There is never a good time for small businesses to swing and miss on a new product launch. But when companies are trying to survive a tough economy, owners must pay close attention to the process to avoid the psychological—and financial—toll of a failed launch.
A lot of business owners will never try something again if they have a first-time failure, says Andrew J. Sherman, author of Harvesting Intangible Assets and a partner with Jones Day, a law firm in Washington, D.C. “For a small company to try a new product or service and have it fail, and to not learn from the failure and try it again is a travesty.”
Follow these steps to ensure successful product development.
1. Build the right budget.
Launching a new product might never happen without a reasonable budget at the outset of the project. Underfunded projects rarely make it to the launch phase, and overfunded projects can result in wasted time and money, Sherman says. Owners need to figure out the total costs related to a new product, set a realistic budget, and hold team members accountable for meeting those numbers. While numbers vary based on industry and company size, it’s not uncommon to allocate 20 to 30 percent of a company’s budget to new product development, Sherman says.
2. Focus on markets.
For a product launch to be successful, owners should avoid “inventor syndrome” and focus on creating products and services customers want, Sherman says.
“What we have to avoid is entrepreneurs and small business owners who are looking for that invention to be their legacy instead of worrying about whether the invention is something customers want, need and will pay for,” he says.
3. Invite collaboration.
Collaborative environments can lead to more successful product launches. The group responsible for putting together the launch should elicit feedback from salespeople or distributors, as well as potential customers, to find ways to improve key elements of the launch. Such elements could include the pricing and positioning of the product.
4. Eliminate wasted time.
Sherman emphasizes the discipline owners must implement throughout the product launch. Those planning the launch should identify its key steps and indicate the stakeholders responsible for carrying out those steps. Steps in the launch-planning process include compiling a realistic budget, collaborating with individuals at all levels of the company and evaluating risk.