Bringing your product to market-- in less than a year : fast-track approaches to cashing in on your great idea

388 Pages·2005·1.102 MB·English

by  Don Debelak

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BRINGING YOUR PRODUCT
TO MARKET . . . IN LESS
THAN A YEAR
Fast-Track Approaches to
Cashing in on Your Great Idea
DON DEBELAK
John Wiley & Sons, Inc.
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Copyright © 2005 by Don Debelak. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Debelak, Don.
Bringing your product to market—in less than a year : fast-track approaches
to cashing in on your great idea / Don Debelak.— Rev. and expanded.
p. cm.
Rev. and expanded ed. of: Entrepreneur magazine’s bringing your product
to market / Don Debelak. 2nd ed. c2001
ISBN 0-471-71553-0 (pbk.)
1. New products—Management. 2. New products—Marketing.
3. New business enterprises—United States—Management—Handbooks,
manuals, etc. I. Debelak, Don. Entrepreneur magazine’s bringing your
product to market. II. Title.
HF5415.153.D432 2005
658.5'75—dc22 2005003020
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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CONTENTS
Preface Welcome to the World of Inventing xv
Introduction Fast-Track Inventing: AGame Anyone Can Play 1
PART I PREPARE FOR SUCCESS
Chapter 1 • Step 1. Evaluate Potential Ideas:
Recognize the Moneymakers 9
Generate a Great Idea: Discover “Hot” Product Ideas in
Your Daily Life / 11
Search for Winning Characteristics: Use a New Product
Scorecard to Forecast Success / 12
Perform Quick and Easy Market Research: Employ Tactics
That Generate Quick Feedback / 17
KnowWhetherYourProductWillMakeMoney:
DeterminingPerceivedValueversus
ManufacturingCost / 23
The Edge Counts / 28
Chapter 2 • Step 2. Look Like a Winner: Demonstrate Business
Savvy and Customer Knowledge 29
Drop Your Paranoia: Talk about Your Product Idea / 30
vii
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Cope with Problems: Learn That Every Situation
Has a Solution / 31
Get Savvy: Create the Right Impression with Contacts by
Doing Your Homework / 33
Know Your Customers: Understand Who They Are and
What They’re Like / 39
Check Out the Competition: Discover What Customers
Think / 42
Create a Sizzling Difference: Ensure That Your Product
Stands Out / 48
Chapter 3 • Step 3. Build a Business Foundation: Line Up
Key Helpers and Financing 54
Find Advisors and Helpers: Strengthen Your Team
with Experts / 55
Strike a Deal That Works: Get the Most from
Your Helpers / 58
Prepare a Financing Plan: Grow without Giving Up
Control / 61
Structuring a Funding Plan / 64
Find Funding: Look beyond Traditional Investors / 67
Prepare an Investor Presentation: Create a Can’t-Miss
Scenario / 69
Chapter 4 • Step 4. Prepare for Kickoff: Decide on Patents
and Prototypes 76
Understand What Patents Offer: Get the Most Mileage
out of a Patent Investment / 77
Implement a Patent Strategy: Protect Everyone’s
Investments / 84
Build a Prototype That Demonstrates the Concept:
Show That Your Product Delivers / 88
Create a “Looks Like, Acts Like” Prototype and Package:
Leave Nothing to the Imagination / 91
Chapter 5 • Step 5. Choose the Right-Fast Track Strategy:
Understand What Works Best for Your Product 96
Three Strategies for Market Introduction: Explore
Multiple Options to Increase Your Chances of
Success / 97
Key Factors in Determining Your Strategy: Choose What
Works for You, Your Product, and Your Market / 100
License to a Market Player: Lower Your Risk and Collect a
Royalty / 104
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Contents ix
Capitalize on Turbo-Outsourcing: Keep Control While
Minimizing Risk / 109
Build a Company: Maximize Your Profit and Wealth
Potential / 114
PART II THE FAST TRACK:
LICENSING YOUR IDEA
Chapter 6 • Step 6A. Prove the Concept: Demonstrate Why
Your Product Is “Hot” 123
Locate Expert Help: Communicate the Product’s
Potential by Using Industry Helpers / 124
Capture the Market Potential: Show You Are on the
Leading Edge / 126
Prove Market Demand: Use Tactics That Produce
Provisional Orders / 128
Illustrate Manufacturing Costs: Produce Significant Profits
