Are you excited about your new invention?

You have two paths forward as an inventor to make money with your invention: either licensing it for royalties to a manufacturer; or choosing to venture – DIY (do it yourself) – or build a business around your product.

In this blog post, I'm going to give you 3 keys to success should you choose option #2 – to venture your invention.

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Would you like to have some free venturing resources for inventors?

Grab your FREE copy of – Venturing Resources for Inventors – now. Just click on the blue button below to get your copy now.

Would you like to learn how to make money from your invention? Tired of just spending money?

Attend the next FREE live webinar – How to License Your Invention for Royalties.

All you need is your cell phone, laptop or desktop computer to attend this LIVE webinar. Get all your questions answered.

Just click on the orange button below to sign up for the next FREE live webinar – License Your Invention for Royalties.

Key #1 – You Must be Crystal Clear on Your Goals for Venturing

One thing I can assure you from my experience is that having clarity early in your inventing career will save you lots of wasted time – spinning your wheels – and possibly thousands of dollars as well.

Regarding venturing, you must think about your goals around manufacturing – because manufacturing is a big commitment for you and your business.

There are 3 different goals towards manufacturing:

  1. You could manufacture your invention to test market demand
  2. You could do a Kickstarter campaign and then manufacture to provide product to your sponsors
  3. You are ALL IN. You are manufacturing for the long term

Market testing is a short-term strategy. You generally plan to test with a fairly small number of units, perhaps 500 or 1,000.

As a result, your profit margins don't really have to be optimized, as you are more focused upon seeing if buyers will really resonate with your invention and not too worried about having optimal profits. It is also okay if you go through a third party who has connections with a factory in China for the production run – this is what I did initially.

With a Kickstarter campaign, you are again testing the waters and are not committing necessarily for the long term.

Your profit margin is more important, however. Also, having a manufacturer who can scale up if needed is also important in case your campaign is a huge success and you find yourself having to manufacture more than expected. Also, ideally, you would like to have a manufacturer you can use again if you choose to continue manufacturing after the campaign is completed.

If you are all in – planning to manufacture for many years, your planning must reflect this.

You must select a manufacturer who can scale up and serve your needs with larger orders over time. Also, in this scenario, profit margins are crucial. You really must have a 4X to 5X mark up from your landed cost (manufacturing cost, plus customs and shipping) to retail. You will need to assemble a good team to work with: your factory, a freight forwarder, and a U.S. Customs broker.

Having clarity about which scenario is the one you are pursuing is critical.

Key #2 – You Must Know Your Numbers

There are three “numbers” you must know in venturing your invention:

  1. Your landed cost – as mentioned, this is your cost to manufacture, plus costs for customs and shipping
  2. Your wholesale cost
  3. Your suggested retail cost

The above three numbers must be optimized for profitability – and the simple formula is that your suggested retail must be about 4X to 5X your landed cost.

You must first start with a retail price for your product that is competitive with other similar products or no one will buy your invention, no matter how great it is. Ideally, your invention would be priced just a bit under the market leader. In my case, with leather wallets, my suggested retail was about $25.

So, I wanted to secure a landed cost of no more than $5 (this is a 5X mark up). Then, wholesale is typically 50% of suggested retail – or $12.50 in my case – to give the retailer a good profit and to allow me enough margin to cover costs plus paying my overhead ($7.50 per each in this case).

Always go in reverse to find your landed cost: start with an appropriate retail and work backwards.

The huge mistake so many inventors make is that they find someone who can make their product (typically in the U.S.) at what seems a “reasonable” cost. But, then their 4X or 5X mark up makes the retail price uncompetitively high. This is why so many products must be manufactured overseas – principally China.

For my wallets, the lowest cost I found in the U.S. was $11 per unit – without packaging. That would have made my suggested retail about $50+ – way too high for a non-luxury item. So, I manufactured in China and was able to hit $5 for a landed cost.

Key #3 – Plan Your Exit Strategy

Simply put, how long do you plan to manufacture your product before you choose an exit via:

  • Selling your company – maybe you are tired of 60 hour workweeks and want to enjoy more time with your family
  • Licensing your invention – successfully venturing your invention often opens lucrative licensing possibilities
  • Kickstarter or market test – is typically a temporary arrangement – so you already have an exit.

As Stephen Covey inveighed – start with the end in mind. Think about your exit strategy before you even begin.

Following the above 3 keys will make your venturing process smoother and more profitable.

Stay tuned.

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Would you like to have some free venturing resources for inventors?

Grab your FREE copy of – Venturing Resources for Inventors – now. Just click on the blue button below to get your copy now.

Would you like to learn how to make money from your invention? Tired of just spending money?

Attend the next FREE live webinar – How to License Your Invention for Royalties.

All you need is your cell phone, laptop or desktop computer to attend this LIVE webinar. Get all your questions answered.

Just click on the orange button below to sign up for the next FREE live webinar – License Your Invention for Royalties.