Transcript How to Look Big, Act Big, Get Big
How to Look Big, Act Big, Get Big
Andy Daniel President, Enginuity LLC
Disclaimer
• Enginuity currently only looks and acts big • I don’t always follow my own advice
Businessperson vs. Inventor
• Businessperson looks for a way to make money • Inventor does something they enjoy and tries to make money at it.
• Do what you enjoy - don't just chase $$$ • If you're unhappy, you won't have the energy to continue
Licensing or manufacturing?
• Licensing is much less risk • Unclear which is more profitable • Sometimes nobody wants to license • Don’t ignore manufacturing then licensing
Licensing
or, "Why are those crooks offering me so little?"
License Terms
• What rights are you licensing?
• Exclusive / non-exclusive • Royalty rate • Annual minimum • Escape clause
Value order
• A product with a strong sales history • A product that is actually being sold • A product that it ready to ship • A product that is in first production • A finished prototype • A functional prototype • Used dishwater • A fantastic idea
Patents
Do you really need or want one? The answer is not always obvious.
• Patents are quite expensive to obtain: legal fees, filing fee, issue fee • Patents require payment of maintenance fees • Patents take about 2 years to issue
Patents
• Many patents are easily circumvented • Unless your value is in the brilliant invention rather than in its brilliant execution, the answer is probably no.
• However: you can use Patent Disclosure, PPA, and filing without issue to buy time at comparatively low cost
Manufacturing
• Economies of scale are critical • Good artwork is no more expensive to print than bad artwork • Spend money/time up front • When shopping for manufacturing, stop thinking like a consumer
Manufacturing
• Murphy's law : everything that can go wrong, will go wrong • Andy's law : everything will go wrong (at least slightly) • Check like a hawk at every step • Control as much of the process as is worthwhile
Home-based manufacturing
• Often lower quality at higher cost • Very difficult to succeed this way (except for artists)
Product Testing
• Don't use your friends/relatives - they can't give an honest opinion • Unless you plan to ship yourself with each copy of the product, hand it to the tester and stand back say nothing .
– When they ask you a question, ask them "what do you think?"
Packaging
• Your most critical component • That's what people see in the store • Hire an artist
Typical product costs
• Customer buys product for $19.95
• Retailer buys product for $10.00
• Distributor buys product for $8.50
• Publisher manufactures product for $5.00
• Don't forget reps, advertising, etc.
• You must produce your product for 1/4 to 1/5 of what consumers will pay
Perceived Value
• Consumer should feel that they are getting value for their money • Big : consumer likes this, retailer doesn't (takes shelf space) • Heavy : consumer like this, retailer tolerates it (higher freight costs)
Advertising
• Does it really work?
– You need 1000's of ads for an order – You need repetition before people will remember you (some say 7 times)
Advertising
• The Internet – as a source of info, it's the best thing since sliced bread • The great equalizer - NOT!
– unless you're Microsoft, it's a "pull" medium • Face-to-face selling – far and away the most likely for a sale (call first!)
Find Novel Things to Do
• Look for novel ways to sell • Look for novel things to do • Look for free/inexpensive ways to do things better
Chain Stores
• Much tougher to get into than small stores • But - convince one (tough) buyer, sell to 100's of stores all at once
Chain stores
+
Lots of customers
+
Much bigger orders
-
Usually demand a price break
-
Not interested in pioneering anything - want proven sales
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Often demand return privilege and dating
Small Stores
+
More willing to try a new product (if not avail at K-Mart!)
+
Willing to try "local" product to help fellow small business
-
Usually tiny order
+
Able to steer customers toward your product
+
Can result in a more targeted customer, esp. at high end
Competing with existing brands
• Why should the consumer buy yours?
• Why should retailer carry your product?
Learning About Your Industry
• Every industry has a "way they do things". Try and learn it.
• Your customers will usually want to do them the same way.
Trade Magazines
• A great source of information.
• Very often FREE, otherwise fairly inexpensive.
• Ads are the most useful part for learning about the industry.
• First issue - read every word. • Other issues - skim it.
Trade Shows
• Attending - often free to attend & you'll learn alot • Exhibiting - quite expensive & be sure you can deliver product/service immediately buyers are not interested in "later" • Attend before you choose to exhibit • Follow-up is everything
Appear Professional
• Business cards, stationery, 800 numbers • Try to appear much larger than you are • It helps to appear like a serious player with both customers and suppliers, but it's much more important with customers
Web Sites
• www.enginuity.com
• www.aol.com/members/enginuity.htm
need I say more?
Your Home Office
• Separate business and fax lines (not a home line) • Fax machine • Letterhead • Business cards • Separate checking account • Answering machine in business voice • Laser printer
Efficiency
• Develop your systems • Try to group your work - it's very inefficient to switch tasks constantly • Develop your relationships with vendors once it works, it's trouble-free • Use your computer to manage tasks
Phone calls
• "Hello, this is John/Mary Smith of Incredibly Successful Inc. I'm in the office but don't want to speak to you right now. Please leave your message at the tone and I won't return your call"
Phone Calls
• Buyers will never call you back • Vendors will call you back within 15 seconds – if a vendor doesn't return calls promptly, find another vendor
Long-term success
• Don't become an individual service provider There’s only 1 of you, and there are only 24 hours in a day
Plan to Succeed
• Don't leave yourself with 2 losing possibilities
example: short run of a product that cannot be remanufactured
Important Lessons
• You never know what people will like • You never know which contact is important
In Conclusion…
• It’s not for everyone… • You may or may not succeed… • It’s quite a ride…
Questions?