Entrepreneurs and Inventors: A Few Pointers

Here are some “stages” for entrepreneurs & inventors to consider before going “all in”.  They aren’t rules or legal advice, just the unsolicited opinion of someone who’s been exposed to the process.

1.  Recognize the need / Potential idea.  There are opportunities out there!

2.  Verify there’s nothing like it on the market, or it’s vastly superior to anything out there.

3.  No really, make certain there’s nothing out there already.  It’s hard to get going if someone already has the market share & name recognition.

4.  Determine your retail price point.  Now don’t kid yourself, people are generally thrifty with their money.  I am.  We all are.

5.  Your manufactured price needs to be around 25% of the price where you think people would step up and spend their hard earned money.

6.  Why?  Every distributor adds around 50% onto the product, and after a couple levels of this type “help”, it adds up.  Remember, they need to make money also.

7.  OK, is there any possible way to produce the “item” for the money available?  Unless you are a manufacturing engineer for a living, find one.  ( Hint-hint )

8.  Does it still seem feasible for the money on the table?  If yes, that’s excellent, things can get interesting now.

9.  You need to develop an engineering drawing, viable prototype, or something to show investors and/or to help with a patent search.

10. Rules vary, but generally if anyone sees the product in public, or you sell one of these, you may lose your patent ability.  If you can’t patent the “item”, other people tend to copy it in short order.

11.  You need to perform a patent search, and see if there is something similar on file.  Often I’ve found something already out there, but was never brought to market for one reason or another.  This type discovery can leave you dead in the water.  On the other hand, maybe you have something different enough to proceed.  Remember, you can’t hit a home run unless you step up to bat.

12.  It appears patentable?  Your patent lawyer (they don’t work for free) helps you through this process.

13.  By the way, if you get a patent, it’s only as good as your wallet to protect.  Yes, people will copy your patented product, and it’s up to you to sue them & win in court.  Yes I know, it’s hard to believe.

14.  At this stage, you have something that “big business” may be interested in.  You may be able to sell the patent to a big company, but this is far from an automatic jackpot.  There is no market demand yet, and may never be demand.  They seem to think they have you “over the barrel” from what I’ve experienced.  Plan on tough negotiations if anyone does express an interest.

15.  Alternately, you decide to build the first production run using your own money & deep seated faith in the product.

16.  By the way, small volumes cost quite a bit more per item, at least compared to big volume.  However, you can’t afford to buy “big volume” as a start-up, so the first production run is probably a loser in profit.

17.  You need to visit with an insurance agent, and discuss product liability insurance.

18.  Find a distribution channel, and hope they’ll “put your product on the shelf”.  Remember, other folks are trying to “get on the shelf” also!  Maybe direct distribution can work, face to face, or even online stores, auctions or similar.

19.  By the way, who’s advertising this?  A rule of thumb is marketing can be 33% of the cost of a product.  Getting on a shelf, and marketing in general, none of this is trivial.

20.  Watch the deals made.  They may let you try a “regional launch” or “market test”.  In the fine print, if you don’t meet goals, the deal is off.  That doesn’t mean they won’t closely copy it & sell it themselves, or nearly copy the “best one” if you had a group, and sell that one while you set on the bench fuming.  This can happen in figures & artwork, where the copyright laws may not offer the protection you’d think.  One extra little feature or color, it can be “different”.

21.  Hope that things sell, the warranty issues are minimal, and that things work out for your endeavor.

22.  Best of Luck to you entrepreneurs & inventors.  The world needs you to succeed, not matter what roadblocks you encounter.