Monthly Archives: March 2012

Seeking Investment To Fund Your Product Idea? Helpful Tips

March 27 2012  |   leardonsolutions  |  All Posts, Business Tips, Inventing Profit, Product Design, Prototyping  |  Comment

Crowdfunding, Leardon Solutions, Product DevelopmentA common question asked by start-ups, entrepreneurs, early stage engineering teams, inventors, and innovators early in the product development life cycle typically revolves around how to get early investment to develop their product idea and take it to market. This question is usually asked when the product idea is in the pure concept phase without intellectual property, prototypes, or business plans. In this stage, the product idea isn’t very valuable to an investor so it is necessary to take the idea to the next level to draw in potential investors or individuals on crowdfunding sites. To best prepare for finding money to take the product idea to the next level, it is necessary to pull together a Proof-of-Concept Prototype of the product idea and provide the Proof of Demand for their product idea. With these in hand, the team seeking money will be way ahead of others and will stand out to angel investors, early stage investors, and crowdfunding sites.

A business plan is important if an entrepreneur or start-up company is setting out to find funding for their idea. The work done to pull together the business plan will be summarized in the executive summary which will be handed to the potential investors or shown on the crowdfunding sites. Three absolutely important parts of the executive summary in this early stage are The Problem, The Solution, and The Opportunity. These parts of the executive summary will prove that the team seeking funding has identified the problem that the product is trying to solve, has shown how the product solves the problem, and has proven that customers want to buy the product.

A Proof-of-Concept Prototype is necessary to show that the product solves the identified problem as described and also to help demonstrate the Proof of Demand in the Market. People handing out money are looking to see that the team seeking the money has proven that the product concept functions as expected and that this Proof-of-Concept Prototype has been used by potential customers that would buy the product if it existed. The more data that can be gathered from real people showing that the product is useful to solve their problems, the more convincing the pitch to the investors or crowdfunding sites. Proof-of-Concept Prototype and Proof of Demand are the two key areas that investors are evaluating so that they make a successful investment.

No matter if you are trying to get investment from crowdfunding sites such as Kickstarter, angel investors, accredited investors, SBA loans, small business innovation research grants (SBIR), or innovation vouchers in some E.U. countries, here are some tips on preparing for finding investment.

  • Be sure to know how much money is required to take the product to the next level. If a crowdfunding site such as Kickstarter is being used, make sure that the expected project costs match the crowdfunding “ask”. The money received must be enough to deliver.
  • If you are using angel investors for early stage or seed funding, be sure that you communicate the sustainable competitive advantage of your product through the demonstration of the Proof-of-Concept Prototype.
  • In order to find investors for your company, put your network to use. You will probably find that within the list of people you know, somebody will be able to refer you to somebody who funds start-up or early stage companies.
  • If you truly believe in the product idea, you will inevitably put “skin in the game”, meaning that you will invest your own money to get as far as possible until you receive outside investment. Investors need to know you are committed and spending your own money will help convince them of that.

Need more information? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com

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What Your Prototype Says About You

March 20 2012  |   leardonsolutions  |  All Posts, Insider's Perspective TIps, Product Development, Prototyping  |  Comment

Product Development, Leardon Solutions, Manufacturing, San Diego, Southern CaliforniaDesigning and fabricating prototypes during the product development life cycle is a critical part of the product learning process. Successful prototypes will prove that the product idea is feasible, will help qualify the engineering design, and are needed to receive customer feedback prior to producing higher production volumes. The interesting thing about a prototype is that it is an extension of you, your company, and the values of your company. In other words, these prototypes give others a first impression of you and your efforts. Below are four questions investors, distributors, customers, and suppliers will immediately answer upon seeing your prototype:

(1) At what stage is the product in the product development life cycle? A prototype will portray the stage of your product in the product development life cycle. It is immediately apparent to an expert if your product is 5% complete or 95% complete after seeing the prototype. It is important to accurately describe how far along the product is in the product development process when speaking with experts, otherwise it will be very clear that you don’t know much about developing products.

(2) How well have you thought through your product idea? The prototype is a physical embodiment of your product idea. When people see your prototype, they will immediately know if you have thought through only the simple aspects of your product idea or if you have dug deep into the critical aspects of the product such as the user and human interface, the detailed design, the interactions with other products, and the manufacturing or assembly issues. Also, the prototype will show if you have a true innovation, an improvement on an existing product, or a trivial reinvention. If you show up to a meeting with a product prototype that only displays the external features of the product but doesn’t demonstrate the functionality, you will get many questions about how you intend to design the product so it functions properly. If you say “I’ll let the engineers handle that….”, then it will be apparent that you haven’t thought through the idea well.

