So there are generally two methods of marketing your invention. The first method involves selling your invention to a company or business that might be interested in commercializing the invention. While that method does have some advantages, it’s generally difficult to sell your invention to a company. In 32 years of practicing patent law, I’ve only ever seen that done a few times.
The second method involves going into business as a manufacturer/distributor and directly selling the invention to the public. While it seems like a daunting challenge to launch your own product into the marketplace, the likelihood of getting your product to market is far higher if the only person you have to rely on is yourself and the team of people you assemble. In 32 years in the business, I’ve seen several entrepreneurs launch successful businesses selling products they themselves invented and patented. It’s difficult, but it’s also often successful. In fact, some of the most successful companies you know were started by a couple of people who had an idea for a new product and the ambition to get that product to the market. So let’s start by talking about the first few steps in the process of getting your product to market.
Step 1 – Patent Searching.
The first step involves securing your rights. Early on in the process, do as much patent searching as you can to determine if there are any patents or patent applications which might interfere with your sale of your new product. You don’t want to get all the way to market only to be served with a cease and desist letter for patent infringement. Searching can also give you some information about some of the technical hurdles you might have to face. If the search seems positive, then consider filing a patent application to secure your rights and protect your investment.
Step 2 – Market Search, and Marketing/Business Plan.
Have you ever noticed yourself getting excited about something new and then jumping into it without thinking it out thoroughly first? We’re all guilty of doing that to one extent or another and the end results are usually less than ideal. This is a mistake you don’t want to repeat when you’re starting a business. It shouldn’t surprise anyone that the most important step in the whole process of marketing your invention is selling the product at a profit, and selling enough of that product to make the whole enterprise worthwhile. That sounds obvious right? You’d be amazed at the number of people I’ve seen over the years who poured thousands of hours and hundreds of thousands of dollars into engineering and product development without first finding out how they were actually going to sell the finished product at a profit. I recall one case 20 years ago where an inventor sunk close to $300,000 in engineering costs to perfect a wonderful product, only to find out that there was no market for the product.
Market research is a critical early step. Unfortunately, the market for each product is unique so, in some sense this step can’t be reduced to a series of specific universal steps. Furthermore, it’s all but impossible to determine what the potential market for a new and previously unknown product could be. Therefore, concentrate your efforts in answering some fundamental questions. Here are a few things you’ll probably need to find out: what does it cost to manufacture the product, what do similar products sell for, how are those products sold, how will you handle shipping and product support, how will you promote and sell your product and, very importantly, how will you get all the money you need to do all of these things? If your invention is a manufactured product, then you’ll need to compile a list of manufacturers capable of manufacturing the product. You can get a list of those manufacturers by consulting a business directory. You’ll then have to contact those manufacturers and discuss what their terms are for things like minimum volumes, per unit price, delivery dates, shipping, dealing with defects, and the like.
When you have as much information as you can gather, you can then formulate a business plan. There are lots of resources available on the web and youtube on creating a business plan, so I won’t get into that too far except to say that I’ve learned from several successful cases that the best plans are flexible and able to adapt to unforeseen circumstances.
Step 3 – Choosing a Business Model.
Having been in this business for so long, there is one thing I’ve learned. There are essentially two business models which a company can pursue. You can sell Ferraris or you can sell Chevrolets. Ferrari’s are very expensive hand made cars that are manufactured in small numbers and have a very high markup. Chevrolets are relatively inexpensive cars that are massed produced and have a relatively low markup. Since Ferraris have such a high markup per car, you can be relatively inefficient at making and selling those cars and still be reasonably profit – indeed, many of their cars are handmade and sold in a few select dealerships. Chevrolets, on the other hand, have such low markups that you have to be very efficient in manufacturing and selling them. If you’re just starting out, it’s better to make Ferraris rather than Chevrolets simply because you won’t be very efficient when you first start off. I’ve seen many people start successful businesses over the years, and each one of them was, in one way or another, more like Farrari than Chevrolet – whether they were selling software, complex machines, fashion purses, or dog food. So, here’s one thing I can tell you about whether your product will be successful or not – if you’re product can’t be sold for a relatively high price, then you’re going to have a devil of time being successful.
Step 4 – Gathering a Team & Legal Structure
If I had to choose which were the most important areas a startup business needs to be successful in order to succeed, I would choose promotion, sales and production. Without a firm grasp of production, there is no product/service to sell. Without a good handle on sales, it will be difficult to sell the products you have produced, and without promotion, no one will know your product/service exists and there won’t be any sales. It’s a rare person who can excel in all three areas, so most businesses that I’ve seen succeed tended to have a small team of 3 or 4 people who together had some expertise in selling, promotion and production. If you have those three bases covered, chances are you and your team can learn the rest. If you already know people who have experience in these areas, then you’re off to a good start – if not, then you’ll have to find qualified people.
