Investment assessment to manufacture and sell a new product

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In summary, when assessing whether to invest in manufacturing and selling a new product, it is important to create a spreadsheet or business plan that outlines the costs and potential profits over a set period of time. This can help determine when the investment will break even and what the return on investment will be. Sample business plans with accompanying spreadsheets can be found online.
  • #1
physea
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Hello

Are there any methodologies to assess whether a manufacturer should invest to manufacture and sell a new product?

I am looking for any Frameworks or procedures that could help methodically and systematically assess an investment like this.
 
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  • #2
It's been a long time but..

Usually you build a spreadsheet/business plan showing when and how much costs/investment would be incurred and when sales/profits or cost savings are likely to be made, perhaps on a month by month basis or yearly for longer projects. By adding suitable running totals you can work out things like when you will break even, when your expenditure will peak and what your return on investment would be by the end of the project or some set time period.
 
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  • #3
You can find sample business plans here, see under Product Development. I haven't looked to see if they include the spreadsheet used to generate the data and charts in the plan.

http://www.bplans.co.uk/sample_business_plans.cfm
 
  • #4
Yes last page (for example page 9 of the soap manufacturers plan) is a sample spreadsheet.
 

1. What is the purpose of an investment assessment for manufacturing and selling a new product?

An investment assessment is a process used to evaluate the potential profitability and feasibility of manufacturing and selling a new product. It helps companies make informed decisions about whether or not to invest resources, time, and money into developing and launching the product.

2. What factors are typically considered in an investment assessment?

An investment assessment takes into account various factors such as the market demand for the product, potential competition, production costs, sales projections, and potential risks. It also considers the company's financial resources and capabilities to manufacture and sell the new product.

3. How is the potential profitability of a new product determined in an investment assessment?

The potential profitability of a new product is determined by estimating the sales volume, pricing, and production costs. These factors are then used to calculate the potential revenue and profit margins. The assessment also takes into account the initial investment and ongoing costs associated with manufacturing and selling the product.

4. Is an investment assessment necessary for every new product?

Yes, it is highly recommended to conduct an investment assessment for every new product. This helps companies make informed decisions and minimize risks associated with introducing a new product to the market. It also allows for a more efficient allocation of resources.

5. What are the potential benefits of conducting an investment assessment?

An investment assessment can provide companies with valuable insights into the potential success of a new product. It can help identify any potential challenges or risks and allow for adjustments to be made before investing significant resources. It also helps in setting realistic goals and expectations for the product's performance and can aid in obtaining funding or support from stakeholders.

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