Prototype Development: Before You Invest Thousands...

In Brief

Developing an initial prototype is a critical and exciting stage, but it should not be the very first step you take. Before investing significant funds in building the model itself, you must conduct a comprehensive business feasibility assessment. This assessment includes identifying a potential manufacturer, understanding mass-production costs, calculating shipping and marketing expenses, and confirming that a sufficient profit margin exists to sustain and grow your business.

Only once you have all the numbers in hand can you make an informed decision about whether to proceed to the engineering and design development phase. Move forward with prototype development only when you know with certainty that your business model has real viability in today's competitive landscape.

It happens to the best and most creative among us. A brilliant idea pops into your head while walking the dog or in the shower - an idea that could solve a problem affecting millions of people. Your family is thrilled, your friends are encouraging, and your fingers are itching to start planning and building immediately. But just before you pour your hard-earned money into the venture, there is one critical step you absolutely must take to ensure your dream doesn't turn into a devastating financial loss.

It came to you suddenly in a moment of absolute clarity while walking the dog, napping, or (most likely) in the shower: the brilliant idea for a product that will solve that problem affecting millions of people worldwide. And since you're a creative person, you immediately started thinking about all the exciting features your product would have. The ideas came so fast that your fingers could barely keep up typing them out!

When you presented the idea to friends or family, their eyes widened in amazement. "Wow, how has nobody thought of this yet? You have to start developing a prototype!" they said, and you knew you were on the right track.

Remember: Prototype Development Is Not Business Development

First, let's give credit where it's due: prototype development is one of the most significant stages in any product's lifecycle. When entrepreneurs invest in building a professional prototype that includes the product's key features, everything becomes clearer. You can present the product to investors to raise capital, draw critical lessons for developing the next version, and take other steps that bring the product closer to mass production and revenue generation. So there is no doubt that prototype development is an important and exciting phase in the entire product development process.

But here at ATI, we think a bit differently from many colleagues who specialize in guiding entrepreneurs and recommend prototype development right at the start of the process. According to the product development methodology we developed - which has helped hundreds of entrepreneurs turn their ideas into thriving businesses - there is a critically important stage that must come before prototype development: conducting a business feasibility assessment for building a business around the idea and product.

What do we mean? Remember when you presented your idea and some people said, "How has nobody thought of this yet?" The truth is, the world is a big place. There are plenty of smart, creative people, and there's a chance someone has already thought of an idea similar to yours, or something close to it. So why haven't you heard of a product like yours, if it could help so many people? The reality is that someone may have indeed invested in successful prototype development, moved on to mass production, set up distribution, started marketing and... failed. They discovered the hard and expensive way - after investing in prototype development and marketing - that the numbers simply don't support a profitable business. For example, manufacturing costs may have been higher than expected, or shipping costs, or marketing costs. It could be that despite highly successful prototype development, the finished product didn't meet customer requirements, received poor reviews, and prompted refund requests. It's even possible that the factory they worked with shut down unexpectedly, or the manufacturer wasn't professional enough and the entrepreneur couldn't find a new one.

You see, prototype development is just one step in a very long process that must end with an active business with a positive balance sheet. Many entrepreneurs arrive with the mindset that prototype development must be the first step in turning an idea into a product. But from our experience at ATI, something else must come first...

Myth-Busting: Before Investing in Prototype Development, This Assessment Must Happen

Prototype development can be a very expensive process. Depending on the product, costs can reach tens of thousands of dollars. And as we noted above, successful prototype development is not a guarantee of business success for the venture built around the product. We've met hundreds of smart, talented entrepreneurs who invested enormous sums in prototype development only to be disappointed later, watching the business they worked so hard on close after losing a fortune.

That's why our unique methodology at ATI focuses, before prototype development, on the business feasibility assessment stage. In the process we conduct with entrepreneurs, we first deeply understand their idea, prepare a highly precise specification of the required product, set prototype development aside - and begin instead by identifying the right manufacturer.

Identifying the right manufacturer is based on the extensive network of contacts we've developed over decades of product development and manufacturing. We're in touch with leading manufacturers in East Asia and other regions worldwide. Each has unique advantages, infrastructure, and strengths. We reach out to manufacturers in our database that we believe are suitable for prototype development and finished product production, or our professional teams locate new manufacturers relevant to the required product development. After selecting potential manufacturers, we begin specification discussions designed to provide the entrepreneur we're guiding with the most accurate possible assessment of the business aspects surrounding their product:

• Full product development completion - timeline and cost
• Prototype development and production - timeline and cost
• Serial production cost estimation report

After receiving all this data from potential manufacturers, we sit down with the entrepreneur, review costs and timelines together, and jointly determine whether there is business feasibility to proceed with prototype development at all. All of this is to ensure the entrepreneur doesn't invest thousands of dollars in a product that has no business viability.

The focus on the business side and the numbers derived from it before prototype development is one of the defining characteristics of ATI Propel's product development methodology. It's possible only thanks to the unique infrastructure we've built to give entrepreneurs maximum value in risk mitigation.

Tip From the Experts

Don't fall in love with the physical model - fall in love with the business model. A product that works perfectly but causes you to lose money on every sale is not a business; it's a very expensive hobby. Always start with the numbers.