Stage One for a Successful Product Launch
June 23, 2015 Linked In
If you have a GREAT idea to produce and distribute in your own new business, there are a myriad of details to consider to successfully launch and profitably operate your company. I have founded many businesses over the past 40 years and produced hundreds of products with total revenues of over $100 Million, so I have learned a lot over the years!
Here is the first of my Five key stages to successfully launch your product and company:
STAGE 1 - PRODUCT DESIGN and FINANCIAL PROJECTIONS
Develop production specifications to review with potential factories and packaging designers
Obtain patents, if applicable. Provisional Patents are inexpensive, do not require expensive legal fees and gives you one year to properly test market your products.
Test market your products with your proposed retail pricing with focus groups and potential retailers.
Locate potential factory suppliers domestically or overseas.
Obtain price quotations and negotiate payment terms. This is very important to properly calculate proper margins to wholesale and retail, then test those price points in the marketplace BEFORE investing your precious funds for inventory. In addition, it will give you real numbers for your projected cash needs to buy inventory.
Develop a clear business plan for financing needs on initial inventory, artwork prep, warehousing and general business set up requirements
Secure initial working capital from savings, friends/family, investors or crowd funding to properly finance initial business needs including inventory costs, set up costs and initial 6 months of administrative expenses.
How to determine your product’s viability to launch a successful business
November 15, 2015 Linked In
What makes your product that you invented or designed unique, different and desirable in the marketplace? What steps do you need to take to analyze your market niche to move forward with your product in launching your own business? It is important to carefully study the marketplace online and in retail stores, to determine the desire and need for your product. If you have a picture or actual sample, you can ask for feedback from local merchants and friends as well.
Who is your customer? Do you know this market niche well? Do you have competitors offering a similar product? Can you add variations of color, shape and design to expand your offering? What should the retail price be for your product that consumers will feel is competitive and affordable?
These are very important questions that you need to answer, to the best of your ability, before investing your money or investor’s funds into production molds, inventory, websites and the myriad of start up costs to operate your business.
Based on your target retail price, your ‘landed’ cost should be no more than 25% of your projected ideal retail price. I have found over the 40+ years running my own businesses, that having a 2.5 to 3 times mark up from your final cost into your warehouse to the wholesale price, then doubling that to retail, is best for a profitable business model.
Once you feel confident from your market research to move forward, you need to develop a clear plan and budget to operate your product based business. You will need to find the best factories domestically or overseas to produce your products are a fair price with dependable quality control and delivery times that also meet your cost margins for a profitable business. There are strategies that can be utilized to negotiate minimum production runs and terms of payment with your suppliers overseas to support your budget and inventory needs.
If you’re interested in getting more details on how to take your product to the next step, email me for your complimentary Product Launch Strategy Session to discuss the nature of your project, your challenges and how I might be able to support you.
LAUNCHED MY NEW COMPANY - BONSAI URN
Published December 10, 2017
I am happy to report that I have successfully launched my new company, Bonsai Urn, in the past month. I have been working on this product idea for almost two years, applying many of the concepts, expertise and patience to my own new business that I have offered to my clients. You can take a look at the completed 'picture' of this process and the initial designs at www.bonsaiurn.com.
I became aware of the growing interest in families wanting options for celebrating their loved ones that chose cremation. After my initial moment of inspiration (the 'ah hah' moment) in late 2015, I began to work with a local product engineer to determine how best to design a ceramic pot with an effective technology to grow a Bonsai Tree or any plant from the remains of your loved ones (people or pets). This will give families a 'portable' green option to grow loving memories and a fresh, new way to keep the cremains in one's home. We went through a number of ideas to settle upon the concentric ring assembly system to safely hold the cremains, soil and plant.
As with many inventions, there were numerous delays including incorrect design calculations, factory issues to get everything fitting together correctly, timing issues with the factories, and a myriad of details that need to come together to fully produce and launch a new product based company. I also filed my first patent and have gone through the long process of working with attorneys, the USPO and practicing more patience.
