Issue 0701011st/ 2nd Quarter 2007
Are you an Inventor or an Entrepreneur?
Based on experience of working with hundreds of Inventors and Entrepreneurs, we have found that the difference in mind set between the quote “Inventor” and the “Entrepreneur” is the difference of using industrial designers and really getting the invention to a mass produced state and to market. Inventors are needed but most Inventors are not experienced in product development, manufacturing and or business launches or branding to create a profitable business. Most Inventors and Entrepreneurs do understand that they need to patent a product to prevent third-party commercialization but this is just the start of the commercialization process.
The Inventor dreams of selling or licensing the idea and getting rich quick based on the “lottery mentality” which is prevalent in most first timers. The chances of hitting the lottery are very low. The chances of licensing a product patent for big monies are very low. Most Inventors have some business experience and see the products displayed on store shelves but have not been exposed to the manufacturing supply chain and what it takes to get a product on the shelf. When the inventor or entrepreneur has the know-how to patent an invention then hire an industrial design firm, they enter the fast paced, unforgiving E-World of entrepreneurial product venture.
The Entrepreneur understands that you must build upon the invention and create a portfolio of patents and products and follow up with consistent sales and marketing to build a profitable business plan. They must work with commercial capitalist and manufacturers who can see their vision of the potential for financial success for the product. The Inventor must move to the business of planning and executing the total industrial design, product development, tool-up, inventory and management business structure to become profitable. It all comes down to the amount of investment versus how fast you can reach the (ROI) return on investment and maintain profit.
When trying to move from Inventor to Entrepreneur to bring an invention to the market, it is really a matter of thinking long term versus short term. Here are 4 basic business path choices to commercialization, with each path choice having an associated ranking system for the level of Investment and relative Chance of Business Success:
* Very Low ** Low *** Relative **** Better ***** High
1. License or royalty based on provisional patent or patent application. Create a business plan, drawings and photographs of a functional model with a color rendering by an industrial designer. Combine that with objective marketing focus group review data. Assemble a MS PowerPoint or DVD presentation and hit the road. Get potential companies to sign an NDA and present your idea and proposed compensation method. Propose a buyout or a 1-2 percent royalty based on gross sales. Investment** = Chances of success *
2. License or royalty based sales & patent ownership. Create a business plan, work with an industrial design firm to generate the production level design and 3D CAD files and drawings. Produce a limited production run of 100 – 1,000 units for retail sales, combine that with a ramp up marketing and sales strategy. Assemble a MS PowerPoint or DVD presentation and hit the road. Get potential companies to sign an NDA and present your product and proposed compensation method. Buy out or 2-5 percent royalty based on gross sales. Investment *** Chances of success **
3. Create a small business,. All of the above, starting out of a small office or garage, based on an inventory of 10,000 units. . Attempt to reach the middle-man buyers for retail establishments. Hit the competition in the wallet, then they will take notice and increase you chance of a sell-out or major ramp up.. Team up with larger businesses. Investment *** Chances of success ***
4. Full business, start up of a full office based on an inventory of 25,000.00 – 100,000 units. Establish a manufacturing and, inventory and fulfillment channels including buyers for retail establishments. Sell out the business or go public. Investment ***** Chances of success ****
If you elect Path 3 or 4 to move beyond invention development and get your product to market, the initial milestone hurdles are the high costs of paying for industrial design and engineering followed by prototyping followed by large manufacturing tooling investments. Typically the most overlooked and under estimated part of the business execution is the follow up marketing and sales investments necessary to create sales once you have packaged product in hand.
Inventor or Entrepreneur, the difference is really getting your product to market and making a profit. Not just selling a few units, but gaging the potential and selling thousands of units that make a profit, after you have paid your investors, your employees and your overhead (i.e. Business Plan). The Entrepreneur understands that you must build upon the invention and patent to build a profitable business. Moving from an Inventor to a Entrepreneur is typically defined by one action, hiring an industrial design firm to design and engineer the best solution possible for the lowest price, taking you through mass manufacturing production. The reality is you need to be a great Inventor and a super Entrepreneur and work with an industrial design consultant to increase your chances of business success.
Here are some recommended steps to follow to help increase your chances of business success:
Step 1 Invention Idea – Documentation – file with Patent Attorney and USPTO. www.uspto.gov
Step 2 Patent & Copyright Search (preliminary- full or international search by a registered Patent
Attorney) Patent Attorney / Legal Referral:
Mr. John Greenwald, P.C. email@example.com Atlanta GA
Gardner Groff – www.GardnerGroff.com
Step 3 3D Development- Proof of Concept (Patent Development)
Industrial Design – human factors/user interface, Mechanical/Electrical Engineering WhiteLight Design, firstname.lastname@example.org
Step 4 Preliminary Business Planning – Industrial Design for Mass Production ( Form/Styling/3D CAD Development)
Step 5 Pre Production Prototype
Step 6 Patent , Trademark, & Copyright Protection Application
Step 7 Full Business Plan – Manufacturing Tooling /Piece Price Cost Bid Quotations for Mass Production
Step 8 Manufacturing Contract – Tooling Release 3D CAD files
Step 9 Manufacturing Assembly Line Development – 1st Production Prototype – Packaging /Boxing/Palleting
Step 10 Production Release (10,000- 25,000 units minimum) – Test Sales
1. The investment level and chances of success rating system is based on opinion and our 25 years experience, working with hundreds of inventors and entrepreneurs. This is just one path – always consult with your patent attorney and industrial designer before investment.
The U.S. Small Business Administration (SBA) has prepared 9 podcasts covering a range of helpful topics from “Check List for Starting a Business” to “Making Your Business Plan Work for You,” with more feeds to be added every month.
The empowerment slogan for the year: “Enthusiasm is excitement with inspiration, motivation, and a pinch of creativity.” Bo Bennett