When inventors contact my company about Due Diligence I like to explain the idea with a simple example. Think of it this way, if a manufacturer is getting ready to make the decision 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 definitely take their time to ensure that they may be creating a good business decision in continuing to move forward with 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 before you make the large financial expenditure. It can generally be assumed that the more time, effort and money (i.e.: “risk”) that a company must spend to develop Inventhelp News, the more they will likely evaluate the potential license. Stay in mind that even if a product seems to be simple and low cost, the entire process of developing and manufacturing is rarely basic 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 have to perform Due Diligence on their invention. As discussed, this may depend on the option you might have elected for taking your products or services to advertise.
Option 1 – Manufacturing by yourself – If you are planning on manufacturing and marketing the invention by yourself, then yes you will have to perform research. Essentially, you are the maker from the product and consequently you should carry out the homework on the invention just like other manufacturers would. The problem that I have found is the fact many inventors who elect to manufacture their particular inventions do little, if any marketing research, which is actually a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, i believe you can minimize your due diligence efforts, because prior to any company licensing your invention, they will likely perform their own homework. If you are employing a company including Invention Home, the costs to market your invention to companies can be minimal – therefore it could set you back more to completely perform due diligence than it might to just market the Inventhelp Office Locations to companies (which, is ultimately your very best kind of homework anyway). Remember, you ought to have taken time to perform your basic researching the market and a patent search earlier along the way to be assured that your products or services is worth pursuing to begin with (i.e.: the item is not really already on the market and you will find a demand).
Let me summarize. If you are intending on investing a lot of money on your invention, then it is best to analyze the opportunity first to ensure it’s worth pursuing; however, if you can actively market your invention to companies with minimal cost, you can be confident that an interested company will do their particular due diligence (not depend on yours). Note: it is always helpful to have marketing homework information available as you discuss your invention opportunity with prospective companies; however, it is far from easy to obtain these details so you have to balance the effort and expense of gathering the data with the real necessity of having it.
I also offers you some due diligence tips.As discussed, the thought of marketing research is to gather as much information as possible to make a well-informed decision on purchasing any invention. In a perfect world, we might have all the relevant information about sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this information might not be easy to come by.
In case you are not in a position to pay an expert firm to accomplish your marketing evaluation, it is actually possible to perform the research by yourself; however, you must understand that research should be interpreted and used for decision-making and on its own, it offers no value. It is whatever you use the information that matters. Note: I would personally recommend that you simply do NOT PURCHASE “market research” from an Invention Promotion company. Often sold being a “starting point” (they’ll usually approach you again with the expensive “marketing” package), the details are largely useless because it is not specific research on your invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will possibly not 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 each of them mean the same. A number of the terms which i have witnessed to describe the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Market Research
· Invention Assessment
Each of these terms is basically discussing the study to assess the chance of your 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 that will help you better be aware of the probability of success.
Again, if you are intending on manufacturing your invention all on your own, you should look at performing marketing due diligence on your own 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 research are highlighted below.
1. Ask and answer some basic questions
– Can be your invention original or has somebody else already think of the invention? Hopefully, you might have already answered this query within your basic research. Or even, check trade directories or the Internet.
– Is the invention a solution to a problem? If not, why do you reckon it can sell?
– Does your invention really solve the problem?
– Is your invention already on the market? If so, precisely what does your invention offer on the others?
– How many competing products and competitors can you locate on the market?
– What is the range of price of these items? Can your products or services 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 which will impact the way your invention sells and objectively evaluate your list
– Demand – is there an existing demand for your invention?
– Market – does a market are available for your invention, and in case so, what is the size of the marketplace?
– Production Capabilities – will it be easy or challenging 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 hard 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 – do you have a price point advantage or disadvantage?
– Life – will your invention last more 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 – will it be difficult or very easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are there special laws that must 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 people inside the field.
– Ask people you know inside the field.
– Talk to close family and friends whom you trust.
– Ask for input on the invention like features, benefits, price, and when they could buy it.
Throughout the diligence stage, existing manufactures have an advantage because they have the capacity to talk with their clients (retail buyers, wholesalers, etc.). Inside my experience, probably the most crucial elements that the company will consider is if their existing customers would buy the product. If I took How To Get An Idea Made Into A Prototype With Inventhelp to your company to go over licensing (assuming they might produce it on the right price point), you will find a very high likelihood which they would license the merchandise if one of the 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 in an invention however they ultimately atgjlh to pass through on the idea because their customer (the retailer) did not 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 within it.