If you run a business, every now and then, you may be tempted to develop a new product. Maybe it’s the thrill of trying something new or a hunt for new income. Whatever the motivation, it helps to clearly define your reason for developing the product, as there are financial implications. Project managers call this definition the business case. It’s an essentially part of the product development life cycle and should not be skipped.
Here are some popular reasons for product development:
1. Personal fulfillment: Typically you don’t need external validation to embark on a pet project. However, if you don’t have a corporate slush fund for moonshot products (like Google does), it may be a bad idea. Chances are your personal passion will blind your business judgement, so the development life cycle will be messy and costly.
2. Income: When you design a product for profit, typically you tend to focus on the needs and wants of the customer who would buy it. You commission feasibility studies to be sure there’s a need for the product and you calculate the likely break-even point. If you’re using corporate of investor funds, every penny is usually accounted for.
3. Invention: Sometimes, consumers don’t know what they want until it’s invented. An entreprenuer may be bitten by an idea that they imagine will change the world. The plan is to make a truckload of money if the idea pans out. But, as a business, be sure you have enough funding from other sources, should the idea fail. Ensure your organisation and reputation will survive, should the product end up being a bust. Remember the iPad was a risky proposition for Apple, but the company had enough cash to afford the experiment. It also had a sterling reputation.
So, before you embark on developing a new product, just for the heck of it, think about the implications for a moment.Before you develop a new product, just for the heck of it, think about the financial implications. Click To Tweet