Have good product idea but no business experience

C

ciano6

Registered User
Messages
34
Here is the story. Myself and my buddy have worked together for about 9 years in the Science Research field. I am a school teacher and he is a third-level lecturer and researcher. In our spare time, we have developed what we believe to be a very good kit which would be of use to a large number of schools. In fact, we are definite that it would be in great demand if it took off. Not only that, but it would have a consumable component which would need to be replaced at a small cost each year. From our contacts, we are sure too that there is no similar product available and there is unlikely to be anyone else at the same thing at the same time. We just don't know what to do next.
We have talked to a manufacturer, a potential supplier to schools, and our local enterprise board who it looks like would give us a feasability grant. But what else should/can we do? Should we be a company or partnership? How would we get a CE Mark? Are there any other sources of funding? The local enterprise board will give us 5,000 of our first 10,000 spend? We have also a rough idea of costs to us though not insurance. Where could we find out about that?
Any help would be gratefully accepted. We are not business people.
 
Have you carried out any formal market research that supports your belief that this would be a successful product?
 
Not at all CCOVICH. Thanks for replying. How would we go about it? To tell you a little more, I know that in two-three years time, almost 50% of Leaving Cert Students will need this product or something similar for a mandatory experiment. At the moment, if you were to buy a similar product from a US or UK supplier it would cost between €300 and €500 for a group of three students. We could do it for about €20.
 
Some thoughts/observations:

County Enterprise Board and Enterprise Ireland would be a good starting point for advice and assistance.

Do you want to start a business based on this? If so, a good place to start is with a business plan. There are loads of templates for these: even if you never show it to anyone, preparing one will force you to think through issues (e.g. marketing, sales channels, pricing, production, finance: the list goes on).

I wouldn't let lack of business experience and skills put you off: the routine stuff can be learned, and as for the not so routine, you wouldn't be the first to start a business with no background in it. Having said that, don't try and operate in domains you know nothing about: for example, if manufacturing is involved as you say, sub-contract that out. There are mentoring schemes around that can can offer advice (contact EI and Enterprise Boards).

How will you sell? Getting revenue in is the key to sucess. Do you know how big the market is? who does the buying? how much they will spend? what's your sales/distribution channel?

Look up similar topics on this on AAM (there was one a while ago on feasability grants).

On your specific questions:

What else should you do? the key thing I'd do is some market research. One key item is competition: a mistake many start-ups make is to go after markets with no competition. If there really is none, it usually means nobody can make a living doing what you propose. More likely, the competition is not obvious or is indirect.

Company or partnership? almost certainly a company, though don't set one up until you have to (it costs, and has certain obligations whether you trade or not).

CE Mark: this is a small item relative to the scope of what you're doing. Manufacturers will know (those that develop their own products): talk to one of them. It can be costly though (if independent testing is required).

Yes, there are planty of sources of funding, mostly from investors of one type of another. The key thing with these is that they expect to make a return, and as it's high risk, a high one at that. You will NOT start a business on grants alone. Best source of funding by far is revenue from product or service sales. Another piece of advice: start selling something, even if it's not your end product, as soon as possible: it will generate revenue, you will learn a huge amount about your target market (maybe to the extend it tells you what it wants is product "B" instead of the product "A" you'd planned), and you'll make all sorts of contacts in doing so.

Not sure what you want to know about insurance: again, a relatively minor matter in the context of what you're asking (do you have premises sorted out, for example?).

Hope this helps.

Best of luck!
 
I can tell you that there are a few companies offering CE compliance testing - depends where you are based - a google search should throw up a few names.

You could try contacting some of the technology/science magazines as well - they are usually quite helpful - particularly if it is suggested that you may be a future advertiser.
 
Last edited:
ciano6 said:
Not at all CCOVICH. Thanks for replying. How would we go about it? To tell you a little more, I know that in two-three years time, almost 50% of Leaving Cert Students will need this product or something similar for a mandatory experiment. At the moment, if you were to buy a similar product from a US or UK supplier it would cost between €300 and €500 for a group of three students. We could do it for about €20.
Click to expand...

Do you know how much the competitive product costs to produce? Don't confuse end-user sales price in quanity of one with the production costs of something produced in thousands.

When you say you could make it for €20, does that include the cost of manufacture, packaging and distribution? or just the raw materials? How much can you sell it for? how many can you sell?

You need to be very careful about making comparisons like this.
 
large number of schools
Click to expand...

