When inventors contact my company about Due Diligence I like to explain the concept with a simple example. Think of it this way, if a manufacturer is getting ready to choose 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 definitely take their time to ensure that they may be making a good business decision in advancing with the product (i.e.: have they 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 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 Find A Patent Attorney, the more they will evaluate the potential license. Stay in mind that even if a product appears to be basic and low cost, the 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 need to perform Homework on their invention. As discussed, this can depend on the option you have elected for taking your products or services to promote.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention all on your own, then yes you need to perform due diligence. Essentially, you become the maker of the product and as a result you ought to carry out the research on your invention just like other manufacturers would. The issue which i have found is that many inventors who opt to manufacture their particular inventions do little, if any marketing due diligence, 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 homework efforts, because prior to any company licensing your invention, they will perform their particular homework. In case you are working with a company like Invention Home, the costs to market your invention to companies can be minimal – therefore it might cost more to actually perform due diligence than it might to just market the Inventhelp Store Products to companies (which, is ultimately your best form of research anyway). Remember, you need to have taken enough time to perform your basic researching the market and a patent search earlier during this process to be reassured that your product will be worth pursuing in the first place (i.e.: the product is not already on the market and you will find a demand).
Let me summarize. If you are planning on investing a substantial amount of funds on your invention, then you should always analyze an opportunity first to make certain it’s worth pursuing; however, should you can actively advertise your invention to companies with minimal cost, you can be assured that an interested company will do their particular research (not rely on yours). Note: it is always helpful to have marketing due diligence information available as you discuss your invention opportunity with prospective companies; however, it is far from easy to get these details so you should balance the effort and expense of gathering the details with the real need of having it.
Furthermore, i provides you with some research tips.As discussed, the concept of marketing homework is to gather as much information as possible to produce a well-informed decision on purchasing any invention. In a perfect world, we may have got all the appropriate information on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, this info is not always simple to come across.
If you are not in a position to cover a professional firm to perform your marketing evaluation, it really is easy to perform the research by yourself; however, you need to understand that research ought to be interpreted and employed for decision-making and on its own, it provides no value. It really is everything you do with the information that matters. Note: I would personally recommend that you just 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 because it is not specific research on your own invention. Rather, it is actually off-the-shelf “canned” industry statistics, which will not always help you make an informed decision.
Before we arrive at the “tips”, let me clarify that “homework” can come under various names, but essentially they all mean the same thing. A few of the terms that I have experienced to illustrate the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each one of these terms is actually talking about the research to assess the chance of an invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, but you can perform some steps to assist you better understand the probability of success.
Again, if you are planning on manufacturing your invention all on your own, you should look at 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.
A few recommendations for marketing research are listed below.
1. Ask and answer some basic questions
– Is the invention original or has somebody else already develop the invention? Hopefully, you may have already answered this inquiry inside your basic research. Otherwise, check trade directories or perhaps the Internet.
– Can be your invention a solution to a problem? If not, why do you reckon it will sell?
– Does your invention really solve the issue?
– Is the invention already on the market? If so, what does your invention offer within the others?
– The amount of competing products and competitors can you discover on the market?
– Exactly what is the range of price of these products? Can your product fall into this range? Don’t forget to factor 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 that will impact the way your invention sells and objectively evaluate your list
– Demand – can there be a current interest in your invention?
– Market – does a market exist for your invention, and when so, exactly what is the scale 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 – 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)?
– 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 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 inside the field.
– Request objective feedback and advice.
– Talk to marketing professionals.
– Ask sales agents in the field.
– Ask people you know within the field.
– Speak with close family and friends whom you trust.
– Ask for input on the invention such as features, benefits, price, and if they would buy it.
Throughout the diligence stage, existing manufactures provide an advantage in that they are able to chat with their customers (retail buyers, wholesalers, etc.). Within my experience, just about the most important factors that the company will consider is whether or not their existing customers would buy the product. Basically If I took How To Get A Patent On An Idea to your company to discuss licensing (assuming they could produce it on the right price point), you will find a high likelihood which they would license the merchandise if one of their top customers agreed to market it.
Whether a retail buyer is interested in purchasing a item is a driving force for companies considering product licensing. I’ve seen many scenarios in which a company had interest in an invention nevertheless they ultimately atgjlh to move on the idea because 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 each time a retailer expresses interest inside it.