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 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
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.
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!