Of course, I needed to have a website built. The website is SO important to design and implement properly, as that is the first place that most potential customers...business and consumers...will discover, learn and order your products. I was fortunate to have a long time friend locally that I trusted who took on the web development project. Working with him was a joy and the final result was elegant, effective and exactly what I wanted. I also needed to secure a reputable fulfillment company and work out the details to receive our first container shipment later in December.
I took a leap of faith to become an exhibitor at the annual National Funeral Director Association trade show in Boston with a full booth to introduce my Bonsai Urn in early November. I designed a lovely banner poster for the back wall, postcards, and new business cards. It took a lot of web searching to find the type of simple circular pedestal tables that are affordable and look great covered with a tablecloth. I arranged to have all these items shipped to the show in plenty of time to be sure everything was in my booth when I arrived to set it up.
The factory sent us nine completed samples directly to the trade show warehouse from China at a cost of $750 freight with DHL and arrived on time. However, when I arrived, the trade show freight folks could not find my samples. They were no where to be found! Fortunately, I had the foresight to send 3 extra samples that I had at home, in case I needed extras for the booth. That's all I had for the show...and all I needed to create an effective booth display! A bit stressful...YES...but it worked! The 'missing' samples showed up after the show and were sent to my home a couple days later. You need to be prepared for all contingencies, especially with a new product from a new factory and tight timelines!
The response from the funeral home owners and directors was everything I could have hoped for and more. Many folks told me that the Bonsai Urn is the most innovative, elegant urn product that has been introduced to the industry for many years. A film crew from the local Boston NBC TV did an interview with me, which will be aired soon along with other new products and trends from the show. Another filmed interview with the Bonsai Urn will be included in a new documentary for HBO later next year on the growing trends towards cremation and 'green' options for end of life celebrations.
Now comes the fun part...Marketing, marketing and more marketing! You can design the best product in the world...but without sales and proper margins, you just have a lot of inventory. I have great contacts with the main online merchants selling to the funeral industry that will be offering our Bonsai Urn. I will need to improve my skills and depend on a talented team to implement a successful online ad campaign to the consumer with Facebook and Google ads. Web technology has allowed us to include an 'Affiliate' link on our website to give anyone the opportunity to offer the Bonsai Urn to their friends and business associates, thereby receiving an ongoing referral commission on all orders from their referrals.
I continue to offer my consulting services to aspiring inventors that are ready to take the next steps towards launching their products. If you would like to start following the Bonsai Urn, please connect with the new Bonsai Urn LinkedIn page. I am looking forward to the new year with wonderful opportunities of creating abundance for my family, friends and community. Thanks for sharing the journey...
TIMING IS EVERYTHING
Published April 20, 2017 LinkedIn
Do have a great idea for the best new product? Do you imagine yourself building a sucessful business of your own? If so, what are the first steps you need to take to make it a reality?
Many of us have lots of cool ideas every day, but most of them are just thoughts and not worthy of all the time and work to manifest them into real products.
Once you have the passion and belief in your product idea, you need to take action steps to go from thought to an income producing company. Here are some steps and the timing for you to consider:
1. Do Market Research First! A simple exploration online with key words will show you what other similar products might be on the market already, how much they cost, and how widely they might be distributed with various key online retailers. This will help you determine if your idea is unique enough to proceed.
2. Product Specifications – list all the unique features, sketch a simple drawing, basic size, measurements and shape. Who is your key target customers? What is your ideal retail price? Work with a Product Engineer, Graphic Artist (or do it yourself, if you have the knowledge) to develop a clear ‘blueprint’ or plans so that a factory can properly understand what it is you want them to produce for you. This usually includes a CAD file, especially if your product is three dimensional.
3. Patents – is your product Patentable? Do a quick search at USPO.com with key words. You can also choose to get a more serious patent search with many online services ($250 - $500). If your product is patentable, look into filing a Provisional Patent ($165 plus attorney fees) to give yourself one year to decide whether to move forward to file a full ‘non provisional’ patent ($1,000 plus attorney fees).
