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

• andy@enginuity.com

• andy123@freemail.net

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?