When inventors contact my company about Due Diligence I like to clarify the concept with a simple example. Think about 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 definitely take their time to make sure that they may be building a good business decision in moving forward with all the product (i.e.: have they done their homework on the product). Therefore, you can summarize “due diligence” as the entire process of gathering all the information necessary to make a good business decision prior to making the large financial expenditure. It can generally be assumed that the additional time, effort and cash (i.e.: “risk”) that a company must spend to develop How To Patent A Product, the more they will evaluate the potential license. Stay in mind that even if a product appears to be simple and low cost, the entire process of developing and manufacturing is rarely simple and inexpensive. Companies will evaluate such criteria as customer comments, retail price points, unit cost to manufacture, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they have to perform Research on their invention. As discussed, this may depend on the option you have elected when planning on taking your product to advertise.
Option 1 – Manufacturing on your own – If you are planning on manufacturing and marketing the invention all on your own, then yes you will need to perform due diligence. Essentially, you feel the manufacturer from the product and for that reason you need to perform due diligence on your own invention just like other manufacturers would. The problem which i have found is the fact that many inventors who opt to manufacture their particular 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, i believe you can minimize your research efforts, because prior to any company licensing your invention, they are going to perform their very own homework. In case you are working with a company including Invention Home, the expenses to promote your invention to companies can be minimal – therefore it could set you back more to really carry out the research than it might to just market the Inventhelp Office Locations to companies (which, is ultimately the best kind of due diligence anyway). Remember, you need to have taken the time to accomplish your basic researching the market as well as a patent search earlier in the process to be reassured that your products or services will be worth pursuing to begin with (i.e.: the product is not really already on the market and you will find a demand).
Let me summarize. If you are planning on investing a large amount of money on your invention, then it is recommended to analyze an opportunity first to make sure it’s worth pursuing; however, should you can actively market your invention to companies with minimal cost, you can be confident that an interested company will work their very own research (not depend on yours). Note: it is always helpful to have marketing due diligence information available when you discuss your invention opportunity with prospective companies; however, it is really not easy to get this information so you have to balance the time and effort and expense of gathering the data with the real need of having it.
I also provides you with some homework tips.As discussed, the thought of marketing homework is always to gather as much information as you can to produce a well-informed decision on investing in any invention. In a perfect world, we might have got all the appropriate info on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details might not be very easy to find.
In case you are not in a position to cover an expert firm to do your marketing evaluation, it really is possible to perform the research on your own; however, you must understand that research should be interpreted and employed for decision-making and on its own, it has no value. It is whatever you do with the information that matters. Note: I would personally recommend that you simply do NOT PURCHASE “market research” from an Invention Promotion company. Often sold as a “initial step” (they’ll usually approach you again with an expensive “marketing” package), the information is largely useless since it is not specific research on your invention. Rather, it is actually off-the-shelf “canned” industry statistics, which will not always assist you in making a knowledgeable 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. A number of the terms which i have experienced to describe the diligence process are:
· Due Diligence
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
All these terms is actually discussing the research to assess the likelihood of an 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 to help you better comprehend the probability of success.
Again, if you are planning on manufacturing your invention on your own, you should consider performing marketing homework on the product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing research are listed below.
1. Ask and answer some fundamental questions
– Can be your invention original or has someone else already think of the invention? Hopefully, you may have already answered this inquiry within your basic research. Or even, check trade directories or perhaps the Internet.
– Is your invention a solution to your problem? If not, why you think it is going to sell?
– Does your invention really solve the issue?
– Can be your invention already on the market? If you have, precisely what does your invention offer within the others?
– How many competing products and competitors can you discover on the market?
– Exactly what is the range of cost of these items? Can your products or services 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 as a better product?
2. List the advantages and disadvantages that will impact how your invention sells and objectively evaluate your list
– Demand – is there a preexisting demand for your invention?
– Market – does a market exist for your invention, and in case so, what exactly is the dimensions of the current market?
– Production Capabilities – could it be easy or hard to produce your invention?
– Production Costs – can you get 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, ease of use)?
– 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 easy to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or are available 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.
– Request objective feedback and advice.
– Talk to marketing professionals.
– Ask sales people in the field.
– Ask people you know in the field.
– Speak to close friends and family members that you trust.
– Ask for input on the invention including features, benefits, price, and in case they would purchase it.
Throughout the diligence stage, existing manufactures provide an advantage in this they have the ability to speak with their potential customers (retail buyers, wholesalers, etc.). In my experience, one of the most important factors that the company will consider is if their existing customers would purchase the product. Basically If I took Getting A Patent to a company to go over licensing (assuming they can produce it in the right price point), there exists a very high likelihood they would license the merchandise if one with their top customers decided to market it.
Whether a retail buyer is interested in buying a product is a driving force for companies considering product licensing. I’ve seen many scenarios in which a company had interest inside an invention but they ultimately atgjlh to move on the idea since their customer (the retailer) failed to show any interest in the product. Conversely, I’ve seen companies with mild interest in an idea who jump in a new product when a retailer expresses interest within it.