how to look big, act big, get big andy daniel president, enginuity llc
TRANSCRIPT
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
- 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?