1. Use your available cash to produce at least one unit of your product. It's tough to get people to invest in your product unless you can show them a completed model or, better yet, show them you've already sold some products. Investors can't always understand a product, let alone decide it's worth investing in unless they can see and touch a real model. Also, compared to a simple drawing, a finalized model conveys the impression that you're really committed to your idea.
2. Don't think you are the typical consumer. Just because you like it doesn't mean everyone else will. Use your own instincts, and confirm those feelings with the opinions of others. But the only way to know ahead of time if your product can really sell is to sell some units prior to launch.
3. Retailers like innovative products that can revive stale categories. To a retailer, a stale product category typically means low profits. That's because similar retailers sell the same or very similar products. So consumers tend to know what the price of the product should be, and they buy from whoever has the lowest price. However, retailers get much higher margins from products that are new and innovative, and they like to try new products in stale categories that might give them that higher margin.
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4. Lots of small investors are better than one big investor. When you lack enough money to launch your business, you have to select a product with somewhat limited sales potential so you don't compete with large companies, which tend to avoid smaller markets. However, with 4.5 million units sold per year, the 180°s Ear Warmers have found a much bigger market than expected. Big investors who are looking for a big gain aren't interested in a product with a small market because it doesn't offer the potential to earn a lot of money. Ideal investors are people who don't often have the chance to invest in new products. People like neighbors and family members are better candidates, and each can offer a small investment to get you off the ground.
| | INVENTING 101 | |
| Successful inventors know how to walk before they run. In other words, before spending their life savings, they make sure ahead of time their ideas will work. The Inventor's Bible: How to Market and License Your Brilliant Ideas (Ten Speed Press) by Ronald Louis Docie Sr. offers a basic understanding of how to evaluate the marketability of your idea. For instance, it includes an invention evaluation and scoring guide to help determine the risk-reward ratio for a product. Your results will help you determine whether to pursue your idea. While the book focuses more on inventors licensing their ideas and overlooks how inventors can market products on their own, it's one of the better books about how inventors come up with and test ideas prior to making that big investment. The book also contains a handy flowchart of the invention commercialization process, which novice inventors (and many experienced ones) will find useful. |
Don Debelak is author of Entrepreneur magazine's Start-Up Guide #1813, Bringing Your Product to Market. Send questions to dondebelak34@msn.com.
Originally published in the December 2003 issue of Entrepreneur Magazine
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