When inventors contact my company about Due Diligence I like to describe the reasoning with a simple example. Consider it this way, if a manufacturer is getting ready to decide 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 ensure they may be creating a good business decision in continuing to move forward using the product (i.e.: have they done their homework on the product). Therefore, you can sum up “due diligence” as the 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 more hours, effort and cash (i.e.: “risk”) that a company must spend to develop Getting A Patent, the more they will likely evaluate the potential license. Keep in mind that even if a product seems to be simple and inexpensive, the process of developing and manufacturing is rarely simple and low cost. Companies will evaluate such criteria as customer feedback, retail price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they need to perform Due Diligence on their own invention. As discussed, this may depend on the option you have elected when planning on taking your products or services to advertise.
Option 1 – Manufacturing all on your own – If you are planning on manufacturing and marketing the invention on your own, then yes you need to perform homework. Essentially, you feel the producer of the product and consequently you should perform homework on the invention just like other manufacturers would. The problem that I have found is the fact many inventors who choose to manufacture their very own inventions do little, if any marketing due diligence, which is a big mistake.
Option 2 – Licensing for Royalties – if you are intending on licensing for royalties, then I believe you can minimize your homework efforts, because just before any company licensing your invention, they will perform their very own homework. If you are employing a company including Invention Home, the costs to market your invention to companies can be minimal – therefore it could cost you more to really perform the due diligence than it might to just market the Inventors Corner to companies (which, is ultimately your very best kind of homework anyway). Remember, you should have taken time to accomplish your basic consumer research and a patent search earlier along the way to be assured that your product or service may be worth pursuing in the first place (i.e.: the item will not be already on the market and there is a demand).
Let me summarize. If you are planning on investing a lot of cash on your invention, then you should always analyze the opportunity first to make certain it’s worth pursuing; however, should you can actively market your invention to companies with minimal cost, you can be assured that an interested company will work their own due diligence (not rely on yours). Note: it is usually beneficial to have marketing research information available as you discuss your invention opportunity with prospective companies; however, it is really not easy to obtain this information so you need to balance the effort and cost of gathering the details using the real need of having it.
Furthermore, i offers you some homework tips.As discussed, the thought of marketing due diligence would be to gain as much information as possible to create a well-informed decision on purchasing any invention. In a perfect world, we would have 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 easy to come by.
Should you be not in a position to pay for an expert firm to accomplish your marketing evaluation, it is possible to carry out the research by yourself; however, you must know that research should be interpreted and employed for decision-making and on its own, it offers no value. It really is what you do with the information that matters. Note: I would recommend that you just do NOT PURCHASE “researching the market” from an Invention Promotion company. Often sold being a “first step” (they’ll usually approach you again with an expensive “marketing” package), the details are largely useless since it is not specific research on the invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will possibly not assist you in making an educated decision.
Before we arrive at the “tips”, let me clarify that “research” can come under various names, but essentially each of them mean the same. A number of the terms which i have experienced to describe the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each of these terms is basically referring to the study to assess the likelihood of your 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 assist you better understand the likelihood 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 intending on licensing your invention for royalties the company licensing your invention should perform this research.
Some suggestions for marketing research are highlighted below.
1. Ask and answer some elementary questions
– Is your invention original or has somebody else already think of the invention? Hopefully, you may have already answered this query within your basic research. If not, check trade directories or perhaps the Internet.
– Is your invention a solution to a problem? Or even, why do you think it can 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 find on the market?
– Exactly what is the range of cost 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 as 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 an existing demand for your invention?
– Market – does a market exists for your invention, and if so, what exactly is the scale of the market?
– Production Capabilities – might it be easy or difficult to produce your invention?
– Production Costs – can you obtain 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, 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 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 very 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 within the field.
– Ask for objective feedback and advice.
– Talk to marketing professionals.
– Ask sales representatives inside the field.
– Ask people you know within the field.
– Talk to close relatives and buddies who you trust.
– Demand input on the invention including features, benefits, price, and if they might purchase it.
Through the diligence stage, existing manufactures have an advantage in that they have the capacity to speak with their clients (retail buyers, wholesalers, etc.). In my experience, just about the most important factors that the company will consider is if their existing customers would purchase the product. Should I took How Do You Get A Patent With Inventhelp to a company to talk about licensing (assuming they might produce it at the right price point), you will find a extremely high likelihood they would license the item if a person with their top customers consented to sell it.
Whether a retail buyer has an interest in buying a product 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 as their customer (the retailer) did not show any interest within the product. Conversely, I’ve seen companies with mild interest inside an idea who jump with a new product whenever a retailer expresses interest within it.