Hello, I'm Dr. Jim Lawson, president of growth strategies International. Welcome to How to develop a new product and take it to market. Today we'll be talking about scaling your business. Take a look at the agenda we're about halfway through. We covered concept analysis, going through the process of innovation and discovery, to coming up with a concept, an innovation that solves a customer need, developing a minimal viable product to take it to market to test the marketplace to validate the market. We in Section three, we talked about customer acquisition, about determining the product market fit about developing a value proposition.

And now we're going to talk about scaling the business. So you've taken your product to the market, you've validated the market. You have a marketing plan. Now you define all the variables in product, place, price and promotion. And now You're ready to roll your product, you're ready to scale your business. You're past the pre commercialization, you've completed your experiments.

You've, you've proven your hypothesis. What do we do next? Okay, well, let's just review back a little bit here. What we did in the last lesson, as we talked about market research, market research was conducted to identify the customer requirements to identify the target market, the market potential, how large is the market to identify any significant competitors and to define our preferred route to market. So, now that we've completed that, and we've done a rapid prototyping, we've completed our conceptual design and modeling, we should have in parallel, developed some specifications that defines the customer requirements, and the value our product brings design to performance specifications so we can take it from a prototype into into production. Likewise, by doing the rapid prototyping and market testing, not only did we do we gather data to develop design performance specifications for our product, but we also identified development risk.

We wish we probably did some failure modes effects analysis on testing. What does that mean? Well, how would this product work in the actual environment? Would it would it be subjected to extreme temperatures, vibration? How's the customer going going to use it if it's going to be a portable mobile device, it's got to be rugged enough that it can, it can survive a fall. So it has to withstand shock.

So we're going to have to understand the development risk in making sure our product is robust. It's reliable, it's affordable. It's made maintainable. So once we've confirmed the design, and we've we've taken our prototype and all the information we've done from our market analysis and testing, then we're ready to develop the detailed design and the manufacturing process to get the product launched. So what do we do? How do we get from a prototype to production?

Well, first off, we're going to have to have a bill of materials. What's a bill of materials is just a list of what materials are going to be required to produce the product. And where they're going to come from? Is the probability made out of metal or fabric or some other type of material with material is the product going to be made of how many parts are going to have to come together to form the final product? Are those parts available on the open market? Or are those parts that go into our parts nothing that has to be custom designed to our specification.

So The bill of materials is important in in determining who our supply chain is to bring all the raw materials together for final production and assembly. And then assuming that we're not going to go through the capital expense of building our own factory, but we're going to go out to a job shop, a factory that will will take an order a prototype, and help us make a production version of it, you're going to have to be aware of what the minimum order quantity is. So when you did your market research, you determine what the target market is and how many that you can possibly sell over a given period of time. The contract manufacturer is going to say, well, we're only going to take an order, if we can produce 10,000 Um, let's say we're 1000 and the volume price breaks down by a factor of time to to set up the tool For the project, and required labor and the turtle plus plus their profit, so they're not going to do a small production run because it's not profitable.

And it's much too expensive, expensive for you. So you need to find out what the minimum order quantity is. For a contract manufacturer shop around, they're all different because they have different volumes of different types of machinery, automation and labor costs. And find one that fits for how large of an order that you want to place because you're going to have to carry that inventory cost. I'm going to give you an example here of a prototype that I developed. I found a market need in that when I was designing aircraft electronics, that we were making these custom that we call an unseen a couple of units.

They're custom made for each aircraft, depending on what the aircraft electronic black box configuration is, and so on. This prototype ah the circuit board with these diodes on here, and this other circuit board with the relays on here and the and the transistors on the inside to prove the concept works and you could plug it into any aircraft and is programmable for the the type of configuration that the that that particular aircraft has. And so they're interchangeable and it reduces the cost for the aircraft company because now they don't have to have a custom box reach aircraft. They have one that they can just program for the avionics. So this proved the concept it showed that it worked and However, it's not very rugged. It's just something I piece piece together.

