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 product which could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most certainly 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 “research” as the entire 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 money (i.e.: “risk”) that a company must spend to develop How Do You Patent An Idea With Inventhelp, the more they are going to evaluate the potential license. Stay in mind that even if a product appears to be basic and inexpensive, the whole process of developing and manufacturing is rarely simple 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 have to perform Due Diligence on their invention. As discussed, this will depend on the option you have elected to take your product or service to promote.
Option 1 – Manufacturing by yourself – If you are intending on manufacturing and marketing the invention by yourself, then yes you need to perform homework. Essentially, you are the maker from the product and as a result you should carry out the due diligence on the invention just like other manufacturers would. The situation which i have found is the fact that many inventors who opt to manufacture their own inventions do little, if any marketing homework, which is 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 are going to perform their own homework. Should you be using a company like Invention Home, the costs to promote your invention to companies can be minimal – therefore it could set you back more to actually perform due diligence than it might to just market the Inventhelp Prototype to companies (which, is ultimately your very best form of due diligence anyway). Remember, you ought to have taken enough time to perform your basic researching the market as well as a patent search earlier along the way to be reassured that your product is worth pursuing to begin with (i.e.: the item is not already on the market and there exists a demand).
Let me summarize. If you are planning on investing a lot of funds on your invention, then it is recommended to analyze the chance first to ensure it’s worth pursuing; however, if you can actively promote your invention to companies with minimal cost, you can be confident that an interested company will perform their own homework (not rely on yours). Note: it is usually beneficial to have marketing research information available when you discuss your invention opportunity with prospective companies; however, it is far from easy to obtain these details so you need to balance the effort and cost of gathering the data using the real need of having it.
I also offers you some research tips.As discussed, the thought of marketing homework is to gather as much information as you can 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 information may not be simple to come across.
In case you are not in a position to cover an expert firm to do your marketing evaluation, it really is easy to perform research all on your own; however, you need to understand that research needs to be interpreted and utilized for decision-making and by itself, it provides no value. It really is everything you do with the information that matters. Note: I would recommend that you DO NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold as being a “initial step” (they’ll usually approach you again with the expensive “marketing” package), the details are largely useless since it is not specific research on your own invention. Rather, it is actually off-the-shelf “canned” industry statistics, that can not necessarily help you make a knowledgeable decision.
Before we arrive at the “tips”, let me clarify that “due diligence” can come under various names, but essentially they all mean the same. A number of the terms i have experienced to explain the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Consumer Research
· Invention Assessment
Each of these terms is actually referring to the investigation to gauge the likelihood of an 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 that will help you better be aware of the likelihood of success.
Again, if you are intending on manufacturing your invention all on your own, you should look at performing marketing due diligence on the product. If you are intending on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing due diligence are highlighted below.
1. Ask and answer some elementary questions
– Is the invention original or has somebody else already think of the invention? Hopefully, you have already answered this inquiry within your basic research. Or even, check trade directories or even the Internet.
– Can be your invention a solution to your problem? If not, why you think it can sell?
– Does your invention really solve the problem?
– Is your invention already on the market? In that case, what does your invention offer within the others?
– The number of competing products and competitors can you find on the market?
– What exactly is the range of value of the products? Can your product or service fall into this range? Don’t forget to factor in profit and possibly wholesale pricing and royalty fee, if any.
– Can you position your invention as a better product?
2. List the pros and cons that can impact the way your invention sells and objectively evaluate your list
– Demand – can there be an existing demand for your invention?
– Market – does a market exist for your invention, and when so, what exactly is the scale of the market?
– Production Capabilities – could it be easy or hard to produce your invention?
– Production Costs – can you have 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)?
– 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 – 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 must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts in the field.
– Demand objective feedback and advice.
– Speak to marketing professionals.
– Ask sales people inside the field.
– Ask people you know inside the field.
– Speak to close family and friends that you trust.
– Ask for input on the invention including features, benefits, price, and in case they would buy it.
Through the diligence stage, existing manufactures provide an advantage in that they have the capacity to speak with their customers (retail buyers, wholesalers, etc.). In my experience, one of the most key elements which a company will consider is if their existing customers would buy the product. Basically If I took Getting A Patent to a company to talk about licensing (assuming they can produce it in the right price point), you will find a high likelihood they would license the merchandise if a person of the top customers decided to sell it.
Whether a retail buyer has an interest in investing in a item is a driving force for companies considering product licensing. I’ve seen many scenarios wherein a company had interest in an invention but they ultimately atgjlh to move on the idea since 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 new product whenever a retailer expresses interest within it.