4. Get Price Quotations from a factory. Your product may be able to be produced domestically (‘Made in America’ has a great cache) but most products are not able to be competitive based on labor costs in the U.S. compared to China or elsewhere overseas. You can find good Sourcing Agencies that have reliable factories that they have vetted, so you are not exposing your great idea to be copied before you even get to market. There are also factories you can find directly on Alibaba.com, but be careful to check them out thoroughly before showing them the product details.
5. Do the Math! Based on your costs, including duty and freight to your local warehouse, what should your wholesale and retail price be for proper, healthy profit margins? How much will you need to invest based on the minimum order quantity and any tooling/mold costs with the factory. What other costs will you need to invest for websites, trade shows, online marketing campaign, package designing, office set up costs, and more? Be sure you don’t ‘over engineer’ your product so that the cost and estimated retail price for appropriate profit margins is not more than what your customer will pay for it.
6. How much Money do you need? By understanding your costs, margins, and all your set up costs, you can get a clear idea of how much capital you will need to invest over the next 6 – 18 months to get your product made and into the marketplace. Depending on the complexity of your product, you may need anywhere from $25,000 - $500,000 to get started.
7. Raise the Money. How much do you have in savings and are willing to invest as risk capital? Who do you know (friends and family) to raise capital as loans or equity/stock? You can also look at using the crowdfunding option of Kickstarter or Indigogo. This does raise a potential risk of having your product copied months before you release it, as many unscrupulous factories overseas look at new offerings daily to get ideas.
8. Is Licensing an option? You might not want to take on the full responsibility and work that it takes to create a business around your product idea. Licensing is an option, to find the ‘right’ company that will develop, invest and market your product. This will give you passive income based on the current royalty rate of 3% - 5% on net sales. If you have a ‘home run’ and the company can do $1 Million in annual sales, that would be $30,000 per year in royalties. Licensing takes a lot of work as well, to find the appropriate companies that have licensing programs in place. It can often take over a year to negotiate a licensing contract, once you find that ‘perfect’ company, based on my experience and that of other licensing agents that I know.
9. Marketing, Marketing, Marketing! Once you decide to move forward into production, have approved pre-production samples and a delivery date, get everything set up to handle shipping and billing the orders. Then SELL, SELL, SELL! Get your website ‘live’ with proper SEO, Google/Facebook ads, line up trade shows for wholesale or retail sales, do PR, a Social Media campaign, mailings to all your lists, and more! You now will have the opportunity to grow your new business as big as your dreams…and touch people’s lives with your creations.
Feel free to look at my website, www.dreamproductguru.com, to learn more about my background and offerings in Product Development, Sourcing and Marketing and how I can support you in reaching your dreams . There are a number of other articles on my ‘blog’ page that you may find helpful as well. I wish you Perfect Timing for a wonderful future with your great ideas!
HOW MUCH SHOULD YOUR PRODUCT COST?
Published Feb 16, 2017 LinkedIn
You may have invented a Great Product and want to see it become the next BIG THING! You most likely will be hoping to become a millionaire as well with your product! There are a myriad of steps and details that need to be taken to get from product concept to shipping finished goods to your customers.
First and foremost is WHAT SHOULD IT COST YOU…and WHAT PRICE SHOULD IT RETAIL AT?
Knowing your costs and understanding your margins from cost to wholesale to retail, allow you to determine IF your product will be successful and become a profitable business (rather than an unintentional ‘non-profit’ business).
How do you get an accurate price quotation to produce your product? You first need to have a clear ‘blue print’ of your product, showing all dimensions, materials and related details that a factory needs to understand in order to calculate a price to you including their labor, materials and margins. If your product is three dimensional, you will most likely need to hire a Product Engineer to prepare the proper drawings and 3D CAD files to show a factory.
