When inventors contact my company about Due Diligence I like to explain the idea with a simple example. Consider it this way, if a manufacturer is getting ready to choose 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 moving forward using the product (i.e.: they have done their homework on the product). Therefore, you can sum up “due diligence” 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 more time, effort and money (i.e.: “risk”) that a company must spend to develop Invention Idea Help, the more they will likely evaluate the potential license. Stay in mind that even if a product appears to be simple and inexpensive, the entire process of developing and manufacturing is rarely simple and inexpensive. Companies will evaluate such criteria as customer feedback, list price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they need to perform Due Diligence on the invention. As discussed, this can depend on the option you may have elected to take your product to market.
Option 1 – Manufacturing all on your own – If you are intending on manufacturing and marketing the invention on your own, then yes you will need to perform research. Essentially, you become the manufacturer from the product and consequently you should perform homework on your invention just like other manufacturers would. The issue that I have found is that many inventors who elect 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 intending on licensing for royalties, then I believe you can minimize your research efforts, because just before any company licensing your invention, they will perform their very own due diligence. If you are working with a company like Invention Home, the costs to market your invention to companies can be minimal – therefore it could set you back more to actually carry out the research than it could to just market the Inventhelp Products to companies (which, is ultimately your best type of research anyway). Remember, you ought to have taken enough time to accomplish your basic market research along with a patent search earlier during this process to be reassured that your product is worth pursuing to begin with (i.e.: the merchandise is not already on the market and you will find a demand).
Let me summarize. If you are intending on investing a substantial amount of money on your invention, then it is recommended to analyze an opportunity first to ensure it’s worth pursuing; however, in the event you can actively market your invention to companies with minimal cost, you can be reassured that an interested company will do their very own homework (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 really not easy to obtain this information so you need to balance the time and effort and cost of gathering the details with all the real need for having it.
In addition, i offers you some due diligence tips.As discussed, the thought of marketing research would be to gather as much information as is possible to make a well-informed decision on purchasing any invention. In a perfect world, we would have all the appropriate info on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info might not be very easy to come across.
In case you are not in a position to cover an expert firm to do your marketing evaluation, it is actually easy to perform the research all on your own; however, you must know that research needs to be interpreted and utilized for decision-making and on its own, it provides no value. It really is what you use the information that matters. Note: I might recommend that you DO NOT PURCHASE “consumer research” from an Invention Promotion company. Often sold being a “initial step” (they’ll usually approach you again with the expensive “marketing” package), the information is largely useless as it is not specific research on the invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will not always assist you in making an educated decision.
Before we get to the “tips”, let me clarify that “research” can come under various names, but essentially they all mean the same thing. Some of the terms i have experienced to describe the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
Each one of these terms is actually referring to the investigation to evaluate the chance of an 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 to assist you better comprehend the probability of success.
Again, if you are planning on manufacturing your invention all on your own, you should think about performing marketing due diligence 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 research are the following.
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 perhaps the Internet.
– Is the invention a solution to your problem? Otherwise, why do you reckon it is going to sell?
– Does your invention really solve the situation?
– Is the invention already on the market? If so, what does your invention offer on the others?
– The amount of competing products and competitors can you discover on the market?
– What exactly is the range of price of these items? Can your product or service 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 being a better product?
2. List the advantages and disadvantages that can impact how your invention sells and objectively evaluate your list
– Demand – can there be a preexisting interest in your invention?
– Market – does a market exist for your invention, and if so, what exactly is the size of the current 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 – have you got a price point advantage or disadvantage?
– Life – will your invention last over 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 simple to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or exist special laws that 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.
– Speak with marketing professionals.
– Ask sales agents in the field.
– Ask people you know inside the field.
– Speak with close relatives and buddies who you trust.
– Demand input on the invention including features, benefits, price, and in case they would buy it.
Throughout the diligence stage, existing manufactures have an advantage because they have the ability to talk with their clients (retail buyers, wholesalers, etc.). In my experience, probably the most important factors that a company will consider is whether their existing customers would get the product. If I took Invention Help Companies to a company to discuss licensing (assuming they might produce it in the right price point), you will find a extremely high likelihood which they would license the item if a person with their top customers agreed to market 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 where a company had interest inside an invention however they ultimately atgjlh to pass on the idea because 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 with a cool product each time a retailer expresses interest within it.