(3) Do you understand the costs associated with developing a product? When an entrepreneur is in a meeting with a potential investor, the investor is typically looking very closely at the financial forecast and plan to determine if it is realistic. If an entrepreneur brings a mature production prototype to this meeting, the investor will expect that the financial plan has very detailed and accurate numbers. This production prototype allows the entrepreneur to get accurate quotes on the costs associated with taking the product to the next level. If the prototype is only at the proof-of-concept level, the financial plan will include rough estimates and the accuracy of the financial model will be scrutinized in detail.

(4) How prepared are you for the challenges ahead? Nobody ever said that product development is an easy endeavor. There are many roadblocks and potholes on the product development path that must be overcome. Producing prototypes is one of the first. Based on the quality, functionality, and overall look of the prototype, people can easily gauge how prepared you are to take on the challenges ahead. Show them that you are prepared for the future challenges of product qualification, production, and manufacturing scale-up by demonstrating your prototype is the best possible embodiment of your product idea.

Need more information? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com

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Tips to Cut Product Development Costs – Part 2

March 13 2012  |   leardonsolutions  |  All Posts, Business Tips, Manufacturing Tips, Product Development, Prototyping  |  Comment

Leardon Product Development Tips, Manufacturing ServicesIn Part 1 of Tips to Cut Product Development Costs, three ways that innovators, entrepreneurs, start-up companies, and small/medium enterprises can be smart and spend the least amount of money throughout the product development life cycle were discussed. Here are the next three ways that entrepreneurs, innovators, or small companies can save money without cutting corners or skipping product development phases.

Avoid Multiple Hand-Offs During the Product Development Life Cycle
Most entrepreneurial, start-up, or small/medium companies do not have large internal staffs to handle all stages of the product development life cycle. These companies typically nearsource or outsource much of the work in an attempt to minimize product development costs and maximize development speed. While nearsourcing and outsourcing can improve your costs and speed, it unfortunately can create a costly and slow system if not managed properly.

Many service providers and suppliers do not provide an end-to-end product development solution from product idea to manufacturing, forcing companies to hire multiple service providers throughout the product development life cycle. When entrepreneurs piece together a product development team by hiring these outside firms, an inefficient team that doesn’t have visibility to the tradeoffs between cost, schedule, and scope is sometimes created. To create an efficient system, the innovator or entrepreneur should try to minimize the number of hand-offs throughout the cycle by hiring an end-to-end engineering, prototype, and manufacturing firm that internally handles all the hands-offs without dropping or losing any of the knowledge gained in the last phase.

Here are some tips for an efficient product development team:

  • Have one experienced internal program manager for the complete project that is responsible for product/project cost, schedule, and scope.
  • Minimize the number of hand-offs by hiring one company that can take the project from design concept to manufacturing.
  • Eliminate any supplier agents, go-betweens, or representatives that don’t allow you to work directly with the suppliers doing the work.

Don’t Buy Production Tooling Until Final Production Qualification.
When a product enters mass production phase, fabrication methods different from those used to produce prototypes are required to meet the quantity, cost, and schedule goals of mass production. Some examples of these production tooling methods include injection molding for plastic parts, progressive stamping for metal parts, production lines for efficient assembly, and wave soldering for printed circuit board assembly. Prior to starting mass production qualification, there is no need to purchase these production tools early in the product development life cycle. Delay the cost of these production tools by using early proof-of-concept and design prototypes for as much testing as possible.

There is usually no need to spend money on any production tooling in the proof-of-concept or design prototyping phases. Even if a production-like method must be used to produce a part in a prototype, the cost can be minimized by fabricating only what is absolutely necessary to make the parts. For example, if you are producing a rubber seal in a prototype, a prototype tool can be fabricated inexpensively to yield the high quality part required. Do plenty of research if a prototype company says that they need to produce a high-volume production tool for a part being used in your prototype because more than likely this is not required.

Minimize the Amount of Product Inventory Purchased.
Once you enter into the production qualification phase, try not to lock up cash in expensive inventory by purchasing large quantities of your product. Work with a supplier who is happy to provide you with a smaller volume, say 1000 production products, that will allow you to test out the market prior to ordering more. This will also prevent expensive inventory reworks.

A misconception in the world of entrepreneurial product development is that all suppliers require entrepreneurs to buy tens of thousands or even hundreds of thousands of products on their first order. For a custom product, it is recommended that the entrepreneur only buy as many products as necessary to fulfill the immediate customer demand of the product. There is a high chance that changes will be required as sales begin so keeping inventory low will minimize the financial pain of any design changes, reworks or repairs.

