Use the following form to evaluate yourself and your product on each factor. The form is designed to help you to develop a plan of action to move your product forward. Several factors are listed on the left-hand side. You need to understand each factor and have some thoughts and plans as to how you will deal with it. For instance, item 12 below is packaging, if you have not thought about how your product will be packaged then you need to start. Write some notes about how it might be packaged and if you need to talk to someone in the packaging industry to get more information, then make a note to do that. Once you have the form filled out you will have an outline for your plan of action. As you resolve issues then you should change the note and continue to update the form. Leeds hotelsFor more room, write your thoughts on a separate sheet of paper.

Overall

1. How do you plan to make money with this idea (license, start a business to sell, etc.)
2. How much time do I have to spend on this project each week?
3. What skills do I have?
4. What skills will I need from someone else?

Finance

5. How will I finance the startup costs?
ERROR MSG 6. How can I structure the project to raise the money I need?
7. Does the product have socially significant benefits that might justify grant funding?

Product Factors

8. What will the product cost to produce?
9. What will be its size, weight, and speed?
10. Safety, health, environmental issues?
Austria Information 11. Ease of use, ease of repair, reliability?
12. Packaging required?
13. Ease of manufacture, does it need special tooling?
14. Noise, odor, taste

Legal Factors

15. Patent disclosure, patent search, patent
16. Trademarks, copyrights
17. Form of corporation?
18. Product liability

Market Factors

19. Market size
20. Ease of market penetration
21. Competition
22. Price of my product in market place
23. How can I learn more about pricing my product?
24. Distribution path and discounts to wholesalers, distributors, retailers?
25. Market dependence on other products
26. Consumer education required?

Technical, Manufacturing, Prototyping

27. How can I get drawings and a prototype?
28. Can I contract some of the manufacture?
29. Bill of all materials plus likely labor costs. Tooling required.
30. Operating manual

If you have questions, refer to the notes on each topic below.

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Notes on Each Item for Roadmap to Success

Overall

1. There are several ways of making money on an idea. One common way is to start your own business to make and sell the idea, another way is to license the idea to some other manufacturer. And there are shades of gray in between that might involve you having someone else manufacture the product while you market it or you might license a product but hire on to the licensing company as a technical consultant. It is difficult to license "just an idea"; you need to move the idea as far along as you can to have a chance to license it.

2. If you work full time it is difficult to devote the time to an idea to make it a success. Think about how you can utilize your time and the time of others to move the product forward.

3. You may have specific skills like an engineering license, or your skills may be harder to define, such as the ability to motivate others to help you or the ability to sell yourself. All these skills will be important. If you have a team or partnership you can include the skills of each person. Do you have a firm (written) understanding of each person's role?

4. If you lack specific skills it is important to recognize this and to have a plan to fill the holes. If you need more skills in a specific area of marketing how will you get those?

Finance

5. The initial cost of new product development typically must come from the inventor, his family and friends. These initial costs are things like patents, prototypes or at least drawings, and basic market research. Some entrepreneurs will go far beyond these initial steps and actually test market a product. Banks will not loan money on an idea although they may give you a personal loan based on your credit worthiness. There are no grants out there for ideas; grants typically fund socially important projects.

6. You need to plan out the cash flow. Typically a new idea is a very expensive thing and you will dig a big hole before you see any positive cash flow coming back. Inventors typically underestimate the amount of time and amount of money the whole process is going to take.

pai gow casino7. Many clients ask me about the possibility of grant funding. The most likely answer is NO. See "Can I get a grant to start my business?" for more details.

Product Factors

8. You need to estimate the cost to produce you product. Include all material and labor costs. In the beginning you may need to buy retail, but as you grow a business you will be able to start buying wholesale. There are usually discounts for buying quantity, but keep in mind that this often requires that you tie up a lot of cash. There is usually more than one possible cost to produce, depending on how much money you invest in tooling. But again, expensive tooling is a use of cash and the money has to come from somewhere.

accommodation in Eger9. Consider issues like size, weight and speed of the item. Are there ways to improve the product and can you offer more than one model or package?

10. Consider regulatory issues. How do these factors help or hurt your products? How can you capitalize on these?

11. Consider ease of use; what is obvious to the inventor is often not obvious to others. How will you handle repairs and service needs?

12. Remember that for retail products the package is often the first and sometimes only thing the customer sees. With small consumer products it is not unusual for the package to cost as much as the product; consider quantity per package. Even if the package is just for shipping, someone still needs to design a package that will ship the product effectively.

