How to Find New Products for Your Business

Sometimes the only way a company can expand sales is by introducing a new product.  The current products have reached their sales peak.  Moreover, they cannot be modified to generate additional sales.

It becomes a question of where to look for a new product that can be made and sold at a profit.  This guide speaks to that question. It discusses a practical approach to the selection of a suitable new product and suggests sources that can be helpful to finding such a product.

A systematic approach is the best way to find a new product.  In such an approach, your first action should be to set a new product policy.  Before you start to search for new product, set guidelines for that search.

These guidelines should help to provide answers to questions, such as:  Can the new product be made on present equipment?  Will it be sold to your present market?  What is the profit potential of the new product?

The second major action involves responsibility for finding a new product.  Will you personally handle the project?  Or will you delegate it?  Either way, the person who looks for the new product should have a clear understanding of the resources available for this project.  In addition, he/she should be authorized to make decisions for your company.

Defining a New Product for Your Company

Although there are thousands of products available on a reasonable basis to any company that will manufacture and market them, the question is:  Which ones can be made at a profit?  In fact, so many exist and are being generated, it would consume all the resources of a small company to examine each one of them only briefly.  On the other hand, too brief a search or a hasty decision can result in costly mistakes, if not outright disaster. It is thus imperative to define the product you are seeking.

Your task is to get on paper some facts about the kind of new product you want to produce in your factory.  These facts consist of your requirements in general terms which will be applicable to the new product.  The following questions, though not all inclusive, should stimulate your thinking in defining a product or establishing criteria by which you can judge potential products.  When you have set such criteria, you can write a "profile of product interest."

Discovering Your Company's Strengths

1.  Is manufacturing your company's strength?

2.  Do you prefer a highly automated production line?

3.  Do you prefer a product with a high ratio of labor to production costs?

4.  Are your production personnel highly skilled?

5.  Are your industrial product designers exceptionally skilled?

6. Does your present equipment have a long usable life?

7. Is your present equipment largely under utilized?

8.  Do you have a strong sales force?

9.  Is your sales force hampered by too narrow a product?

10. Do you have strong capability in a particular technology?

11.  Does your company have cash or credit resources not used in your present operation?

12.  Does your company have a reputation for high quality products?

13.  Does your company have a reputation for low cost production?

Deciding on the Market Preference

14. Do you prefer a particular industry?

15. Do you prefer a product sold to retail consumers?

16.  Do you prefer a product sold to industrial users?

17.  Do you prefer a product sold to the government?

18.  Do you prefer a product with long usage?

19.  Will you accept a product that may be a fad item?

20.  Do you prefer a consumable item?

21.  Is there a distribution system (trade practice) you prefer?

22.  Would you consider a product limited to a given locality? (Or a product in demand largely in overseas markets?)

23.  Is a product that requires specialty selling desirable?

24.  Is a product that needs mass merchandising suitable?

25.  Do you intend overseas distribution?

26.  Must your present sales department be able to sell a new product?

27.  Are you willing to create a new or separate marketing department to sell a new product?

Determining the Sales Volume Desired

28.  Have you determined the optimum annual volume from the product over the next 3 years?

29.  Do you have any preference for a unit price range in a product?

30.  Do you have 5 and 10 year volume objectives for a new product?

31.  Will this product have to support its own sales organization?

32.  Will the product support its own manufacturing equipment?

33.  At what volume does a product exceed your company's capability?

Product Status

34.  Will you accept an idea for a product?

35.  Will you accept an un-patentable product?

36.  Is a non-exclusive license of a patent acceptable?

37.  Are you willing to develop an idea to patentable stage?

38.  Will you develop a patent without acceptable prototype?

39.  Will you accept a product that has been on the market but is not vet profitable?

40.  Will you license a patent?

41.  Do you insist on owning the product's patent?

42.  Will you enter a joint venture for a new product with another company?

43.  Would you merge with or buy a company that has good products but needs your company's strength in manufacturing, sales, finances, or management?

Deciding on The Product Configuration

44.  Are there any maximum size limitations to a product you can manufacture?

45.  Would weight of a product be a factor?

46.  Do warehousing facilities or yard space impose size limitation?

47.  Does length of production time influence the desirability of a product?

48.  Have you determined your equipment tolerance?

49.  Do you have adequately trained personnel to do the job?

50.  Would you prefer that a product be made certain materials?

51.  Are there manufacturing processes that should constitute the major portion of a new product?

52.  Are there any manufacturing processes that the product should not have?

53.  Would a product requiring extensive quality control costs be desirable?

 

 

Finding the Money Required to Starting a New Small Business. Now that You have calculated your initial financing requirements,
where are you going to receive the money? The first source is your personal savings. Then relatives, friends, or other individuals
may be found who would like to"enterprise" their savings in your company. Before getting too large a share of money from outside
sources, remember you ought to have personal control of enough to guarantee yourself ownership.