There are many entrepreneurs who are “up-sold” to higher quantity orders for a lower product price. There are other entrepreneurs who are shocked to learn that a supplier is unwilling to take a low quantity order and will not to work with the customer unless a large order is placed. It is important to know the prices at all order quantities early in the relationship with the supplier. If the supplier is unwilling to fulfill low quantities in the range of 1,000 products, it might be best to switch to another supplier. Chances are high that there are hundreds of other suppliers that are capable of supplying the product and willing to work with entrepreneurs.

Need more information? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com

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Tips to Cut Product Development Costs

March 6 2012  |   leardonsolutions  |  All Posts, Business Tips, Manufacturing Tips, Product Development  |  1 Comment

Leardon Product Development Tips, Manufacturing ServicesMany innovators, entrepreneurs, start-up companies, and small/medium enterprises have very limited product development budgets. Therefore, these companies need to be very smart about properly spending their money to continue moving forward in the product development life cycle and saving cash for later in the product development game. In order to save costs, many organizations try to cut corners by integrating or altogether skipping product development phases. This not only ends up costing more money but the total time it takes to complete the product will also inadvertently increase.

Product Development is a process that when followed properly results in a tangible product that can be sold to customers for revenue and hopefully profit. In order to get quickly into the revenue stage, it is important to develop a process that results in fast product time to market, high quality, and minimal development costs. Throughout this process, there are ways that the entrepreneurs, innovators, or small companies can save money without cutting corners.

This is the first article of two providing tips on how how entrepreneurs and companies can be smart and spend the least amount of money throughout the product development life cycle. Check out these first three tips:

Define Your Product Before Starting Anything!
This might sound like an obvious suggestion but many companies and entrepreneurs begin product development without really knowing what they are trying to design and produce. The first step before commissioning new product development should be to document the required features and functionality so that there are goals for the team to pursue. Without first defining and communicating these requirements, the team will be moving forward blindly, wasting valuable time and money on unnecessary changes caused by the vagueness and ambiguity of the cosmetic, material, functional, and engineering requirements.

One way to compile a complete list of product specifications is to answer the following questions:

  • How will the product perform and what are the functional characteristics?
  • Will the product interface with other products outside of your control?
  • What are the industrial design requirements (the look of the product)?
  • What are the human factors requirements (the feel and human interaction of the product)?
  • Are there any installation, support, service, and maintenance requirements?
  • What type of qualification, regulatory, safety, and standards compliance are required?
  • Should the product be compatible with other products and if so what are these requirements?
  • What are the packaging, shipping, and labeling requirements?

The effort required to generate the product specifications list might seem unnecessary or excessive before starting new product development. On the contrary, this list is necessary to determine the product goals, will be used throughout the product development life cycle, and will save the team valuable time and money by focusing the team on the proper goals and objectives.

Make Sure The Product Functions as Envisioned.
Once the product specifications have been defined, the team must determine which specifications have yet to have technical feasibility proven. This phase of proving technical feasibility requires the use of proof-of-concept prototypes that bear little resemblance to the final product. As the name implies, the goal of this proof-of-concept prototype is to validate that the idea and concept is technically feasible and functions as envisioned.

For complex products that have multiple functional aspects, do not try to save money by integrating all of the functions into one all-inclusive prototype. Instead, it is more efficient to create proof-of-concept prototypes for each of the independent functions of the product. Remember that the goal is not to make a prototype that looks like the final product. The goal is to prove that it is possible to make the prototype function as specified in the product specification list. Making multiple proof-of-concept functional prototypes will allow the team to efficiently make changes to each prototype to find the optimal conditions that result in the function required.

Limit the Quantity and Increase the Utility of Prototypes.
Every prototype fabricated in each product development phase should be utilized as efficiently as possible. This means that there should be a qualification and test plan associated with each prototype. By documenting the test plan for each prototype rather than just blinding ordering a large quantity of prototypes, the organization becomes aware of the costs associated with each prototype while increasing the utility of the prototypes.

During the product development life cycle of the floe from Apt Innovations, the qualification tests for each prototype produced were clearly specified. As quoted in the BBC news article, Managing Director Jason Paul states that the prototypes looked “smarter” than past prototypes but in fact these prototypes were also smartly utilized. New new prototypes were only ordered after qualification tests were performed and design changes were required, saving Apt Innovations significant money and minimizing waste.

Only fabricate the quantity of prototypes sufficient to meet the qualification needs of the team plus a small number of replacements. Do not order a high quantity of prototypes in order to get a lower price per prototype. The additional prototypes purchased will usually be a total waste of money since design changes and prototype reworks could be required after performing qualification testing. Even worse, the additional prototypes might need to be scrapped as significant design changes could be needed to continue the qualification testing.

Need more information? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com

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