13. Ease of manufacture can be a very critical factor. Often the cost of tooling dictates that an inventor can not bring the product to market themselves. Plastics and electronics products often fit this description unless the product champion has money or is good at raising the needed money.

14. Consider noise, odor, taste and other factors that might bother some users of the product.

Legal Factors

15. Do patents apply to the product? Do a patent search to determine if you infringe another patent and if your product is patentable. Licensing typically requires a patent up-front, but you may have some other options if you plan to bring the product to market yourself.

16. Trademarks protect the name or logo of a product. Do a trademark search; then consider the use of common law or registered marks. Copyrights protect works of authorship.

17. Forming a corporation can provide some protection from lawsuits for your personal assets.

18. Some potential distributors and retailers will require you to have product liability insurance prior to selling your product, if this is the case for your product then you will need to price the insurance, which is typically dependent on the type of product and the number to be sold.

Market Factors

19. The size of your market is important, but often a large market works to the disadvantage of the inventor. The reason for this has to do with market resistance and competition. I have seen many more inventors succeed with a high priced product for a narrow market then I have seen succeed with a low cost mass market type product.

20. Ease of market penetration is something that inventors usually fail to estimate. Just because you have a great product is no guarantee that you will succeed.

21. Most inventors fail to adequately evaluate the competition while working on a concept. Recognize that similar products can be competing for the same money from the consumer. Also recognize that most people resist change to some extent, even change to a better way. A mediocre product backed by a great organization will almost always beat a great product backed by an inadequate organization.

22. Price is an issue that is very difficult for inventors. Many under price the product based on a misguided feeling that this will allow them to break in to a market. Rule number one is never try to underprice someone financially bigger than you and rule number two is that if you have a better new product you should be able to charge a premium price for it. Base the price of your product off customer perception, not based on what it costs to produce.

23. Learn more about how to price your product by asking questions and getting involved with that market. If you have a veterinarian product ask vet's what kind of products they like to have and what percentage markup they need. Attend trade shows, walk in store and ask questions, develop a thick skin when people tell you "NO" when you ask these things. Some people will help you and some will not.

24. Develop a plan for distributors. They need to buy quantities of products at a discount so that they can sell to retailers, who in turn need a discount. These discounts can be pretty high, sometimes as much as 50% or more, but are highly dependent on the product and distribution network involved.

25. Market dependence means that sales of your product depend on the sales of some other product. If you invent a new windshield wiper, the sale of your product is related to and dependent upon the sales of cars, the number of cars on the road and regulations on cars.

26. Customer education is another area that inventors typically underestimate. We tend to take consumer education for granted because we are so bombarded by it all the time. A new product always requires some education of the consumer as to how to use the product and what the benefits are. How you deliver this information to the potential customer is one of the most critical decisions you will make. Just getting the product on the store shelf is usually not nearly enough.

Technical, Manufacturing, Prototyping

27. You need to communicate your idea to others. You understand your idea but others do not. Drawings, a web page, a prototype or a videotape can help you get the message across.

28. Many products can be produced by custom manufacturers if you are willing to take the risk. Custom manufacturers are readily available in packaging, assembly, machining, textiles and woodworking. Typically the approach is to locate a couple manufacturers who are willing and able to do the work. Get each to bid based on setup and production. Get bids on different quantities so that you understand where the price breaks will be. Use a secrecy agreement (samples here and here) if you don't have patent protection yet.

29. Describe each part of the product, who will supply it and what the cost will be. You can get bids on custom parts once a drawing is available. Include labor in your bill. This document will allow you to come up with a cost to produce your device. You may need two or three of these bills of material depending on different levels of production. Compare the cost of production to the market price above, a small consumer product often sells at retail for 5 times its production cost. A high-ticket niche product might be viable for a retail price 2½ to 3 times production cost, including packaging.

30. Don't forget the instruction manual, especially where the product has a significant price tag. An exploded view will allow the customer to order replacement parts and will also provide a basis for phone conversations.

 

 

CONTACT FOR INFORMATION: Mark Manley, Consulting Engineer; Bill McKnight, Consulting Engineer - Center For Technology And Small Business Development (660) 543-4402 or 543-8162 (Call to request a hard copy of the forms above) Central Missouri State University Small Business Development Center Center for Technology and Small Business, G-009 Warrensburg, MO 64093 Phone (660) 543-4402 or (660) 543-8162 FAX (660) 543-8159