And so I took this to the manufacturer, and I said I wanted I want to produce 1000 of these Then you fast, was able to come up with a design very similar to mine design right here. However, the box is a lot more sturdy. It's got real guides on the inside to hold the circuit cards. So when they vibrate in flight, they don't short out the relays or heavier duty relays that have a longer life to them. And they made some other changes in here that actually improves the reliability and the maintainability. So this is the production version of my prototype.

So I had to go to the factory with a purchase order. And they typically ask for a third to half of the cost up front, and there'll be some tooling involved. So Perhaps there's tooling to bend this channel right here, which is a heatsink for these transistors. And so they have a jig that they, they make that bracket from to go inside this chassis. And they're going to charge you for the customer or the fixture for the tooling and you own it, and that can cost anywhere from 1000 to $200,000 depending on on the complexity of it. Next thing you want to do is work with a factory to understand the steps required to translate your handmade, low volume production prototypes into large quantities.

What type of quality control is going is going to be done? You don't want to inspect in quality you want to design in quality. And then lastly, if you're if your product is Designed for retail shelves, unique packaging need packaging, not just to protect your product, but also to promote your product or marketing pitch or branding. And so you're going to have them do the packaging for you or you have someone else to do that. Once you have the finished product, these are all things to think about. There's a, there's a link down here on my chart that you can find more information about the manufacturing costs required to taking your idea from a prototype to production.

Finally, you have your finished product, you have it packaged, now you have to ship it so you'd have to budget some some money in order to relocate your product into a storage facility. Unless you have a garage you'll need some type of a storage storage center to keep your inventory so you can transport it to sale. Now how do you get the product out The warehouse or the storage facility, your finished product into the customers hands. Well this product this chart right here shows the distribution channels. Now, on the one side we have the suppliers that supply chain and there's different tiers of suppliers. So example in this, this particular example here, we have the tier three suppliers may be Texas Instruments supplying these power transistors, the T two supplier, maybe the manufacturer that's supplying the sub assembly with the circuit board and there's another sub assembly with another circuit board.

The T one supplier may be the person that's putting all this together in the in the chassis that goes to the manufacturing company that does the final assembly and the wiring to the to the connectors. So it's understanding your supply chain all the way down to the smallest part. And then the manufacturing process once once you have the finished product, are you going to sell directly to the customer through a website? Are you going to take the pot out of your warehouse and sell to retailers to sell to customers? Are you going to use a distributor? And distributor is going to take your product to the retailers?

And then to the customers? Are you gonna have dealers do or sell directly to customers? Or do you have the direct sales forces sells directly to the customers? Those are all decisions you have to make. And there's costs involved. There's trade offs involved, certainly with a direct sales force.

And with a with a with a large quantity of products over large geographic area, then maybe more expensive than having a distributor with retailers. But distributors and retailers are going to Add cost to your selling your product. Okay, what we're going to need to do Finally, once you have this all figured out, is to conduct a feasibility assessment. Look at the economic feasibility do a cost benefit analysis, determine economic feasibility on the quantities that you're going to produce the technical feasibility, we talked about that before, look at what the risk are and have a strategy to mitigate those risks. The operational feasibility, make sure you've got all your quality control and efficiency, your security and data everything is in there operationally, and schedule you have any flexibility of feasibility in managing the schedule, look at your slack times in the schedule, allocating resources to have the most efficient use of resources to get the product to market in the shortest amount of time.

There's a there's a a YouTube video I'm going to leave you with here that goes into more detail on the product development process you may or may want to watch. And I'm going to summarize with these key points in the incremental prototyping of the product and market testing that's going to reduce the overall risk and cost by the time you get to production, scaling to production, gonna require you adding purchasing tooling, quality packaging, shipping and distribution functions. So you're going to have to build up your team to do that. The next section we'll be talking about intellectual property in scaling your business. Thank you Have a great day.