Prosper Newsletter: April 2008 > Entrepreneurship

You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.

Old Ideas

New Products

In the back of just about any entrepreneur's mind is a list of ideas. Ideas on new products, new business plans, storage or design solutions, and advertising. Why not take time this spring to organize those ideas and look into the logistics of making at least one of them a reality?

If you haven't already, reserve some time to compile on paper the schemes and visions that have crossed your mind. Organize them into categories and decide when you will address each main point. For now, let's look at any product ideas you've ever thought of developing.

You've had this genius idea for months or even years and you're sure you could make it big given the opportunity. Perhaps, like many people with big ideas, your holdup has been knowing how to turn it into a physical product without wasting money or having someone else steal the idea. Keeping in mind that less than 1% of products patented ever come to market, a lot of people have invested significant amounts of money with no return on their own ideas. However, by doing research up front, you'll know your idea is feasible before spending more money than you need to.

Draw a detailed picture of your product

Before you can research possibilities surrounding your idea, you'll need to sketch it out while writing as much detail as you can, including what it is, what it's used for, what dimensions it may have, what materials it will be built of, and any other details you can. Go to www.google.com/patents and look at patents for examples of what to include. This will also help you see if there's already a patent for your idea. Make a copy and mail it to yourself. Then you'll have a sealed, post-marked envelope to use as evidence that you created the idea by that date. This can be showed to a judge if the need ever arises.

The drawing and description you came up with will help as you contact potential manufacturers. You should not give away too much info too early; so decide on a related product that may have similar properties you can use as an example. Even if there's nothing like it in function, think of some of the properties it may have and come up with an existing product you could describe as an example.

Gather information on manufacturers

This can be a tedious process, but it will pay off to find the best fit. As you call manufacturing companies individually, you'll know what to expect as fair prices within the industry. Plus, you'll get a feel for who has the best service. As you call manufacturers (avoid email), indicate that you do not want to go into specifics, but you'd like to produce an item similar to "x", of "y" dimensions, made out of rubber and felt (or whatever). First, find out if they can make that. Then, get more information on how much it would cost for them to produce a prototype of the item.

As a starting point to locate potential manufacturers, browse through the Custom Manufacturing & Fabricating section of Thomasnet.com. Look through the category closest to what you want to produce. Then, try some Internet searches for the item similar to what you're making, plus the terms manufacturer, distributor, association, trade magazine, or article. For example, if I wanted to make a new kitchen appliance similar to a blender I would search for blender manufacturer, etc.

The value of searching for these various keywords in conjunction with your main keyword is that you'll find different types of leads that will be very useful. You are looking for manufacturers, but if one you contact doesn't make it, ask for a referral on a company that might. The same goes with distributors, associations and trade magazines: they are great sources to find manufacturer references.

Inform distributors that you are making a product with similar materials in a different industry; many will have good recommendations. Additionally, every industry has an association that can provide a lot of information. Find out who the association officers are and ask for manufacturer recommendations. By looking up trade magazines, you'll learn a lot about trends in that industry, as well as some names of people who could help. Contact the editors for recommendations. This will also help you make connections that could help in marketing later on. As a last resort, articles will help you find more information on similar products and contacts for companies who make them.

Decide on a manufacturer to create a prototype

Decide on a company and give them the information to create a prototype. First, however, be sure to have anyone you talk to about your product from here until it is patented sign a non-disclosure agreement. Make sure it is dated and signed. You can search the Internet to find pre-written non-disclosure agreements that you can adjust and use yourself.

Most companies offer reasonable prices to create a prototype because they want to be selected to manufacture your product. Depending on the prices of materials though, or if they have to create an expensive mold, it may be more. Consult with the company to make any changes you want. It may take several revisions to make it perfect. It's best to have the actual item or pictures, with exact dimensions before you talk to a lawyer so you don't waste money on too many meetings. Even if you just have a shell available, you can show that and explain the interworkings.

Consult a patent lawyer and conduct a patent search

Most patent lawyers will provide a free consultation. Ask if that could be arranged to see what it would take to have your product patented. When you know the price, thank him/her for the time spent, and say you will get back with them very soon. Look online to see what other price options are available. By calling around, you'll get a feel for what pricing options are available.

Before you move forward with the lawyer, pay someone with experience to check your product against any similar patented products that may exist. They will run a report letting you know of any remotely similar items with current patents. You can search for an online agency to do this, or ask the local lawyer for recommendations. This will provide information on how to differentiate your item, and possible aspects to cover.

When you receive the patent reports, move forward with your lawyer to patent the product. It usually takes 6-8 months for a patent to be approved. However, there are ways to get it done in matter of weeks if needed. Conduct an Internet search for "fast patent" for more details. Also visit the United States Patent and Trademark Office website at www.uspto.gov for more information. When the patent is processed, you can move forward to manufacture the item.

When all is said and done, you have successfully converted your idea into product reality. This type of mental spring cleaning can boost business for months and years to come, so why not get started!

Improving Business

With spring fast approaching, many entrepreneurs look at this time of year as a fresh beginning for both life and business. It is time for out with the old and in with the new. You may even wish to reflect on your New Year's resolutions, or take a renewed look at your business goals. Now is a perfect time to dig into some of the testing you may have been running with different campaigns, marketing initiatives, joint venture partnerships, the launch of new products and services, or phone scripts.

Every once in a while we all need to be reminded of product lines and margins. Now is an excellent opportunity to do a product mix audit—analyzing profit margins, customer feedback, vendor performance, supply chain operations, and marketing messages. When was the last time you looked at your products and services? When was the last time you had someone secret shop your company? When was the last time you looked at feedback regarding customer satisfaction and loyalty, or conversion, traffic, and the growth of your list on your website?

As spring cleaning approaches, here are some suggestions for a few things to look at with your business:

• Direct mail
• Referral program
• Special events
• Joint Venture partnerships
• Purchase frequency
• Average ticket size
• Number of customers (and trends over time)
• Marketing initiatives
• Employee training/retention
• Sales personnel
• Administrative needs
• Customer care
• Growth and expansion
• Emerging markets
• Website (eCommerce and general online presence)

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*See the Elective Class Catalog in your Success Center for the latest dates, times, and class details.

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