When inventors contact my company about Due Diligence I like to clarify the idea with a simple example. Think about it this way, if a manufacturer is getting ready to decide 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 ensure these are building a good business decision in continuing to move forward with all the product (i.e.: have they done their homework on the product). Therefore, you can summarize “research” as the process of gathering all the information necessary to make a good business decision before you make the large financial expenditure. It can generally be assumed that the more hours, effort and money (i.e.: “risk”) that a company must spend to develop Inventhelp News, the more they will evaluate the potential license. Keep in mind that even if a product seems to be easy and low cost, the whole process of developing and manufacturing is rarely simple and affordable. Companies will evaluate such criteria as customer feedback, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Due Diligence on the invention. As discussed, this will depend on the option you might have elected to take your product or service to advertise.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention all on your own, then yes you will need to perform homework. Essentially, you become the producer from the product and as a result you should perform the due diligence on your own invention just like other manufacturers would. The issue i have found is the fact many inventors who opt to manufacture their very own inventions do little, if any marketing due diligence, which is a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, then I believe you can minimize your research efforts, because before any company licensing your invention, they are going to perform their own research. If you are using a company such as Invention Home, the expense to market your invention to companies can be minimal – therefore it could set you back more to actually perform the research than it would to just market the Inventhelp Invention Prototype to companies (which, is ultimately your very best kind of due diligence anyway). Remember, you need to have taken the time to perform your basic market research as well as a patent search earlier along the way to be reassured that your product will be worth pursuing to start with (i.e.: the merchandise is not really already on the market and there is a demand).
Let me summarize. If you are planning on investing a large amount of cash on your invention, then it is recommended to analyze the chance first to ensure it’s worth pursuing; however, should you can actively market your invention to companies with minimal cost, you can be reassured that an interested company will perform their very own research (not depend on yours). Note: it is always useful to have marketing homework information available as you discuss your invention opportunity with prospective companies; however, it is far from always easy to obtain these details so you have to balance the effort and expense of gathering the information using the real need for having it.
I also provides you with some homework tips.As discussed, the idea of marketing research is to gain as much information as is possible to create a well-informed decision on investing in any invention. In a perfect world, we might have got 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 easy to find.
Should you be not in a position to pay a specialist firm to accomplish your marketing evaluation, it really is easy to perform the research on your own; however, you need to understand that research ought to be interpreted and used for decision-making and by itself, it offers no value. It is whatever you do with the details that matters. Note: I would personally recommend that you just do NOT PURCHASE “market research” from an Invention Promotion company. Often sold as a “first step” (they’ll usually approach you again having an expensive “marketing” package), the details are largely useless as it is not specific research on your invention. Rather, it really is off-the-shelf “canned” industry statistics, which will not necessarily assist you in making a knowledgeable decision.
Before we reach the “tips”, let me clarify that “homework” can come under various names, but essentially all of them mean exactly the same thing. A few of the terms which i have witnessed to explain the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Market Research
· Invention Assessment
Each one of these terms is basically discussing the study to gauge 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 assist you better comprehend the probability of success.
Again, if you are intending on manufacturing your invention on your own, you should consider 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.
Some suggestions for marketing research are listed below.
1. Ask and answer some elementary questions
– Is your invention original or has somebody else already develop the invention? Hopefully, you may have already answered this query in your basic research. If not, check trade directories or the Internet.
– Is your invention a solution to some problem? If not, why you think it will sell?
– Does your invention really solve the problem?
– Can be your invention already on the market? In that case, exactly what does your invention offer on the others?
– The amount of competing products and competitors can you find on the market?
– What is the range of cost of these items? Can your product or service fall into this range? Don’t forget to element 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 can impact the way your invention sells and objectively evaluate your list
– Demand – can there be an existing demand for your invention?
– Market – does a market are available for your invention, and in case so, what is the scale of the current market?
– Production Capabilities – will it be easy or difficult to produce your invention?
– Production Costs – can you get accurate manufacturing costs (both per unit and setup/tooling)?
– Distribution Capabilities – could it be easy or difficult to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, convenience)?
– List Price – do you have a price point advantage or disadvantage?
– Life – will your invention last longer 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 – could it be difficult or very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or exist special laws that really must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts within the field.
– Demand objective feedback and advice.
– Talk to marketing professionals.
– Ask sales people in the field.
– Ask people you know inside the field.
– Speak with close relatives and buddies that you trust.
– Ask for input on the invention such as features, benefits, price, and in case they could purchase it.
Through the diligence stage, existing manufactures provide an advantage because they have the ability to talk with their clients (retail buyers, wholesalers, etc.). Inside my experience, one of the most important factors that the company will consider is whether or not their existing customers would purchase the product. Should I took Inventors Help to a company to talk about licensing (assuming they can produce it on the right price point), there is a high likelihood which they would license the product if one of the top customers consented to sell it off.
Whether a retail buyer is interested in investing in 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 but they ultimately atgjlh to pass on the idea as their customer (the retailer) failed to show any interest in the product. Conversely, I’ve seen companies with mild interest within an idea who jump at a cool product each time a retailer expresses interest inside it.