10 Steps to Bring a Product to Market – Outsource Entrepreneur Model
Set Up a Proposed Deal Structure
Before you start approaching potential partners, you should know what kind of deal you are hoping to set up. Have an idea about what kind of investments each partner will make, how you will divide profits and how you will handle the future of your idea. Remember this isn’t the final deal, but just a starting point for you and your partners. No one will sign on a deal that isn’t fair for them, so try to make it as fair as possible for everyone involved. Don’t devalue yourself in this process though, creating and developing the idea is very valuable and the basis for the partnership.
Basically what you have to do offer is an exclusive, that you will commit to produce the product with a manufacturer for certain considerations, and you will commit to selling only to the marketer for a certain length of time in return for certain considerations. If you can do this without giving up any of your company that is great, but you may need to go farther, for example offering 10% ownership, and sometimes more to the manufacturer in return for more financial help, and you might need to have a private label or a joint venture agreement with the marketing partner. It all depends on what investment you require and what the return could be. If you have a sewn product, with very little investment, you might not give away anything. But as the costs goes up the market needs to be bigger and the manufacturer and marketer may need a better deal and some ownership.
As a guideline, your partners will want to have an 18 month payback period, so they will make back in profits in 18 months their total investment. If you can get that requirement, you might be able to make a deal. To help your presentation consider contacting SCORE, which is a group of retired executives in every city, or the Small Business Development Center which you can find at www.sbdc.org
Check out the inventor story in the articles, Colin Roch, and Bobby Ronsse – Pen Again to see how they approach their situation. Just enter the inventors name in the search box on OneStopInventioShop.net to get the article