Dear Karen: You recently advised an inventor to build a prototype for testing purposes. Are there companies that do that sort of thing?
Answer: Yes. There are fabricators that specialize in developing prototypes, which are handmade versions of products that later may be mass-produced.
Search the Internet for “prototype manufacturing” and you’ll get some idea of the range of companies serving this niche.
“The purpose behind a prototype is to test the concept to see how well it works, or to show it to others to gauge market interest,” said Phil Baker, a small-business consultant and author of “From Concept to Consumer.”
A product made of hard plastics, metal or wood should be prototyped by a model-making or machine shop that has experience working with those materials, with parts of similar sizes, Baker said.
An engineering firm may be used to build an electronic circuit or simple circuit board. “It’s important when you work with these resources that you have drawings that clearly define the parts and the product,” Baker said.
A good fabricator can help you test and refine your prototype and also recommend a manufacturer or do the manufacturing on site.
Ways to keep sales coming
Dear Karen: How can I keep my sales up in this market?
Answer: Emphasize outbound marketing, such as direct mail or telemarketing, said Michael Falkson, chief executive of ETI Sales Support. “Outbound marketing is still very effective,” he said.
You also want to be agile with your marketing plan, constantly auditing your efforts to determine what is working. “If you’re wasting precious dollars on ineffective, non-sales-producing activities, stop them,” Falkson said. “It may sound obvious, but many companies waste dollars on activities with no return on investment.”
Go after larger customers. “One hundred whale-sized prospects are better than a million sardines,” he said. And remember to measure your efforts in terms of cost per sale, not cost per lead. “A higher upfront cost will likely return a lower cost per sale. You get what you pay for,” he said.
A formula for breaking even
Dear Karen: How can I get my business to the break-even point?
Answer: Calculate your profit per sale and pump up the dollar amount of your typical sale by offering an assortment of products or services that work well together, said Jeff Williams, chief executive of Bizstarters.com.
Then set your prices so that you get a 60% profit or are earning at least $75 an hour, Williams said. “Let’s say your monthly overhead is $600 and you need a $40,000 annual salary. If the profit on your typical sale is $150, you must make 315 sales annually to break even,” he said.
If that number seems unrealistic, increase your profit per sale. “Send regular promotional e-mails to customers to get new orders that cost you very little,” Williams said. “Work with a complementary business to have them promote your product or service and you do the same for them. That way you connect with prospects they paid to get.”
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