When inventors contact my company about Due Diligence I like to explain the reasoning with a simple example. Consider it this way, if a manufacturer is getting ready to make the decision 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 may be creating a good business decision in advancing using the product (i.e.: they have done their homework on the product). Therefore, you can summarize “due diligence” as the 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 more hours, effort and cash (i.e.: “risk”) that a company must spend to develop Inventhelp George Foreman, the more they are going to evaluate the potential license. Keep in mind that even if a product is apparently easy and inexpensive, the whole process of developing and manufacturing is rarely basic and inexpensive. 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 need to perform Research on their invention. As discussed, this may depend on the option you might have elected for taking your product to promote.
Option 1 – Manufacturing by yourself – If you are intending on manufacturing and marketing the invention on your own, then yes you will need to perform due diligence. Essentially, you become the manufacturer of the product and as a result you should perform due diligence on your own invention just like other manufacturers would. The problem i have found is that many inventors who opt to manufacture their particular inventions do little, if any marketing homework, that is a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, then I believe you can minimize your homework efforts, because just before any company licensing your invention, they will likely perform their own homework. If you are employing a company including Invention Home, the expense to market your invention to companies can be minimal – therefore it may cost more to actually perform homework than it could to just market the Review For Inventhelp to companies (which, is ultimately your best form of research anyway). Remember, you should have taken the time to do your basic consumer research and a patent search earlier in the process to be assured that your products or services is worth pursuing in the first place (i.e.: the product will not be already on the market and there is a demand).
Let me summarize. If you are planning on investing a large amount of money 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 do their own homework (not depend on yours). Note: it is always helpful to have marketing homework information available while you discuss your invention opportunity with prospective companies; however, it is far from always easy to acquire this information so you have to balance the time and effort and expense of gathering the details using the real necessity of having it.
Furthermore, i offers you some due diligence tips.As discussed, the concept of marketing homework would be to gain as much information as you can to produce a well-informed decision on investing in any invention. In a perfect world, we might have all the appropriate information on 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 find.
Should you be not in a position to pay for a professional firm to perform your marketing evaluation, it really is easy to perform research on your own; however, you must know that research should be interpreted and employed for decision-making and alone, it provides no value. It really is everything you do with the data that matters. Note: I would personally recommend that you just do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as 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 the invention. Rather, it really is off-the-shelf “canned” industry statistics, that can not always help you make an educated decision.
Before we get to the “tips”, let me clarify that “due diligence” can come under various names, but essentially all of them mean the same. A number of the terms that I have witnessed to illustrate the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each one of these terms is actually discussing the investigation to gauge the chance of your invention’s salability and profitability. The question of whether your invention will sell can never be known with certainty, but you can perform some steps that will help you better understand the probability of success.
Again, if you are intending on manufacturing your invention all on your own, you should consider performing marketing research on your own 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 highlighted below.
1. Ask and answer some basic questions
– Can be your invention original or has someone else already come up with the invention? Hopefully, you might have already answered this question inside your basic research. Otherwise, check trade directories or perhaps the Internet.
– Is the invention a solution to your problem? If not, why do you reckon it is going to sell?
– Does your invention really solve the problem?
– Is your invention already on the market? If you have, exactly what does your invention offer on the others?
– The number of competing products and competitors can you locate on the market?
– What is the range of price of these items? Can your product fall into this range? Don’t forget to aspect in profit and possibly wholesale pricing and royalty fee, if any.
– Can you position your invention as a better product?
2. List the advantages and disadvantages that can impact the way your invention sells and objectively evaluate your list
– Demand – will there be a current need for your invention?
– Market – does a market are available for your invention, and if so, what exactly is the dimensions of the marketplace?
– Production Capabilities – could 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 – might 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)?
– Retail Price – have you got a price point advantage or disadvantage?
– Life – will your invention last longer than other products?
– Performance – does your invention perform much better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – could it be difficult or simple to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are there 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.
– Demand objective feedback and advice.
– Speak to marketing professionals.
– Ask sales representatives within the field.
– Ask people you know inside the field.
– Speak with close family and friends whom you trust.
– Ask for input on the invention including features, benefits, price, and in case they would buy it.
Throughout the diligence stage, existing manufactures provide an advantage in this they have the ability to talk with their customers (retail buyers, wholesalers, etc.). In my experience, probably the most key elements that a company will consider is whether or not their existing customers would purchase the product. Basically If I took Inventhelp Invention News to a company to discuss licensing (assuming they could produce it on the right price point), there is a high likelihood they would license the merchandise if a person of the top customers agreed to sell it off.
Whether a retail buyer has an interest in buying a item is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest within an invention nevertheless they ultimately atgjlh to pass on the idea as their customer (the retailer) did not show any interest within the product. Conversely, I’ve seen companies with mild interest within an idea who jump in a cool product when a retailer expresses interest within it.