in investing in a product is a driving force for companies considering product licensing. I’ve seen many scenarios wherein a company had interest in an invention but they ultimately atgjlh to pass through on the idea since their customer (the retailer) did not show any interest within the product. Conversely, I’ve seen companies with mild interest inside an idea who jump with a cool product each time a retailer expresses interest in it.