When I was a child, one of the first lessons I learned from my parents was “follow the rules” – of appropriate behavior.
Throughout our adult lives we learn to ‘follow the rules' for success in our career (show up on time, get projects finished to meet deadlines) and in our personal lives (respect the needs of the other person).
So, what rules should we follow for success as inventors? Below are 4 guidelines or rules I have followed over more than a decade of being an inventor:
- Odds of success are less than 5%; and it will take years before any money is made
- The only investor you will find for your business is in the mirror
- You must describe your product's key benefits in 30 seconds – or else!
- You will make more money licensing your product than building a business
Odds of success are less than 5%; and it will take years before any money is made
Wow, what a depressing thought! How could such a negative indictment comprise a “rule for success”?
Here is how. Knowing that success odds are long and large up front costs push any profits to years later – helps to shape business choices and decisions.
Avoid all invention marketing companies that are long on promises and short on proven results – most are snake oil purveyors. You could almost shorten this to avoid all invention marketing companies – see a previous post for trusted resources. Carefully research and vet any potential business partners or resources to your business.
Invest your limited capital resources very carefully, take reasoned incremental small risks with capital rather than large enticing but risky leaps. Instead of doing a production run of 5,000 pieces, try for 500 or less (reduced capital risk). Given that invention is already a very risky endeavor, increase your odds of success by avoiding unnecessary risk.
The only investor you will find for your business is in the mirror
One of the first question the sharks on Shark Tank ask an inventor is “what are your sales?” Investors balance financial risk by owning an equity stake in a growing venture with proven results. An invention with little or no sales offers only risk with no equity to buffer the risk. Why would any investor choose 100% risk (unproven invention) when they have so many investment options with managed risk and equity ownership.
Therefore, always avoid taking on any invention that can only succeed with a large capital infusion from an investor or financial partner. Invent simple, low cost items that may fit within your own financial budget for maximum success.
You must describe your product's key benefits in 30 seconds – or else!
My first product has been very successful on television including QVC and morning shows. TV can instantaneously introduce your product to thousands or even millions (in the case of QVC) of viewers. But the valuable air time is short and your message must be crystal clear and concise: you have less than 30 seconds to describe your product's key benefits. If you cannot do this, your odds of product success plummet even if you never intend to sell on TV.
Why? In any marketing situation, your contact will ask, “so, what do you have?” There is your opening for a 30 second commercial. For my wallet product, I would say, “my wallet is half as thick, holds twice as many cards and is flexible.” Short, sweet and simple.
You will make more money licensing your product than building a business
The financial merits of licensing your product to a manufacturer in exchange for royalties versus selling it yourself is a hotly debated topic among inventors. I vote in favor of licensing rather than going into the manufacturing, marketing, and sales business of running your own show. I described this in previous blogs in some detail.
Given the choice of working 70 hours per week to run a manufacturing business, replete with employee issues, product sourcing costs and snafus or turning that all over to someone else in exchange for royalty payments, I opt for the latter. You will only make more money if you can manage the business successfully and get your product into very wide retail distribution and keep it there. That is a very tall order.