Explore by Topic
Explore by Type
C2FO Powers Early Payment Programs for the World’s Largest Companies.
Discover expert insights on working capital, cash flow optimization, supply chain management and more.
We believe all businesses can and should have equitable access to low-cost, convenient capital to grow and thrive.
Your business is ready to develop new products. But do you have the product-market fit, funding and buyers needed for a successful product launch strategy?
If your small to midsize business is ready to grow, you may be considering new product development. When done well, new products are valuable opportunities to address real customer needs and demands. They can also help you differentiate your business from competitors, diversify your customer base and achieve significant growth.
However, there’s a reason that up to 95% of product launches fail. Without a valid market need for a new product, it’s unlikely to give your business a return on investment and enable growth. Unforeseen supply chain and manufacturing issues can also affect a successful launch, while insufficient funding can sink a business before a new product has a chance to gain traction.
Whether you are new to product development, have acquired a business or are expanding an existing product line, here’s how to approach a new product launch strategy.
Lack of product-market fit is one of the top reasons that new products flop, so it’s critical to research the market thoroughly before investing in product development. This can be performed either internally or through a third-party market research company. Regardless of your approach, a comprehensive analysis involves both primary research (insights that you or a third party investigate) and secondary research (insights that are already publicly available).
Government industry statistics, commercial agency research, and internal sales and marketing insights can offer valuable objective data on your target market. Businesses also use interviews, focus groups, surveys and product testing to gather more nuanced qualitative market fit information.
While researching market needs with existing customers is useful, it’s also important to engage with prospective customers and internal stakeholders — such as executives, sales teams and product developers. This expands your research sample and offers a more accurate depiction of customer pain points, market needs and potential risks. As a baseline, you should come away from this process with a good understanding of:
Even a unique product with significant market demand can’t succeed without sufficient funds. Developing and launching a new product takes a significant amount of time, energy and resources. For most small to midsize businesses, launching new products requires some form of financing.
When exploring financing options, the first step is to estimate product launch costs. This typically covers research and development, intellectual property protection, materials, manufacturing, production, testing, pitching, marketing and sales. For many businesses, these efforts necessitate additional staff and may take months or years before a product hits the market.
Next, estimate sales projections for years one, three and five. Include a best-case, worst-case and midrange sales scenario, factoring in risks such as material shortages, changes in market demand or an economic downturn. Once you’ve forecasted costs and returns, you can calculate the projected net profit, again in years one, three and five. If you anticipate lengthy payment cycles, account for additional funding needed to operate before your first round of payments clears accounts receivable.
This will give you a sense of how long it will take to break even on the product, when you’re likely to start seeing returns and how much working capital you’ll need to support the launch while maintaining your existing business.
Traditional business loans are often the first options that businesses consider for financing. However, there are several alternatives if you need additional funds or can’t meet traditional loan requirements:
Do your current buyers make up your new product’s target market? Even if you already work with a potential buyer, pitching a new product can be just as challenging as engaging with brand-new customers.
It’s a good practice to identify key buyers and communicate regularly with them. Are they satisfied with your products? Are there unmet customer needs they are trying to address? Over time, these conversations can build trust, generate new product ideas and lead to collaborative new product development. If you’ve established strong buyer relationships, developing buyer-specific products is often less risky than pitching products to new buyers.
Whether you are targeting new buyers or engaging with existing ones, you can increase your chances of success by:
At its core, a successful product launch strategy relies on two things: product-market fit and adequate funds. Before investing any money in new product development, do your due diligence. Research the market and validate that there is a real need for your idea. Be realistic about the costs associated with the product launch, and stay open to both traditional and alternative financing solutions for the venture.
When it comes to making sales, consider the needs of your existing buyers and prioritize businesses that are more likely to invest in small to midsize supplier relationships. This will not only boost sales and enable growth but also strengthen your buyer relationships in the long term.
Learn more about how early payment programs can help fund business growth and support your product launch.
This article originally published September 2017. and was updated August 2023.
In this article:
There are plenty of places a growing business can invest its resources, from R&D to hiring more staff. But which investments should you prioritize first?
Find out the reasons businesses fail and how effective cash flow management can help your business succeed.
Subscribe for updates to stay in the loop on working capital financing solutions.
9 min read
8 min read
7 min read