Finding a reliable factory can be another challenge. You can often find many potential factories overseas using Alibaba.com. However, it is hard to know how large or small a listed supplier is or how reliable they are in terms of keeping your product concept confidential to avoid getting copied before you even get started (regardless of whether you having a patent pending or a signed NDA). You want to find a reliable factory with a good reputation that will quote you a fair competitive price. There are a number of good sourcing agencies available in the U.S. that have long term relationships and offices overseas that are often the best option. You will pay a bit more than directly to the factory (usually 5% - 10% more), but if your costs are in line with proper margins to wholesale and retail, it is well worth having a professional team on board. If you need them to help you fine tune and engineer your design, then additional fees are appropriate.
You will need to know if there are any one time tooling costs or set up costs. You also need to request minimum quantities for your quotation. I usually ask for quotes on 1,000 up to 10,000 units, depending on the cost per unit. A rule of thumb is that a factory generally does not want to do a custom production run for less than a $5,000 invoice. If you work with a sourcing agency, they will sometimes amortize the tooling costs and other engineering costs on the first production run to give you a simple price per unit along with minimum order quantities (MOQ).
Don’t forget to have the factory or agency include freight (and duty, if importing) for a ‘landed’ price to your warehouse for your true cost per unit. The cost for shipping by ocean freight (usually consolidated with other shipments unless you have enough product and volume to fill a complete 20’ container) or air freight can vary greatly, depending on the time of year and who you choose as your freight forwarding agency. You also need to factor in the inland freight from the factory to the ocean port city or airport as well as freight from your local U.S. ocean port or airport to your warehousing facility. The duty will vary depending on the product category can can be as high as 21% on hand blown glassware (average is 5% - 10% on most goods unless they are ‘duty free’). You need to have a good sourcing agency or customs broker to determine the proper duty codes from the U.S. Customs office, to import your products and fill out the duty forms properly to get them cleared through customs.
Once you know your cost per unit, you can then determine the preferable retail price for a profitable company. This is usually 4 – 6 times your landed cost which gives you a 65% - 80% gross margin on wholesale (which is usually half of retail). The larger ‘big box’ stores will often demand volume discounts, so you need sufficient margins to stay profitable on volume orders.
The other VERY IMPORTANT question to consider is WHAT WILL THE CUSTOMER PAY for your product. Are there other products in the marketplace that are somewhat similar? This is sometimes called ‘market based pricing’. How much do they sell for online or in stores? How different is your product as a ‘better mouse trap’? Do your homework and market research before spending all your savings and that of your investors on producing something that might be too expensive and therefore not succeed.
For example, if your landed cost is $10.00, which means the retail will be around $50 - $60 for a healthy margin, is that comparable to other products in the marketplace? If your competition is selling in the $25 - $30 retail range, your product will be much harder to sell successfully unless it has a lot of added features and benefits that will be attractive to the more discerning, upscale customer. You may need to find ways to simplify your product design and materials to keep your costs down to stay competitive.
I have gone through this process hundreds of times over the past 45 years with my housewares and gift companies that I have built. It is an exciting and challenging process…but when it works well, the benefits for everyone are well worth it! Feel free to contact me to review your project and determine how I can best support you through the process. I hope your invention becomes the next BIG THING and all your dreams are realized!
FORGET LICENSING! PRODUCE IT YOURSELF!
November 19, 2016 Linked In...
Most Inventors dream of licensing their great ideas to the perfect company and sit back to collect their millions in royalty! This does happen occasionally with an invention that creates a completely new product category and a licensee that has the vision to put their full capital resources behind it.
However, in my experience, this rarely happens. Finding the ‘right’ company that is interested in your invention is very challenging. The prospective licensee needs to have a licensing program in place with a formal submission process in order. Otherwise, you are wasting your time and opening up the possibility sooner that your idea might be knocked off. Most companies do not work with inventors on licensing deals as they have their own ‘in house’ designers or depend on overseas factories to be creative for them.
I recently decided to represent a number of inventors as an agent in the housewares and hardware industry to see if I could overcome these challenges, based on my many years of experience with my own product companies and contacts in these markets. I attended the major national trade shows, walking the aisles to find the appropriate licensee partners. I did find a number of parties to discuss the opportunity to license these wonderful inventions. However, despite my intensive follow up calls and emails with a number of potential licensees, no deals got to the serious negotiation stage.
