Something to Sell
Turning a napkin sketch into a residual check: bringing a physical therapy product to market.
By Michael Todd Smith
Most million-dollar ideas are actually worth a dime a dozen. The true challenge for inventors and entrepreneurs is making a million dollars, a few thousand dollars, or any money at all, by turning an idea into a product and getting it to market. Physical therapists work with the human body day in and day out; it’s not uncommon for a light bulb to turn on with a brilliant idea that could change the industry and greatly improve patient lives. While genius can strike in an instant, there’s a long journey to turn that napkin sketch into a residual check. Here are some expert tips to guide you and a few landmines to avoid.
Step One: Research. Research. Research!
Has someone else has already invented your big idea? No? Great! But that’s only the first question you need to answer with thorough research:
- 1. Check Out Your Competition. Just because your product doesn’t yet exist, there are likely other solutions to the problem it solves. Some solutions might be free; others might be expensive.
- 2. Size the Market. How many people would likely benefit from your product? Does it address a rare physical or medical condition, or a fairly common one? The volume you can expect to sell will help you calculate price.
- 3. Identify the Customer. Who will buy this product? Your customer isn’t always the end user. Are you selling directly to other Physical Therapists? Yoga therapists? Doctors? Naturopaths? Certified Rolfers?
- 4. Map the Sales Channel. Once you determine your customer, think about the sales channel that best reaches them. Retail stores put products into the paths of buyers who may or may not be looking for your product. If you decide to sell direct, you must determine how to reach potential buyers. For retail channels, think about how many links make up the sales chain (manufacturer, distributor, wholesaler, retail buyer, etc.). Does one person buy for an entire chain, or just a single boutique?
- 5. Determine the sales price. How much will your product cost to manufacture and ship? If your product is heavy or fragile, increased shipping and packaging costs must factor into your sales price. You must weigh in the cost of manufacturing the product, the individual unit package, the wholesale package, assembly, storage, shipping, and all related labor and marketing costs to bring the product to market.
- 6. Estimate Manufacturing Quantities. Does one size fit all? If not, how many sizes will be manufactured, and in what quantities? Proper estimates will help you avoid buybacks and product returns.
- 7. Determine Your Profit Margin. What is the value of the product? How much would the end user be willing to pay for it? Working backward through the sales channel, start taking the estimated value and deduct margins for everyone in the supply chain to make a profit. Once you know the final figure, you can determine your margin. Margin and Volume will be key factors when deciding whether to bring your product to market.
- 8. Gauge Market Readiness. Is the world ready for your product? This is a tough one to judge. Quite often, good products arrive ahead of their time. Beta tapes were superior in quality to VHS, but the latter arrived at the right point in time to take root with consumers. The electric car was invented decades before the first hybrids came out. And let’s not forget how well Marty McFly’s heavy metal guitar solo went over in the 1950s.
Step 2: Design. Build. Test. Improve.
If you’ve determined there is a market for your product and a reasonable margin to be profitable, it’s time to build your prototype and see if it works. If you can’t craft a working model using materials you can buy or acquire, hire a CAD (computer-aided design) designer to build a model for you, perhaps even printing a prototype using a 3D printer.
Put the product to the test and keep careful notes of the results. At this stage, your failures are as important, if not more important, than your successes. Every flaw that’s revealed opens the door toward improvement.
If creating a product to treat a patient, be careful to research all potential liabilities. In most cases, have a lawyer draft a waiver for participating patients to sign and carefully discuss the risks with them.
Step 3. Build Your Brand
Now that your product is perfected, it needs a name and a brand identity. The name should be unique enough to be search friendly on the internet, but not too confusing for people to easily remember. The brand identity should match the nature of the product and the solution it solves. A lighthearted name for a serious product (or vice versa) can confuse or turn off the customer. A tagline can distill your sales pitch down to a few words and easily hook the customer.
Before you go public with your name, even before you file your business name or patent application, be sure to secure your URL (ideally a dot com) and social media handles. Hire an intellectual property attorney to manage the rest (patent filing, trademark protection, etc.).
The final step of the branding process is packaging. Effective packaging protects the product on its way to the customer; it also delivers the final pitch to close the sale and in some cases, instructions on how to use it. Leave room for UPC codes. The style of your packaging also depends on the retail channel. A product marketed to doctors will look different than one marketed to yogis.
Step 4. Prepare Your Sales Materials.
Packaging speaks to the consumer. Sales materials speak to the supply chain. Fact sheets cover the unique selling points and essential benefits of your product. Sales sheets include suggested retail price, wholesale rates, bulk discounts, return policies, shelf life, point-of-purchase display options, etc.
Step 5. Pitch Your Product and Negotiate Your Deal.
Did you know a huge order could possibly put your company out of business? Major retailers have very strict vendor requirements. Not understanding the small print can cost you big bucks for every violation you make. Distributors often require each wholesale box of product to show specific information, including PO box number, store location, abbreviations, etc. A single violation can levy a per box fine. If 10 products come in each box, and the buyer purchases 1000 boxes, a $50 fine per box can put you out of business. Know the return policies for each retailer. It’s common for retailers to require 60 percent of the merchandise to sell at full price before they are willing to discount merchandise to clear it out. Otherwise, the vendor often needs to eat the difference, and in some cases, pay the retailer to box up and return the merchandise.
Know how long the retailer expects the product to sit on the shelves. Staple products can have an evergreen shelf life, while other products, especially apparel, rotate by season, or in some cases, turn every few weeks.
Step 6. Hire a Merchandiser
Unlike the store employee, the merchandiser works directly for you and has your best interests at heart. The average big box store can have hundreds of thousands of products on display on any given day. There is no guarantee your wholesale box isn’t lost in the warehouse when products should be on the floor. Once your sales agreement is active, the retailer starts counting the days until your product sells through. If a product isn’t on the floor, it can’t be sold. A merchandiser once found my product sitting on a loading dock days after it was supposed to be on sale. Had we not discovered this, we would have had to pay the store a fine even though the problem was their mistake.
Step 7. Market and Promote Your Product
Just because a product is in stores, doesn’t mean it’s going to sell. You need to create your own demand. Promotion involves getting key influencers to try and endorse your product. Early adopters can range from a celebrity who has the physical condition your product treats, to a notable PT with a rabid following on social media. Next, you can promote your product with paid media (advertisements) and earned media (publicity campaigns). Most social media campaigns have influencer, paid and earned components. Just because most products fail doesn’t mean yours won’t be the next big thing. Good inventions come in pairs—the invention itself and the business plan to bring it to market.
Michael Todd Smith and his company, Collective Seven, have developed an eclectic list of clients. The brands Smith has developed, or taken to market, range from Technology, Law, Hospitality and Retail, to Fashion and Real Estate. He can be reached at email@example.com.