Where do you find those people? Good question. Pre-Covid-19, I would suggest using a service like meetup.com to find group meetings in your area that you can attend and meet people. For example, if you’re invention is a new smartphone app and you need someone knowledgeable about promoting that sort of product, then you might consider joining a smartphone developers group, a mobile computing group, or even a start up entrepreneur’s group. If you’re near a large city then these meetups generally end up attracting dozens or even hundreds of people at a time. I’ve attended several of these meetups and its amazing the diverse group of talented people you can meet at one of these meetups. Post Covid-19, these meetups seem to be happening via zoom/skype, so it’s still possible to use that route. Alternatively, you could join a facebook group or a trade association which deals with your area of business.
So what do you offer the members of your team? If you have lots of money, you can just hire people, but most of the times I’ve seen people assemble a small team wherein each of the team members effectively become owners of the startup. This brings me to the next topic in our discussion, setting up the legal structure of your business. I have one word of advice for all of you – incorporation. Incorporate a company to run and operate the business. The owners of the business can then take shares in the company. So if the company had four owners, the company could issue 600 common shares and issue 150 shares to each owner so that each owner owns 25% of the company. Alternatively, you could hold 300 shares and grant the other 3 shareholders 100 shares each, that way you own 50% of the company. It all depends on what you can negotiate between the team members. The parties would have to sign a unanimous shareholders agreement to help govern each share holder’s rights and obligations. The incorporation also allows the business to proceed even if one member of the team leaves the project. There’s one catch though – the other shareholders might insist that you transfer your rights in the invention to the company. That’s not an unreasonable request, but you can strengthen your position by giving the company an exclusive license in the invention rather than full ownership. This way, if the company fails to launch, you can try again with another team or another approach.
Step 5 Financing
This is a question I get a lot – how do I get financing for my new invention or business venture . Without financing, your project isn’t going anywhere. It takes quite a bit of money to launch a new product or business. If you’re going to manufacture a product, the costs can be shockingly high, but even a startup software company can end up costing tens of thousand if not hundreds of thousands of dollars to launch. Things like engineering, product development, advertising, and promotion can be very costly – so where is the money going to come from. There are generally several sources which I’ll go over quickly.
Over 32 years of being in the inventing busines, the financing method I’ve seen to be most successful in raising funds is the partner’s method and the friends/family method. I’ve also seen angel investors finance a few projects over the years. Generally, it’s much easier to approach a few people directly with an investment opportunity than it is to gain financing from an institutional investor. These methods require the inventor to give up ownership of the invention/innovation in exchange for the investment. This is best done by transferring ownership of the invention to a company which then issues shares to the inventor in exchange for their invention. The investors then receive shares in the company in exchange for their financial investment. However, there is a limit as to the number of different shareholders that can be accommodated. In many jurisdictions, there is a limit of 25 to 50 shareholders, beyond which you’ll have to get the company to issue a prospectus and get listed on a stock exchange. That’s a complex thing to do, although I have seen it done several times. The crowd funding method is very exciting, and I think there is real potential in that method, particularly since it can also act as a method of promoting the business.
Step 6: Manufacturing / Production
So now we come to the crux of project. How do you get that product of yours produced. Of course, this step depends a lot on the type of product/service being launched. If it’s a software product or a new app for a smartphone, what you’ll need is a server, a website, software and people who can write code and manage the server/website. Surprisingly, that can be done by a small group of talented and dedicated people with relatively little capital and infrastructure. If your product is a simple mechanical device made of injection molded plastic, then the manufacturing step is going to be significantly more involved. You’ll need a mold maker to make the mold for your product, probably more than one mold, and you’ll need a plastics manufacturer to turn those molds into plastic parts. Their might be another company involved to assemble the final product from the molded parts. Injection molds are surprisingly expensive – think tens of thousands of dollars each; although I’ve heard that good deals can be found in places like China and Vietnam to get molds made. In highly industrial regions like southern Ontario and the North Eastern United States, there are a lot of local plastic molders whom you can hire to get your product manufactured – they do the engineering, the mold making and molding. Those services don’t come cheap of course. In fact, it’s often a better approach to start small and build up when the sales volume can justify the cost of injection molding. Processes like 3D printing and metal stamping have a much lower start up cost, although their per item manufacturing costs are higher at larger volumes. Again, this is where the Ferarri business model pays off. If you’re product is intended to sell for a high price, then having it made of stamped metal rather than molded plastic is a lot better. It’s probably best to manufacture the initial run of products using non-molded parts and off the shelf components where possible.
There’s no single right way to proceed, but in my opinion, it’s better, at least initially, to get the product manufactured close to home in a jurisdiction where you can enforce your rights against the engineers and manufactures you hired to produce your product. Yes, your production costs will probably be higher, but initially things like quality control and product design are more important than per unit cost. From what I’ve seen, it’s easier to control those things if you do those things close to home.