After you can show that you have carefully worked out your fiscal Requirements and can demonstrate expertise and ethics, a
financing institution may be willing to finance part of your operating needs. This could possibly be done on a short-term basis of
from 60 days to as much as one year. Any institution that has money to lend is mainly concerned with safety. The safety may be a
business asset, but if you're just starting the best security is usually your home or any other personal advantage.

The second thing that the lender will want to see is Some Kind of Business plan. If you complete a business strategy - which
includes a cash flow forecast - that the lender will see you have done some realistic and serious thinking about your business and
be more likely to consider your request.

Be familiar with your banker. In selecting a banker consider Progressiveness, mindset toward your business, credit services
provided, and the size and management policies of the bank. Is the lender progressive? The physical appearance of the lender may
provide you some indication. When the workers are pretty youthful, interested in your problems and active in civic affairs the
bank is likely to be progressive. The character of the bank's advertising might also be a clue to its progressiveness.

To succeed the banker Ought to Be interested in Assisting You to Become a better manager, and develop a continuing relationship
that will mean rewarding business for you as well as the lender over the years.

Will the lender give you the kind of credit you need? By Way of Example, If seasonal accumulations of inventory turned into a
problem will the bank create a loan against field or public warehouse receipts? If your capital is tied up in accounts receivable
throughout your hefty selling season, will the bank accept these receivables as collateral for a loan? Will the bank consider a
term loan?

Finally, understand the dimensions and management policies of the lender. Will Your maximum conditions fall nicely within the
bank's"legal limit"? If you intend to do some export business, does it have a currency department? In the event that you or your
traders sell on installment conditions does the bank have facilities for managing installment paper? How deeply is the lender
concerned with the growth and prosperity of your regional community?

When you deal with your banker, sell your self. Whether or not you Want a bank loan, make it a practice to stop by your banker at
least once every year. Openly discuss your strategies and difficulties. It's the bank's business to not betray a confidence. If
you need financial assistance carefully organize, in written form, complete information that'll present a comprehensive
comprehension of your whole proposal. Many business-people or potential small business operators ruin their chances of getting
financial aid by neglecting to present their proposal correctly.

Trade creditor or equipment manufacturer, Firms from which you Buy equipment or product may also furnish capital to you in the
form of extended credit. Manufacturers of store fixtures, cash registers, and industrial machinery frequently have financing plans
under which you may purchase on an installation basis and pay from future earnings. You don't need to pay for the goods at once.
If products are for resale, then no security other than repossession rights of the unsold merchandise is involved. However, too
extended a use of credit can prove expensive. Usually cash discounts are quoted if a bill is paid in 10, 30, or 60 days. For
example, a term of sale offered because"2-10; net 30 days" signifies that a cash discount of two percent will be awarded if the
bill is paid within 10 days. If not paid in 10 days, the whole amount is due in 30 days. If you don't take advantage of the money
discount, you are paying 2 percent to use money for 20 days, or 36 percent each year. This is high interest. Prevent it.

Among the main causes of failures among businesses is Inadequate funding. If you do enter company, remember it's your
responsibility to provide, or obtain from others, adequate money to supply a firm foundation for the enterprise.

Sharing Ownership With Other People. Now that you have decided what Company to start and about how much capital will be required,
you may find it necessary to join with a couple of associates to launch the enterprise.

If you lack certain management or technical skills which are of Major value to your preferred business a spouse with these skills
may prove a satisfactory way to pay the deficiency. If you're very skilled in your particular area but lack management training
and abilities, you might search for a partner using a background in direction. If you might need more startup money, then sharing
the ownership of the business is one way to get it. Great care ought to be taken in deciding upon a partner. Personality and
character, as well as ability to render financial or technical aid, affect the success of a pa333ship.

A partnership can be a mixed blessing. A spouse who places in time Or money has a right to expect a share in running the
enterprise.

In a partnership the accountability for the debts of the firm is Infinite, just as it's in a single proprietorship. This means the
owners are Personally responsible for the firm's debts, even in excess of the sum that they Have spent in the business. In a
corporation the liability of the owner is limited To the amount that they pay for their shares of stock. A partnership, such as a
single proprietorship, lacks continuity. Thus, the Company terminates upon the Death of the proprietor or a spouse, or on the
withdrawal of a spouse.