The main objections included:
Most inventors have not invested the money to fully engineer their idea with 3D CAD drawings and specifications which are required by any factory to supply quotations on tooling and production costs
The invention has not been fully prototyped and working perfectly
There have not been any sales of the product in the marketplace to give ‘proof of concept’ and the prospective licensee a ‘comfort level’ to proceed
Prospective licensees have an aversion to investing a lot of ‘risk capital’ and time to finish designing, testing and proving your invention
They are too busy with other major products they are developing which often are full lines of products rather than a ‘one off’ invention
It is also important to remember that if you pursue a successful licensing deal, the time line for development stages, tooling and quality control phase, marketing and production can be anywhere from 6 – 18 months before any product is sold. The product sales then needs to ramp up in the marketplace to get placement and sell through to create volume. Royalties are then paid quarterly on sales, usually at a fairly low 3% - 5% of net sales. The company needs to sell a lot of product for you to make any serious income (ie: a ‘home run’ of $1 MIL per year will give you $30,000 - $50,000 annually….not bad, but not enough to cover most household expenses).
I don’t want to sound negative here but want to pass on my experience and insights into the challenges of licensing inventions. I am a very positive, optimistic entrepreneur and pride myself in having ‘positive expectancy’ in all of my pursuits!
If you want to have the opportunity to see your invention become a real success, take control and produce it yourself! You will have unlimited income potential, you set the timelines and decide how much money to invest, how hard to push your product and can enjoy the fruits of your labor. You are usually the only person that will really fully understand your invention and put your ‘heart and soul’ into it!
Yes, it takes capital…and time…and hard work. But I have found that it is worth the journey! I started my first company when I was 17 years old with a $5,000 investment from my father, producing photographic notecards that started in a ‘closet darkroom’ in my parent’s house! Within 2 years, I was renting an office/warehouse and eventually grew the company to over $500,000 in annual sales (back in the 70’s). My next company was in the 80’s when I imported a few designs of pewter bottle stoppers for a ‘big investment’ of $10,000. As I slowly got placement in retail stores and expanded the line, I hit my first $1 MIL in sales after just 5 years and eventually grew to company to over $5 MIL per year and $65 MIL over 25 years in business! So it can be done…sometimes slowly with little investment…sometimes longer start up times with larger investments, especially when special tooling is required to produce your products.
If you would like to talk to me further about how I might be able to support you with my expertise, please feel free to reach out to me for an introductory consulting phone appointment.
I hope you are inspired to go forward and make your great invention a big success in the marketplace soon!
HOW TO MARKET YOUR INVENTIONS
April 26, 2016 Linked In
You can invent the best product, produce it and have a full warehouse of stock ready to go…BUT your dream customers usually don’t initially beat a path to your door unless they know about you and your great products! You may also be considering taking the licensing path for your invention rather than funding, producing and marketing the products yourself.
Marketing methods of distribution for consumer products initially will include independent sales representatives in your trade niche (paid on a commission basis), telemarketing (to targeted key accounts) and trade shows to market to retail stores. Consumer direct sales will focus on developing a great website, strong social networking campaign and online Google/Facebook ad campaigns. You may also consider adding a printed sales catalogue for wholesale business, direct mail campaigns, email marketing, TV infomercials, PR/ad campaign to trade and/or consumers and related promotional activities.
Marketing channels of distribution for your products may include independent retail stores, department stores, mass merchandise/big box stores, club discount stores (Costco, Sams), Drug/grocery chains, online retailers, Amazon, your website, and direct print to the consumer.
It is best to pre-sell your product – but only after you have given pre production sample approval to your factory, have a firm date to complete production, financing is in place for inventory and initial operations and all back office/shipping logistics are set up and ready to go.
Once you have all the important initial details for your business in place and production completed, you are off and running to market your Dream Product Company! If I can be of assistance along the way, please contact me