A Step by Step Guide
This guide will walk you step by step through all the essential phases of making money with a new idea or invention.
Innovative ideas are essential to business progress. It is very difficult, however, for innovators to get the kind of financial and management support they need to realize their ideas.
This Guide, aimed at idea people, inventors, and innovative owner-managers of companies, describes the tests every idea must pass before it makes money.
Table of Contents
1. You've Got an Idea? Great!
2. You've Got an Idea? So What?
3. Can You Exploit Your Idea?
4. Is Your Idea Original?
5. How Will the Invention Be Produced and Distributed?
6. Will Your Idea Make Money?
7. Can You Protect You Idea?
8. Is There Any Hope?
9. Where Can You Go for Help?
In the first place, the chances that you are the first to come up with a particular innovation are somewhere between slim and none. Secondly, even if you have come up with the better mouse trap, nobody - but nobody - is going to beat a path to your door. In fact, in the course of trying to peddle your BMT, you'll beat up plenty of shoe leather wearing paths to other people's doors. You'll stand a good chance of wearing out your patience and several dozen crying towels as well.
Well, new product failure rates are estimated conservatively to be between 50 and 80 percent. One survey of major companies with millions of dollars to spend of R & D, market research, and product advertising, and with well-established distribution systems found that of 58 internal proposals only 12 made it past initial screening. From these 12 only one successful new product emerged.
Another group set up to help innovators has found that of every 100 ideas submitted 85 have too many faults to bother with. They can be eliminated immediately. Of the remaining 15, maybe five will ever be produced. One of those might - only might - make money.
With odds like 99 to 1 against an idea being a monetary success, is it any surprise that your idea is greeted with a chorus of yawns? People - companies, investors, what have you - are basically conservative with their money. Ideas are risky.
Does that mean you should forget about your idea? Of course not. It merely means that now you're beginning to see what Edison meant, when he said, "Genius is one percent inspiration and ninety-nine percent perspiration."
Again, those of you who own small firms started on innovations are well aware of the truth of Edison's words. You've been through the hard work.
Can You Exploit Your Idea?
Although coming up with what you think is a sure-fire idea is the biggest step, it's still only the first one. You've got the other thousand miles of the journey to success still ahead of you.
Many things remain to be done before you can expect to realize the first dollar from your invention or other innovation. You should be prepared for the unhappy discovery that the end of the line for your idea may turn up well before the point you needed to reach to make money from it.
At a bare minimum, your idea will have to pass the following tests:
Is it original or has someone else already come up with it?
Can someone produce and distribute it if it's an invention or other product, or use it if it's a marketing innovation, a new use for an existing product or the like?
Will it really make money? (Will someone buy it?)
Can you protect your idea?
That seems to be a modest enough list, and it is. The problems arise from the dozens of underlying questions that must be answered before the major questions can be resolved. Here, for example, are the 33 areas that the University of Oregon's Innovation Center runs each submitted idea through to determine if it has commercial merit:
Product Life Cycle
Stability of Demand
Trend of Demand
Product Line Potential
Research and Development
Now that is not a modest list. However, for the moment lets ignore the 33 and look at the four broad questions.
Is Your Idea Original?
Obviously, if somebody has already come up with and produced as good an item or a better one, it would be pointless for you to pursue a similar idea any further. You'd only be wasting your time and money.
There are lots of places to look to find out. If your idea is for a consumer product, check stores and catalogs. Check trade associations and trade publication in the field into which your invention or innovation fits. Visit trade shows relevant to your idea. Look in the business and popular press. (Here, you can consult The Reader's Guide to Periodical Literature to help you in your search. Your public library has a copy.)
Don't be afraid to ask people in the field if they've ever heard of anything along the lines of your idea. In the pure idea stage it's not very likely that somebody will steal your idea - all the hard work still has to be done. Besides, you can ask general sorts of questions and keep the details of your idea to yourself if you're really anxious that your idea will be pirated. Patent rights to an idea in major foreign countries will be jeopardized by uncontrolled disclosure prior to filing a patent application in the United States.
Obviously, if what you've come up with is an invention or an idea that can be put into patentable form, you'll eventually have to make a patent search. You could do that in this early stage, but it is probably a better idea to hold off until you've taken a look at your idea in the light of the next two questions?
How Will the Invention Be Produced and Distributed?
The first thought many innovators have is to take their ideas to a big national company. Provide the dazzling idea, they think, and let the giant work out the details. After all, the national company has the money, the production capability, and the marketing know-how to make this surefire profit maker go.
Unfortunately, the big companies are almost never interested in ideas from outsiders. Whether that's because, as one innovation broker has suggested, that outside technology is "a risk, a threat," or simply because large corporations need potential sales of an item to be in the tens of millions of dollars, doesn't matter. The cold fact is that selling a big firm on your idea is in the 100,00 to 1 shot range.
On the other end of the scale, you may be able to produce some items yourself, working out of your home and selling by mail order. This method can be a good way to get started, but after a while you may find yourself getting tired of having 200,000 better mouse traps stashed in your bedroom.
To be sure, if you can start (or already have) your own company, you will be better off. It's easier to sell a company than a patent, even if the company is losing money.
Many potential buyers understand a company much better than they understand the technology of an invention. Business people usually look at the profit-and-loss possibilities differently from the way an innovator does.
Many of these business people follow what one innovator has called "the 'Anyhow' theory of economics"; We have a plant anyhow. We have a sales force anyhow. We advertise anyhow. We're smarter anyhow." Such business people also know that by the time they purchase a company most of the bugs are out of the technology and customers exist.
Between the extremes of starting your own company or having big business buy you out is taking your idea to small and medium-sized businesses. Such firms would be happy to produce an item producing sales in amounts that simply don't interest large companies. Smaller firms may lack marketing and distribution expertise, but again your major problem is even finding one that can help you realize your idea and is interested in trying.
Other books in this Category that may interest you:
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A Step by Step Guide to Exporting
A Step By Step Guide To Starting a New Small Service Company
A Step by Step Guide to Starting a Successful Home Based Business
A Step by Step Guide to Small Business Feasibility Study
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A Step by Step Guide to Registering a Patent
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