When inventors contact my company about Due Diligence I like to explain the reasoning with a simple example. Think about it this way, if a manufacturer is getting ready to decide to develop, manufacture, and market a new item that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would definitely take their time to ensure that they are building a good business decision in moving forward with the product (i.e.: have they done their homework on the product). Therefore, you can summarize “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 Patent Help, the more they will evaluate the potential license. Stay in mind that even if a product appears to be basic and affordable, the whole process of developing and manufacturing is rarely simple and affordable. Companies will evaluate such criteria as customer comments, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Due Diligence on their own invention. As discussed, this may depend on the option you might have elected when planning on taking your product or service to promote.
Option 1 – Manufacturing on your own – If you are intending on manufacturing and marketing the invention by yourself, then yes you will need to perform due diligence. Essentially, you are the manufacturer in the product and consequently you ought to perform homework on your invention just like other manufacturers would. The issue i have found is the fact many inventors who opt 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, then I believe you can minimize your due diligence efforts, because before any company licensing your invention, they will perform their particular due diligence. Should you be employing a company including Invention Home, the expenses to promote your invention to companies can be minimal – therefore it might cost more to really carry out the research than it might to just market the Inventhelp Office to companies (which, is ultimately your very best form of research anyway). Remember, you need to have taken the time to accomplish your basic market research and a patent search earlier in the process to be confident that your products or services is worth pursuing in the first place (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 substantial amount of money on your invention, then it is recommended to analyze the chance first to make certain it’s worth pursuing; however, in the event you can actively advertise your invention to companies with minimal cost, you can be assured that an interested company will perform their very own homework (not count on yours). Note: it is always beneficial to have marketing due diligence information available as you discuss your invention opportunity with prospective companies; however, it is not always easy to obtain this info so you have to balance the effort and expense of gathering the information with the real necessity of having it.
Furthermore, i provides you with some homework tips.As discussed, the thought of marketing due diligence is to gather as much information as possible to create a well-informed decision on making an investment in any invention. In a perfect world, we may have all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info may not be very easy to come across.
In case you are not in a position to cover a professional firm to perform your marketing evaluation, it really is possible to carry out the research all on your own; however, you must know that research ought to be interpreted and used for decision-making and alone, it has no value. It really is what you use the details that matters. Note: I would personally recommend that you DO NOT PURCHASE “consumer research” from an Invention Promotion company. Often sold as being a “starting point” (they’ll usually approach you again having an 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 can not necessarily help you make a knowledgeable decision.
Before we reach the “tips”, let me clarify that “research” can come under various names, but essentially each of them mean exactly the same thing. A number of the terms that I have seen to explain 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 research to gauge the chance of the invention’s salability and profitability. The question of whether your invention will sell can never be known with certainty, however you can perform some steps to help you better understand the probability of success.
Again, if you are intending on manufacturing your invention all on your own, you should think about performing marketing homework on your own product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing homework are listed below.
1. Ask and answer some elementary questions
– Is your invention original or has someone else already develop the invention? Hopefully, you have already answered this question within your basic research. Otherwise, check trade directories or the Internet.
– Is the invention a solution to a problem? Otherwise, why do you reckon it can sell?
– Does your invention really solve the problem?
– Is your invention already on the market? If so, exactly what does your invention offer within the others?
– How many competing products and competitors can you discover on the market?
– What is the range of value of these products? Can your products or services fall into this range? Don’t forget to element in profit and maybe wholesale pricing and royalty fee, if any.
– Can you position your invention being a better product?
2. List the advantages and disadvantages which will impact the way your invention sells and objectively evaluate your list
– Demand – can there be a preexisting interest in your invention?
– Market – does a market are available for your invention, and in case so, what is the dimensions 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 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 easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are there special laws that really must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts in the field.
– Request objective feedback and advice.
– Speak with marketing professionals.
– Ask sales representatives inside the field.
– Ask people you know inside the field.
– Talk to close family and friends that you trust.
– Request input on the invention such as features, benefits, price, and if they might buy it.
During the diligence stage, existing manufactures provide an advantage in this they have the ability to chat with their customers (retail buyers, wholesalers, etc.). Inside my experience, one of the most important factors which a company will consider is if their existing customers would buy the product. Should I took What To Do With An Invention Idea to a company to talk about licensing (assuming they might produce it on the right price point), there exists a high likelihood they would license the product if an individual of their top customers decided to sell it.
Whether a retail buyer has an interest in purchasing a item is a driving force for companies considering product licensing. I’ve seen many scenarios wherein 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 in an idea who jump in a new product whenever a retailer expresses interest within it.