Jeff Haden | Inc
Here’s a straightforward approach to analyze a product’s potential and bring it to market.
Ideas: Everyone has them. Few act on them. Even fewer make money from them.
Want to turn an idea into a real business? Here’s an overview of the process from Stephen Key, the author of One Simple Idea for Startups and Entrepreneurs. He holds 13 patents and his products have been sold in retail outlets like Walmart and 7-Eleven.
1. Test quick, test often.
Early on Key realized that in order to eat he had to find out really fast if an idea would work–if not, he needed to move on and find a new one. “But don’t test with your friends,” he says. “The real test is whether people will reach in their pockets and pull out dollar bills. That is the ultimate test.”
2. Understand the market.
First, really understand the marketplace: Where your product fits, how it’s different from other products, and whether you can sell at the right price point in that category.
The ideal situation is to find a niche where everyone else has left crumbs on the table, Key says.
3. Determine the manufacturing cost.
Now determine if your product can be manufactured at a price point where you can make money. That’s easy: Contact contract manufacturers, send over specs, find out if it can be made and the cost of making it.
To protect your idea, have manufacturers sign an NDA. Or file a provisional patent. Either works.
4. Determine your margin.
If your price is too high you obviously won’t be competitive. On the flip side, competing on price alone is a losing battle you probably won’t win. Your profit margin must allow you to compete day in and day out; if it won’t, move on to another idea.
5. Get real feedback.
Stop at local retailers. Go to regional trade shows. Show your product to people in a position to make decisions. That pulls your idea forward instead of you pushing it.
Smart people will tell you right away if you have something or not.