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Feasibility Analysis Step 4: Product Definition & Development

Posted Wednesday April 5, 2006 in Entrepreneurship

What, exactly, is your product or service? Can you make or provide it successfully? The Product Development section is where you prove that you can actually do at all what you say you’re going to do (the other steps in feasibility analysis prove that you can do it successfully). In this section you’ll cover:

• What exactly is the product?
• What technology is needed? Is it mature?
• How will prototyping and testing be handled?
• Does any intellectual property need to be acquired?

Product Description

You know a lot about your product, you’ve probably immersed yourself in the industry, you can talk the talk, and, at the very least, sound like you know what you’re doing. That’s what makes this section so difficult; you have to explain your product in ways that an ordinary, non-technical person can understand.

Why? Two reasons. First, if you need funding, it’s unlikely that you’ll find (in the early stages) a financier who is as versed in your industry as you are. If you boggle them with technical vocabulary, they probably won’t feel comfortable financing you. The second part is sales-related: even within your industry, decision-makers are likely busy and have little time to listen to you speak in complete paragraphs on your wonderful product or service. To break things down into layman’s terms, you also need to break down the concept to the key points that most need to be expressed, then explain those key points in a relatively simple way. Even if you later add back the technical vocabulary, understanding better how to get to the point will serve you well in sales.

Technology Assessment

Most products and many services make some demands on technology; even “Bob’s woodworking — the smoothest handmade joins in Albuquerque!” requires hand saws and sandpaper to get its work done, as basic as those technologies are. Manufacturing, of course, requires complex technologies, as do computer-related products and services. What technology does your company need to produce your product or provide your service? How about for running the company — basic things like accounting, time-tracking, supply chain management, etc. If you use an innovative sales system, is the technology there to track success? Even if the product itself is technology — say, computer software — are the tools out there to create the end product? Look for the details in your product and your service.

Then find out: is the technology commercially available to meet needs? Can it be developed in-house? Is it affordable? If the preceding questions are answered in the negative, will the technology mature in time, or if it goes into series production?

Prototyping and Testing

Whatever the product or service, you must prove to yourself and to your customers that you can successfully offer it, at the quality and quantity levels that the market demands. What is the testing method to prove this? Is there a way to go into low-volume production, do beta testing, or try things out with a friendly lead customer first? How will you gather and incorporate feedback from customers, to ensure you meet market needs? How will you track quality and production metrics internally, to know if you’re producing or providing what you want to? What exactly is the plan to get from zero to proven ability to provide (sales and marketing, obviously, will take you to the next step — success)?

Intellectual Property

These days, patents and other IP rights protect a remarkably wide variety of ideas, products, and procedures. What do you need to license to start your company and sell your product? How much will that license cost? A good place to start looking for IP that you might have to worry about is the Patent and Trademark Office’s Web site uspto.gov. If you’re really worried — perhaps you’re in an IP-intensive industry — you can get a patent lawyer to do a search for you as well. Your feasibility study will be invaluable in doing this, as your lawyer will be able to read it and have some idea of what’s going on, especially if you’ve explained your product idea in plain English (or the language of your choice, so long as it’s plain) as described above. If you’re lucky, your lawyer will see some IP that you can protect yourself!

In many ways, this is the easiest section yet, because you don’t need to speak with anyone outside of your company, just understand what it is that you’re doing and how you’ll continue to do it. Once you’ve gathered this information, add it to your best-case Excel spreadsheet. Where does your idea stand now? Is it still feasible? If so, go on to the founding team, finances, and timeline.