Where do you find manufacturers? Like I said in the previous video on how to sell your invention to a company, you can use a business directory to find manufacturers in your area whom you could hire. Tool and die makers and metal fabricators are often available and eager to do that type of work. Of course, you want to have them sign confidentiality agreements before meeting with them to discuss your project.
Step 7: Distribution
Now that you figured out how you’re going to get your product manufactured, the next step is to figure out how to get your product sold. Depending on what your product is, you can try to get your product placed on store shelves and sold by retailers. Most retailers prefer to deal with established suppliers who can guarantee supply, price and support, so it can be challenging to get your product picked up by a large retailer. Luckily, services like Amazon, Ebay, Alibaba, and Facebook are available to sell your product to the public. There are even services which help you sell your product on platforms like Amazon, eBay and Facebook. It’s probably easier to sell a new product today using one or more of these platforms that at any other point in history. It’s also possible to sell your product directly to the public through your website. There are multiple platforms and plug inns that can enable you to add an online store to your website with relative ease.
Step 8: Promoting Your Product/Service
This is probably the single most important step. You’ve heard the saying “build a better mousetrap and the world will beat a path to your door”? That’s a lie. I’ve met an inventor who literally built a better mousetrap and the world didn’t care. In fact, the world didn’t even know his product existed. To compete in an economy already saturated with advertising, your business venture will struggle if you can’t figure out how to get your product known to the public. Don’t rely on your product being amazing or well designed – that won’t get the product sold, at least not initially. Once your product is known to an initial segment of the market, things like word of mouth and product reviews can help you build your market over time. Getting over that initial hump is the difficult part. Like so many things, it depends on the product you’ve invented, but here are some things I’ve seen people use to successfully promote their products.
Website: This should be your first step. Get a website up and running as soon as it’s safe to do so. The website should be simple, informative and easy to navigate. So as much search engine optimization as you can on the site, and highlight the problem or issue your product attempts to solve. Building search engine placement takes a long time, so it may take a while before your website starts placing well in search engine results.
Advertising: Things like Google adds and cost per click advertising are one way to place targeted adds to your potential marketplace. If you have a website with an online store, these adds could be directly linked to your store.
Crowd Funding: Platforms like Kickstarter and Indigogo are a good way to build excitement and interest in a new product. Those platforms host a wide range of new products and people actively search those platforms for interesting new products. Like almost everything these days, there are tutorials and books about how to build a successful crowd funding campaign.
Media Coverage: Try to get your product reviewed or discussed by media outlets. Send your product to any media site you think might do a story on your product. Send your product to youtubers with large audiences and get them to review it. Send your product to youtubers with smaller audiences and get them to review it. This can be a very effective promotion strategy – Case in point: Instant Pot. This was a company started by one guy with an idea to create an improved pressure cooker. He got the product made and then he started giving away his product to youtubers for them to review and cook with them. In a few months, thousands of youtube videos appeared featuring his new pressure cooker and the products started selling in large numbers. I myself bought an Instant pot after watching a youtube video. Now there are whole youtube channels that specialize in cooking with an instant pot.
Trade Shows: If your product is highly specialized to a specific industry, then attending a tradeshow could be a great way to build contacts and connections to help promote your product or service. I’ve been to enough tradeshows to have learned that everyone always checks out everyone else’s booth at the tradeshow. If you can possibly manage it, try to get a booth at the most relevant tradeshows for your product. Even a tiny booth no bigger than a table can help you build awareness and develop contacts. Now here’s a potential bonus that comes with getting a booth in a tradeshow. Your booth in a tradeshow can be your conduit to making important contacts with larger companies that are dominant in the industry. In my last video on how to sell your invention directly to a company, I told you that the most difficult step in the process was meeting key executives in the companies you’d like to sell to. Not surprisingly, those top executives are often likely to attend a tradeshow, particularly if it’s a key tradeshow for the industry. If you’re ever going to meet key executives of a company, you’re more likely to meet them at a tradeshow than anywhere else. Tradeshows are a great place to meet the sort of people who run the sort of companies that might be interested in buying or licensing your invention. In fact, launching a successful startup which attracts a lot of attention is by far the best way to attract companies to buy or license your invention. I’ve literally seen it happen with my own eyes. In fact, if you build a successful startup, the chances you’ll end up selling your business to a larger company is pretty good.
Conclusion: You Can Do It
Well, over the last 32 years I’ve seen all sorts of new products get launched and succeed, and I’ve seen a lot of products get launched and fail. Getting your product to market by having it manufactured/produced and selling it directly to the customer is not easy, but it’s potentially very lucrative. In fact, most companies were formed in this way. It’s without a doubt the most successful method of marketing a new invention. From my experience, it’s the inventor and the team he or she puts together that is the single most important factor as to whether a venture will be successful or not. Dedication, hard work and a bit luck are required certainly, but the decisions you make early on in the process really help decide how things work. Like I said before, promoting your venture is probably the single most important step in the whole process, so that should be the first thing you try to figure out. Keep it simple and promote your venture with all your energy, that’s probably the best advice I could give you.