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Experienced Innovator Guide |
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Commercial steps |
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In this Section
Assessing Commercial Potential Is There a Market for My Innovation? Most people with a new idea have checked around - maybe some local retail stores and sales outlets - and determined that there's nothing like their product on the market. On occasion, there may a similar product, but it didn't have the same unique features. Likewise, they have conducted some informal research, asking friends and relatives their opinions about the product, and have received a very positive response. Everyone feels that their invention will make a million. When asked the question "Is there a market for your product?" the answer is invariably, "Oh, yes!" We call this type of vague generalization about an idea's potential as more of a "gut feeling." And while we believe that gut feelings and intuitions are valid, most inventors fail to go beyond this initial starting point to really dig in and get statistics and information about their product and the market potential. Prove It To Me! Now, from the point of view of an investor, licensee, or venture capitalist, or someone who is considering investing or financing your product in some way, they're going to want more substantiation than just a gut feeling along with some informal research as back-up support for your claims. A few opinions from family and friends aren't going to be enough to convince anybody to invest in your product. These business people want you to prove it to them. They want solid statistics. They want facts. They want data. And they want to see it in writing, not tossed off the top of your head. They want to know where you got the information, when you got the information, and how you got the information that supports your claims. The more of this you have, the easier it will be to present and close a prospective deal. Ironically, you may find that not all of the prospective contacts will actually read all the data, or care about all of the information you have. But you never know who will want what information at any one point in time, so having as much of it as possible will help increase your chances of success, because you'll be prepared for just about anything and everything. You won't be thrown off guard by a question(s) that you hadn't thought about. And, best of all, in the process of gathering all of this material, you actually become an "expert" about your product based on research and study, not on speculation and wishful ness. Because you will be much more confident as a result of having the proper supportive data in your business dealings about your product, you will come across as a professional and will not seem like a naive "wannabe." Too many inventors skip this marketability research part and go straight to the patent and prototyping stage because nobody has explained to them how important this phase is. However digging up this back-up support may also help you reduce the risks of marketing this invention. While there are never any guarantees, being as certain about the product's marketability will greatly increase your chances of success. TIP: In this initial research phase, it is also important that you remain "neutral" about your idea while you're doing the research so that you can let go of the idea if you happen to find out that it is a "no- go." Finding this out in the early stages could help you save thousands of dollars that would otherwise be spent on useless patents, prototypes, manufacturing, etc. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page Marketing New Products and Inventions The five Critical Steps Most of us have a good new product idea every once in a while, but the vast majority of us never take steps to own or sell our ideas. However, every year thousands of ideas are acted upon by their creators. Some develop into financially successful products. What does it take to get a new idea going? How does one protect the idea while in the process of finding out what to do, how much it will cost and what the chances of success are? Many schemes and procedures are found in the literature from authors of various backgrounds. We have found that the invention process is well represented by a five-step procedure taught by the Inventors Forum in Orange County, California. In this process, a new idea is brought from concept stage to a "business ready" stage where the inventor is prepared to seek venture partners, financial backers or licensees. Let's take a look at these individual process steps: Step ONE establishes the legal date of conception. An idea in your head is protected only by the fact that no one else can read your mind. Once you disclose the details to others, they may be tempted to claim that the idea, or a modification of it, actually originated with them. This is prevented by disclosing the details of your idea on paper, signing, and dating this document as the "inventor," and then having it witnessed. The result is a legal document that is remarkably strong in protecting the inventor's rights as originator of the idea. Our patent laws protect the rights of the first to invent. Step TWO involves evaluating the marketability of a commercially viable product based on your idea. This is done identifying products or services that meet the same human needs that your product would. This is a very important step and is frequently glossed-over by the eager inventor without adequate discovery. To be successful in the marketplace, a new product must have a strong benefit that some human beings would naturally seek. It is important to be thorough in evaluating all of the current competitive products. For new consumer ideas, competitive products are all around you in the retail stores. For industrial goods such as tools, competitive products are described in technical sheets available from manufacturers listed in references such as the Thomas Register in any library. Step THREE calls for a patentability search in order to see if the idea is protectable, and also if it might infringe the patent rights of others. Some non-patentable ideas, like the "pet rock," have generated large revenues for their creators. Most products that are not protected under U.S. patent laws do not do well for the small entity independent inventor because just when sales of the new product are growing fastest, strong outside interests are attracted to compete. It is possible to lose a fast-growing market in only a few weeks. A preliminary patent search may be carried out using the Internet or one of the many depository libraries located in major cities around the country. A professional search with patentability opinion from a patent agent or patent attorney is always a good idea if your initial search proves positive. Step FOUR is reduction to practice. This means building a prototype to prove to yourself and others that the idea really works, or is as appealing as you first thought. A prototype may not be a practical possibility or may be unnecessary, but, if it is feasible, it should always be considered. Rarely can potential backers, licensees or venture people convince their management to invest in your product without seeing it, holding it and working it. If step two shows that the market is strong for a product such as yours, and if your patentability search results are positive, now is the time to file for patent protection. It is highly recommended that both a prototype be made and a patent application be filed before commercial efforts begin. The new Provisional patent application may be written and drawn informally by the inventor, without legal help, and requires a filing fee of only $75. Step FIVE is to formulate a business plan. There are two basic ways to make money with your idea. Licensing, the first way, requires filing a strong and broad-based patent application on your idea and then trading protection under your potential patent(s) for a royalty against sales by the licensee. Venture, the second way, generally involves your personal involvement in the business of taking the product to market. If you have experience with manufacturing, marketing, finance or business management, you may be functional in your own venture. Alternately, you may be a silent partner providing the intellectual property protection but not becoming active in the venture. Whether licensing or venture, you will need to prepare a business plan about what and how you will proceed. When properly executed, these critical five steps produce three important results. First, a raw inventive idea is converted into a definable "intellectual property" protected under law. Second, the inventor, quickly and inexpensively, develops an understanding of the true practical value of the idea. Third, the inventor assumes an "expert" position with real negotiating strengths. The inventor moves quickly and assuredly, converting a new idea into an income stream; or, alternately, learning that his best strategy is to drop the matter before investing major time or money in it. Either way, it's a win-win situation. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page When locating manufacturers to which you will send your marketing letter, you should search for companies who already make products similar to your innovation. You should attempt to locate at least 20 to 100 manufacturers in the same business focus of your innovation. There are seven places you can search for potential licensees:
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