I've drafted a design for a simple mechanical upper body exerciser. I've sent my patent application and Trademark to the US Patent Office and am waiting for their acceptance. I have many more steps in front of me but the one I really need help with is finding and negotiating a contract with a company that will build and mass produce my equipment at a reasonable price. If my cost is $100 per and customers are only willing to pay $75, then I won't have a business. I'd appreciate any advice. Thank you!!
Answers
Hey John - You've given me an idea. Perhaps I could build one in my garage? The majority of it will be made of tubular steel - like bicycle handle bars. I'll need to find a machine to cut and bend the bars into shapes. Then I'll need to locate hydraulic or air pistons - like the shocks on cars. Lowes probably has the tube steel. Thanks John.
For a production run of 500 units, you should setup an assembly line in your garage. Hire two or three college engineering students to work on your assembly line, pay them $20/hr plus free dinner. Pepperoni pizza and Jolt cola are great for youngsters. You can fund the parts for your first 50 units using your credit card ($5k). Walk into Wal-mart and look in the furniture section, write the names of the mfrs down from all the Wal-mart desks, tables, chairs, lamps. Then lookup these mfrs on the internet, send an email inquiring.
You need more than a belief. You need a business plan. In the business plan, there are places for marketing strategy, financial strategy, target market and penetration measurements. See score.org for plan templates. Making these objects is the easiest part of the puzzle. The hardest part of the puzzle is your business plan and how you plan to penetrate the market successfully. Pay particular attention to your margins. Avoid the hockey-stick philosophical approach where your projects become overly optimistic over time.
Read Geoffrey Moore's book "Crossing the Chasm". Amazon $10.
Enroll in CEO school.
Hi John - Thanks for responding so quickly. I don't have a business plan developed yet and of course don't have a million dollars. All I have is belief in my product idea.
The patent will be good for 20 years, so I have time to figure out the rest after my patent is approved by the US Patent Office. If it's approved, I was thinking I'd start small with maybe 500 units but even then I'd have to raise some capital. Do you know of any credible off-shore manufacturers and tax laws/consequences and other considerations?
Thanks so much!!
Alan
Hi Alan -
Do you have capital to work with ? Just finding a mfr is not enough. Third-party mfrs don't underwrite the cost of inventory.
For example, If you want a first run of 100,000 units, and the unit cost is $100, you will need to deposit $10 million with the mfr to start the run. Its not like you can ink a contract for 100,000 units without putting up earnest money.
On-shore facilities will be too expensive for you given your margin and unit cost. The US Govt has so many regulations and tax structures that the cost of doing this on-shore will be way upside down.
Off-shore (China, Taiwan, Philippines, Malaysia) will be able to support your margin.
Do you have a business plan ?
JG
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