Irish schools have notoriously small budgets. Have you considered selling to the UK or US instead? - especially if you can undercut the competition by so much.
 
That last post of mine might have sounded a little negative: didn't mean it to be, or to discourage you in any way. You imply that it's a market that will develop over the next couple of years: this is good, as growing markets are the easiest for a start-up.

By the way, another suggestion is forming some form of partnership with someone selling some (non-competing) item into your target market. Setting up sales and distribution networks is very expensive for new companies, and if you can piggy-back on someone elses, so much the better.
 
Thankyou for taking the time to respond ang1170

County Enterprise Board and Enterprise Ireland would be a good starting point for advice and assistance. Yes we are following this lead

Do you want to start a business based on this? If so, a good place to start is with a business plan. There are loads of templates for these: even if you never show it to anyone, preparing one will force you to think through issues (e.g. marketing, sales channels, pricing, production, finance: the list goes on). Yes, a small business would be ideal so business plan is a good idea

I wouldn't let lack of business experience and skills put you off: the routine stuff can be learned, and as for the not so routine, you wouldn't be the first to start a business with no background in it. Having said that, don't try and operate in domains you know nothing about: for example, if manufacturing is involved as you say, sub-contract that out. There are mentoring schemes around that can can offer advice (contact EI and Enterprise Boards). Yes, we will need a mentor for the marketing or sales. We would be fairly technical as regards design/manufacture etc.

How will you sell? Getting revenue in is the key to sucess. Do you know how big the market is? who does the buying? how much they will spend? what's your sales/distribution channel? Most likely we will end up using one of the half dozen or so companies that suppy schools with Science Equipment and consumables.

Look up similar topics on this on AAM (there was one a while ago on feasability grants). Thanks

On your specific questions:

What else should you do? the key thing I'd do is some market research. One key item is competition: a mistake many start-ups make is to go after markets with no competition. If there really is none, it usually means nobody can make a living doing what you propose. More likely, the competition is not obvious or is indirect.

Company or partnership? almost certainly a company, though don't set one up until you have to (it costs, and has certain obligations whether you trade or not). What kind of costs and obligations? Will I see it on other AAM threads?

CE Mark: this is a small item relative to the scope of what you're doing. Manufacturers will know (those that develop their own products): talk to one of them. It can be costly though (if independent testing is required). Independent testing may be required as it is a low voltage electrical item.

Yes, there are planty of sources of funding, mostly from investors of one type of another. The key thing with these is that they expect to make a return, and as it's high risk, a high one at that. You will NOT start a business on grants alone. Best source of funding by far is revenue from product or service sales. Another piece of advice: start selling something, even if it's not your end product, as soon as possible: it will generate revenue, you will learn a huge amount about your target market (maybe to the extend it tells you what it wants is product "B" instead of the product "A" you'd planned), and you'll make all sorts of contacts in doing so. That would be feasible alright. Would that involve becoming a company?

Not sure what you want to know about insurance: again, a relatively minor matter in the context of what you're asking (do you have premises sorted out, for example?). Insurance for letting kids use our little electrical device? (Battery powered only - not mains)

Hope this helps.

Best of luck![/quote]
 
Thanks Caveat

I can tell you that there are a few companies offering CE compliance testing - depends where you are based - a google search should throw up a few names. It is a low voltage electrical device (battery powered). We are in Cork. I will google that.

You could try contacting some of the technology/science magazines as well - they are usually quite helpful - particularly if it is suggested that you may be a future advertiser.[/quote] Good idea. I have contacts in two magazines as I contribute to them.
 
leghorn said:
Irish schools have notoriously small budgets. Have you considered selling to the UK or US instead? - especially if you can undercut the competition by so much.
Click to expand...


This will be for a mandatory experiment. In recent years, all schools are grant-funded to buy essential equipment for these obligatory experiments.
 
ciano6 said:
This will be for a mandatory experiment. In recent years, all schools are grant-funded to buy essential equipment for these obligatory experiments.
Click to expand...

I'm convinced...how do I invest?!
 
ciano6 said:
Thankyou for taking the time to respond ang1170
Click to expand...

No problem: been there a couple of times, and I know what it's like to be faced with the kind of questions you're asking.

