|FORTUNE Small Business:|
Bringing a killer new product to market
The idea is the first step. Here's how to turn it into a business.
(FORTUNE Small Business) -- Dear FSB: I have some potentially profitable new product ideas. Two of the proposed offerings could be made easily and used by people worldwide. How do I get a manufacturer interested in making them or creating samples for me?
- Alan Moreno, Boynton Beach, Fla.
Dear Alan: The complexity of bringing your ideas to market depends on a number of factors, including your ultimate goal. You could sell or license your ideas. Or, you could take the products to market yourself.
If you go the latter route, the process can be lengthy and require more capital, but the economic rewards may be higher. The good news is that consumer demand for new products has never been greater.
"Fifty percent of the revenue at large companies like Proctor and Gamble comes from products that are less than two years old," says Louis Foreman, founder and executive producer of the PBS show Everyday Edisons and CEO of Charlotte, N.C.-based Enventys. "Think about how big a firm's pipeline of ideas must be to keep up with consumer preferences."
"There was a time when companies exclusively relied on their research and development departments and everything was invented in house," says Foreman, who is also an inventor who holds nine patents. "But that only worked when products had a shelf life of five to 10 years. Now, because of customer expectations, companies have to consider outside inventions."
Plotting your course
"Ask who your end user will be," says Foreman. "Keep it narrow. While everyone may benefit from the product, realize that not everyone will buy it."
Next, suggests Foreman, start an inventor's notebook. You can use a composition book, but don't tear out any pages. In great detail, describe the process used to create your product. Have someone with no financial stake in your idea sign each page to certify that she understands your process. If there is ever a legal dispute, U.S. law follows the first-to-invent, not the first-to-patent rule. Your notebook will document your invention's timeline.
After you've determined that you have a worthy product and you've documented how you created it, it's time to legally protect your invention by applying for a patent - or at the very least, a provisional patent. Provisional patent applications act as temporary placeholders that allow inventors to file inexpensively without including a formal patent claim, oath or declaration. Once you file one, you'll have one year to investigate factors such as the invention's feasibility and patentability.
Licensing specialist Stephen Key, co-founder of San Francisco-based InventRight, describes licensing as "renting your idea to a company." He says that getting a manufacturer interested in your ideas can be easy if you take the right approach.
Navigating the development process that will take you from idea to distribution is critical, says Key, whose company provides inventors with free online information. You may have to alter your idea to ensure its success. Key advises against created a prototype. Save your money, he counsels. A corporation that is interested in your product will want to make its own prototype. But you should create a "sell sheet," a one-page document that describes your product, its benefits, and its target audience - don't forget to include your name and contact information.
Key suggests calling companies that make products similar to those you propose to offer.
"Get the company's 800 number from its packaging, ask for corporate headquarters, and then find out who's in charge of marketing or sales," says Key. When you reach the right person, say you are a "product developer with a great idea," Key advises. "I never use the word 'inventor' because people have strange ideas about inventors," he adds. You'll have five seconds to make your pitch. "Do it in a way that emphasizes your product's benefits and makes the company want to see it," he says.
Solo Marketing Effort
"Most inventors hope to license their ideas, but the reality is that many have to go to market themselves," said Foreman. It can be a challenging process.
"Instead of buying ideas, big companies frequently prefer to purchase existing firms with established brand and market shares," says Foreman. It's safer for both parties."
Large companies deal cautiously with inventors because they don't want to be accused of stealing an inventor's idea that may be similar to a product they are already developing.
If you decide to market your product on your own, it is crucial that you first build and refine a prototype, says Foreman.
"James Dyson said it took him 5,127 protypes before he was happy with his vacuum," Foreman notes. Once you've perfected your prototype, you'll need to find the appropriate distribution channel to reach your customers.
"As much as a company may like to sell its products at Wal-Mart (WMT, Fortune 500), sometimes you have to start with smaller retailer, perhaps a specialty one or even online, to establish some traction," says Foreman.
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