on Each Order / 130
Show a Path to the Future: Explain How Your Product Is
the First of Many / 132
Chapter 7 • Step 7A. Choose Your Targets: Determine Which
Companies Will Benefit the Most 135
Decide on a Positioning Strategy: Choose a Strategy
Based on Potential Licensees’ Goals / 137
Look for Companies with the Right Ingredients:
Learn What Characteristics Make a Company the
Right Target / 140
Pick Your Potential Targets: Understand Their Business
Goals / 143
Make Your Initial Contacts: Confirm That a Company Is
a Good Candidate / 145
Chapter 8 • Step 8A. Preserve Your Capital: Use Low-Cost
Tactics for Landing a License 147
Avoid a Sales Test: Don’t Incur Costs You Can’t
Recoup / 148
Enlist Helpers: Use Their Investment of Time and Money
to Cut Your Outlays / 150
Create Options to Lower Costs: Let Potential Licensees
Pay for Desired Testing / 152
Sign Memorandums of Understanding (MOUs): Offer an
Incentive to Potential Licensees / 153
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Chapter 9 • Step 9A. Develop a Licensing Plan: Find the
Quickest Way to Market 159
Propose a Target Introduction Timetable: Encourage a
Quick Deal / 160
Prepare the Licensing Plan: Include the Key Elements
for Success / 162
Chapter 10 • Step 10A. Sell Your Concept: Create the Highest
Value for Your Product 173
Create the Dynamic Opening: Convert Prospects
from the Start / 175
Generate a Can’t-Miss Licensing Presentation: Appeal to
Licensees’ Goals / 176
Initiate the Licensing Negotiations: Convince the Prospect
It’s Win-Win / 180
Finalize the Licensing Deal: Negotiate the Key Points in
Your Favor / 183
PART III THE FAST TRACK:
TURBO-OUTSOURCING
Chapter 11 • Step 6B. Prove the Concept: Establish That the
Product Will Make Money 189
Find Your Space: Show Why You Are a Crucial
Ingredient to a Product’s Success / 191
Generate Buzz: Showcase the Market’s Potential / 192
Establish Who Gets What Share: Choose a Strategy
That Benefits the Inventor / 194
Evaluate Manufacturing Cost versus Perceived Value:
Determine Whether There Is Enough Profit for
Three Partners / 199
Follow Up with Buyers: Discover Support Levels
Required to Make Sales / 200
Chapter 12 Step 7B. Choose Your Partners: Find Distribution
and Manufacturing Partners to Accelerate Sales 202
Locate the Right Marketing Arm: Sign Sales Power to
Drive the Deal / 204
Locate the Right Manufacturing Company: Discover
Manufacturers Looking for Products / 208
Sign Preliminary Agreements: Keep Control of
Your Product / 211
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Obtain Commitments for Performance: Insist on a Major
Effort from Partners / 211
Chapter 13 • Step 8B. Preserve Your Capital: Encourage the
Manufacturer to Pick Up the Up-Front Costs 215
Sell the Manufacturer on the Benefits: Obtain Help
during Development / 217
Use the Marketing Partner’s Sales Success: Motivate the
Manufacturer to Fund Start-Up Costs / 220
Create Easy Entry Points for Manufacturers: Lower the
Risk for Joining the Team / 222
Negotiation Principles for Smooth Relationships: Prevent
Problems with the Right Type of Agreement / 224
Chapter 14 • Step 9B. Develop a Marketing Plan: Create the
Backup for a Successful Deal 227
Match the Plan to Resource Levels: Focus on the Results
You Can Achieve / 229
Prepare the Marketing Plan: Include the Key Elements
for Success / 233
Chapter 15 • Step 10B. Sell Your Deal: Motivate Companies to
Move Quickly 242
Focus on Quick Market Sales: Set the Stage with Your
Opening Remarks / 244
Explain That the Margin Loss Is Small: Illustrate Each
Partner’s Benefits to the Other / 245
Target a Major Player to Base-Load Sales: Structure an
Irresistible Deal / 247
Prepare the Turbo-Outsource Presentation: Put It
Together with Sizzle / 248
Negotiate the Agreements: Keep It Simple and
Flexible / 249
PART IV THE LONG-TERM INVESTMENT:
BUILDING A COMPANY
Chapter 16 • Step 6C. Prove the Concept: Establish That the
Product Will Make Money 259
Develop a Manufacturing Strategy: Cover Both
Short- and Long-Term Options / 261
Generate First Sales: Show That Customers Place High
Value on the Product / 263