By the way, you say you'd like to start "a small company". Plan to start a big one (think international from day one). It'll make it easier talking to the likes of EI. Don't however take on any costs associated with this until you're ready.

ciano6 said:
How will you sell? Getting revenue in is the key to sucess. Do you know how big the market is? who does the buying? how much they will spend? what's your sales/distribution channel? Most likely we will end up using one of the half dozen or so companies that suppy schools with Science Equipment and consumables.
Click to expand...

My inclination would be to test market and sell direct first before you approach them. Then you can say: "we have this great product that we're selling: would you like some of the action?" rathar than "can you help us sell this, please?"

ciano6 said:
Company or partnership? almost certainly a company, though don't set one up until you have to (it costs, and has certain obligations whether you trade or not). What kind of costs and obligations? Will I see it on other AAM threads?
Click to expand...

Yes: many times. See also the CRO web site.

ciano6 said:
CE Mark: this is a small item relative to the scope of what you're doing. Manufacturers will know (those that develop their own products): talk to one of them. It can be costly though (if independent testing is required). Independent testing may be required as it is a low voltage electrical item.
Click to expand...

Having it low voltage is a huge help. You'll almosr certainly require independent testing, though. AFAIK, the actual certification is generally self-certified. Talk to one of the test houses for more details (I can't recall who we used for the thing I was involved in, but there's a few of them around). Don't forget they have a vested interest though in convincing you that you need tons of testing. They will know the process, though.

ciano6 said:
Yes, there are planty of sources of funding, mostly from investors of one type of another. The key thing with these is that they expect to make a return, and as it's high risk, a high one at that. You will NOT start a business on grants alone. Best source of funding by far is revenue from product or service sales. Another piece of advice: start selling something, even if it's not your end product, as soon as possible: it will generate revenue, you will learn a huge amount about your target market (maybe to the extend it tells you what it wants is product "B" instead of the product "A" you'd planned), and you'll make all sorts of contacts in doing so. That would be feasible alright. Would that involve becoming a company?
Click to expand...

To be credible, I'd say: yes.

ciano6 said:
Not sure what you want to know about insurance: again, a relatively minor matter in the context of what you're asking (do you have premises sorted out, for example?). Insurance for letting kids use our little electrical device? (Battery powered only - not mains)
Click to expand...

Sounds like product liability insurance. Can be very difficult to get, and may not actually be required.
 
ciano6 said:
Thanks KalEI. We really are convinced ourselves though. Anyway, I'm off to bed. It's my first time posting on AAM and I'm delighted with the response.
Click to expand...

Best of luck with the venture Cian!
 
Hi ciano6,

Do you have a patent registered? If not then get one. This will protect your idea and make it much easier to get funding from EI. Have you talked to them about becoming one of their high potential start up's? (HPSU). This offers loads of funding and support in marketing and research.
If you are looking to sell the product internationally I would strongly recommend letting a larger player in your market manufacture the product under licence. They will have the finances to defend your product from copies (a watertight patent is bugger all use if you don't have the resources to defend it) and the network of suppliers to have to made cheaper and better than you. They will also have the design, marketing, and most importantly the distribution channels in place already. Also remember that revenue from patent royalties is tax free to the parent holder.

Good luck with the venture.
If the product is good and saleable your biggest problem will be funding to get the prototypes and packaging made and tested. Work out the cost and then double it then calculate the time to get it to market and quadruple it.
 
Purple said:
Hi ciano6,

Do you have a patent registered? If not then get one. This will protect your idea and make it much easier to get funding from EI. Have you talked to them about becoming one of their high potential start up's? (HPSU). This offers loads of funding and support in marketing and research.
If you are looking to sell the product internationally I would strongly recommend letting a larger player in your market manufacture the product under licence. They will have the finances to defend your product from copies (a watertight patent is bugger all use if you don't have the resources to defend it) and the network of suppliers to have to made cheaper and better than you. They will also have the design, marketing, and most importantly the distribution channels in place already. Also remember that revenue from patent royalties is tax free to the parent holder.

Good luck with the venture.
If the product is good and saleable your biggest problem will be funding to get the prototypes and packaging made and tested. Work out the cost and then double it then calculate the time to get it to market and quadruple it.
Click to expand...

Funding is unlikely to be a problem for something that has proven potential.

I'd agree on using someone else to manufacture and forming partnerships for marketing and sales.

Patents are now expensive to get, and offer little practical protection against anyone determined to enter the market with a similar product (specific products such as pharma excepted). Despite this VCs (and EI) love them: if you deal with them you might have to go down that route, but I'd be slow to do it.
 
You must log in or register to reply here.
Back
Top