Developing a New Product is a Multi-Faceted Enterprise. Now Ken Tarlow Looks at Both Sides of the Process.
By Ken Tarlow
Because invention and product development can have so many highs and lows, I thought it might be time to look at the risks and rewards the process offers.
THE RISKS
New product development is an exciting but risky business. You may think you have the greatest new product since the telephone, but until it's manufactured and has proven itself a winner, your product is considered a high-risk investment.
Rule number one is--only invest what you can safely afford to lose. The word "safely" means different things to different people, depending on their risk-taking nature. Simply ask yourself what you're willing to lose versus the profit-making potential.
You will get more of less profit, depending on the amount of money you invest. Some investment analysts have pegged the odds of successfully developing and selling a new product at 200 to 1. But during the past 19 years, more than 40 percent of those we've worked with have been at least moderately successful in making it all the way to the marketplace and into the lives of people.
Remember that raising money for new products takes practice and persistence. The more you have on the "Silver Platter," the easier it will be to raise money. The best source for relatively small amounts of money is family and friends. For larger amounts, you can contact your local Small Business Administration.
THE REWARDS
The rewards for new product development can be broken down into two areas.
1. Financial--An investment in the development of a new product can easily create a ten times return on investment if the product is licensed and successfully marketed. For example, a product with a $15 wholesale price would produce $.75 per unit royalty. There are more than 200 million people in the United States. Nationwide sales of 50,000 units per year is considered modest, 100,000 is good, 250,000 is very good, and 500,000 great.
Using that as the basis, the royalty income would be as follows:
* 50,000 X .75 = $37,500 Royalty* 100,000 X .75 = $75,000 Royalty
* 250,000 X .75 = $187,500 Royalty
* 500,000 X .75 = $375,000 Royalty
And that's just for one year of sales. A well-designed product can have a life of two or even three years.
2. Psychological--By participating in the creative process of new product design, you will feel a new excitement in your life. You'll feel a new sense of power and control over your life when you see that you can create wealth the same way large corporations do.
More and more people are realizing that the check at the end of the week is never going to get them all the money that is needed to lead a really prosperous life. Instead of investing by buying stock in some distant corporation, why not participate in the creation of your own unique product that you really care about? The thrill of seeing your product in a store or in someone's home is one of the greatest rewards of all. Product development can be a way to create a great level of fulfillment in your life both financially and psychologically.
I encourage you to persist, enjoy, and make lots of money!
The above article was excerpted from Tarlow's MIND TO MONEY, a cassette tape/workbook package that can help you develop a new product from the idea stage to the marketplace. MIND TO MONEY may be ordered from the Dream Merchant at $59.95 plus $4.95 CA sales tax and$5 shipping and handling ($69.90 total). Send orders to the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501.
Previous Index
Idea Help
Next