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Test during the Sales Period: Discover How to Generate
the Highest Margins / 266
Determine Your Manufacturing Costs: Evaluate Your
Profit versus Your Risk / 267
Illustrate Future Markets: Show Rapid Growth Potential
for Investors / 270
Chapter 17 • Step 7C. Choose Your Sales Strategy: Determine
How to Become a Significant Market Force 271
Discover All Your Distribution Options: Choose
Distribution That Encourages Small
Companies / 273
Offer Incentives to Bring the Right Salesperson
on Board: Give Up a Percentage to Leverage
Big Increases / 278
Focus on Your Top Three Choices: Dedicate the Effort
Needed to Close Major Accounts / 278
Develop a Sales Plan to Penetrate Accounts: Build
Momentum in the Market / 281
Chapter 18 • Step 8C. Preserve Your Capital: Structure Deals to
Keep Control 283
Offer Early Deals with Buyback Clauses: Save Control
of Your Company / 285
Provide Options to Buy Stock at a Later Date: Sweeten
the Deal for Early Investors / 286
Sell Vendors on Long-Term Benefits: Offer Loyalty in
Return for Concessions / 286
Learn All the Tactics for Stretching the Dollar: Use Both
Sales and Purchasing Tactics / 288
Structure Short-Term Financial Support from Investors:
Obtain Financial Backing with Minimal Loss of
Ownership / 290
Look for Private-Label or OEM Agreements to Back
Loans: Avoid Diluting Your Ownership
Position / 292
Chapter 19 • Step 9C. Develop a Business Plan: Creating High
Value for Your Company 296
Understand the Three-Year Payback: Generate Funds
for the Right-Size Product Launch / 298
Deliver What the Reader Wants: Explain Three Points to
Entice Investors / 300
Prepare the Business Plan: Include Key Elements
for Success / 302
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Contents xiii
Chapter 20 • Step 10C. Sell Your Product: Motivate Customers
and Distribution 317
Create Sales and Promotional Material: Discover the
Message That Sells / 319
Stage Your Sales to Generate Momentum: Focus Your
First Efforts on Easier-to-Sell Channels / 321
Develop an Arsenal of Promotional Tactics: Ensure Your
Early Sales Customers Enjoy Success / 324
Forge Alliances to Build Credibility: Select Tactics That
Will Encourage Steady Activity /326
Appendix A The Go-No-Go Decision Matrix 330
Appendix B Checklists before Starting the
Introduction Process 332
Appendix C Sample Documents 339
Appendix D Web Addresses for Inventor Stories 352
Glossary 355
Resources 362
Index 373
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PREFACE
WELCOME TO THE WORLD
OF INVENTING
My first marketing job in 1980 was for a company founded by the inven-
tor of the first reclining dental chair. While he was selling recliners at the
Iowa State Fair, a dentist with a bad back said it sure would be nice to have
a dental chair that leaned back so that dentists wouldn’t have to twist their
backs to treat patients. The inventor took that comment and turned it into
a $30 million business. By the time I joined the company it had acquired
another inventor-based company where a dental serviceman understood
that high-speed dental handpieces (also referred to as dental drills) that
used water coolant would require a new type of vacuum pump. He used
that knowledge to create a pump that met the specific needs of dentists, a
$5 million business, which he sold for a huge profit.
I’ve been with inventors and new products ever since, working on
more than 100 new products, sometimes as a private consultant, some-
times as a marketing manager of companies, and sometimes working for
Small Business Development Centers. I’ve also written columns about
more than 100 inventors for Entrepreneurmagazine (starting in 2000) and
Business Start-Ups (1998–2001). The world of inventors has always fasci-
nated me, not because inventors are Einsteins with secret magic formulas,
but instead for the opposite reason: Most successful inventors are ordi-
nary people who just took a chance, stepped into the market, and kept
working until they succeeded. Their stories do not necessarily reflect
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