Have you ever come across an ad for a product or service that prompted you to say: “Hey! That was my idea!” So why didn’t you act on that great idea? Didn’t know where to start? If so, here is a step-by-step guide to bringing your product or service from imagination to reality.
Ask yourself some preliminary questions.
Does your product or service meet a need or satisfy a want not currently being met? Does it solve a problem? Who is your customer? What do you think they would be willing to pay for such your product or service?
Research: Round one.
Is your idea already in the marketplace? Use search engines such as Google to look for as many combinations of the concept you can think of. Look through catalogs. Check trade shows. Is your product or service less expensive, faster, easier to use, etc. than what is presently in the marketplace?
Research: Round two.
It’s great to have a great idea, but can you make money at it? Is there a market for your idea? Who would you market to? How much does it cost to produce it? Again, the Internet is your friend. Search for the components to your product and price them. Check out shapelock.com where you can order microwavable pellets that can be molded into the shape of your gadget. Who is going to produce it, and what will that cost be? Explore the possibility of having a prototype made. At thomas.net you can enter the list of components of your product, and they will give you a list of factories that work with those components. Local machinist shops could also be a resource to make a prototype. Now that you know approximately how much it’s going to cost to produce your product, add in postage and packaging materials.
So much for products, what about services? The initial financial outlay is generally less for service-based businesses. However, there are costs involved that need to be evaluated before you set up shop. Do your homework. How many businesses are out there offering the same services that you are considering? How can you make your services a little different, better, faster, less expensive? Apprentice yourself or volunteer in the area you’re interested in to find out if type of work/business is right for you. Also, as more service-based businesses go online, be aware there may be patent issues.
Whether your new business entails offering a service or launching a new product, the next question you need to ask yourself is: How much profit do you want to make per sale? There are a couple of schools of thought on this question. You could make less profit per sale and make more sales. Or you could make more profit on fewer sales. Once you’ve ballparked your profit number, add that amount to the total product cost and look at that number. Do you think your customers would pay that price? If yes, then maybe you’re on to something. If not, go back to the drawing board. Can you cut costs? Are you willing to make less profit? If the answers are no, it’s possible that it doesn’t make sense to more forward and that’s okay. Better to have spent a little time with paper, pencil and calculator to arrive at that conclusion then to have wasted months (or even longer) and a lot of money.
The first patent question. Do you need a patent?
Can you put your product out in the marketplace quickly, and is its life short-lived? For example, the Pet Rock. When it hit the market, everyone had to have one. Then the craze was over almost as quickly as it had begun. A patent process can be lengthy and expensive. How does that fit into your profit margin and timeframe? A good source for your patent questions is Sandra Etherton’s Let’s Talk Patents.
The second patent question. Is your product already patented?
You can do some preliminary research yourself at the US Patent Office website (www.uspto.gov), but before you activate the launch sequence – talk with a patent attorney. (For a list of patent attorneys go to: www.uspto.gov.) This is going to cost a little, but it could cost you a lot more if you skip this step.
Create a business plan.
By this time you’ve run preliminary cost numbers, but here you get serious and you may need some help. Through the Small Business Administration there is the Women’s Business Center program (www.sba.gov/womeninbusiness) that provides training and counseling usually at very low fees or free. SCORE (www.score.org) is a network of retired and working executives who freely share their expertise. They match the executive’s area of expertise with that of the new entrepreneur. If there isn’t a local chapter, a mentor can work with you online.
Market like your life depended on it.
And the life of your business does. Email friends and family about your new business and ask them to pass it on. Network within the groups you’re already involved in. Join business networking groups. Rent a booth at a trade show, local farmer’s market or swap meet. Host a special event in your community. Team up with an organization or event. Have a contest. What can you do for free to get the word out? Give a workshop? Give out samples?
For new businesses money is tough to come by. Babson College estimates that two-thirds of the average start-up capital comes from personal savings, family and friends. Once you have a solid business plan and some cash flow, you can start to look elsewhere for other funding. You’ll need to be specific as to amount and what you’ll use the loan for.
Angel Investors. These investors will exchange capital for an ownership stake in your company.
Venture capital. These firms provide money and management experience in return for an ownership stake.
SBA-guaranteed loans. If you meet the criteria, Small Business Administration loans obtained through a commercial lender are a great source of funding. Their loan products vary in length and other terms based on specific purposes
Now you’re cooking. If you haven’t already, perhaps it’s time to get some help. What type of help do you need? Where would you find that person? Schools? Clubs? Temp agencies offer personnel with a variety of experience, but also think outside the employment agency. Ask friends, family, colleagues, and acquaintances if they know anybody who could do what you’re looking for. Once you’ve found someone consider hiring them on a part-time or project basis. You can determine if they match your way of doing business and if you have enough work to support a full-time employee.