Recently as a case study I assisted a gentleman with a product concept he wished to take to market. The invention was a jogging light, which ran off the vibrational energy of the footsteps of the athlete. We go to working up a Business Plan to launch a company, which would design, build, manufacture and sell this consumer product around the country via online eCommerce and Internet Sales, TV Infomercial and Specialty Retail Outlets. As we developed costs to launch the start-up business we immediately were overwhelmed and we learned a little bit about human nature as well. You will find this interesting as it shows how quickly irrational exuberance can get the best of a motivated and high energy set of entrepreneurs. First we needed a prototype, down and dirty, the darn thing does not have to be pretty, it just has to work so we can prove concept. This is smart thinking, build the prototype first yet I worried about something the entrepreneur has said; "I am no Mr. Home Depot and if I build it, it won't work!" I worry about this, because now we had a plan, which was feasible for such a start-up company, but no product that works. So the second plan would have to finding a competent local "University Tech" professor to refer us a student who wants to build it. This is bothersome as it adds costs and research dollars and if one wanted the University to work on it, then well, you have to pay through the nose and they could add another $500,000.00 to the project. Meaning the start-up would have to go balls to the wall in year one to sell that many units and thus thrust the company into another year of expenses without ROI. Again adding cost. Of course the research gained in doing all this will be worth its weight in "Gold" but that does not do much for the companys consumer market exploits. The device does have military, space, and industrial possibilities. And all the patents, which would be needed to be filed would rack up costs, but also be worth their weight in gold too. It is interesting how excited entrepreneurs can get about a product and leave out such a little detail. The product does not exist and they cannot make and will not try. So, that is your case study for today. Dont get ahead of yourself on a start-up concept until you have all the details ironed out. Think on this. |
