From the May 1999 issue of Startups

How can you turn one invention into a string of successes? What are the secrets to building a lasting business from an initial flash of inspiration?

Patrick McNaughton knows. Since McNaughton, 34, and his sister, Jamie, 36, started their business in 1985, McNaughton Inc. has created more than 30 new products. Today, the Minneapolis company has 15 employees and 40 independent sales representatives and has sold millions of its products to mass merchandisers, catalogers and overseas markets.

The McNaughtons built their company by combining their talents: Patrick is the inventor and handles financing and production, Jamie handles operations and sales, and the two share marketing duties. Their success rests on two key factors: "fun" products that are clearly differentiated from others on the market, and their uncanny ability to ride the rising wave of market trends.

The Drawing Board

Patrick developed several small inventions as a teenager, but his first commercial venture took off when he was 18. He invented those neon blackboards restaurants use to post their specials. The chalks take on a fluorescent glow from the neon light and are easy to read in a dark setting. The neon chalkboards are now found nationwide. Patrick had a partner help finance that venture, but after two years, he sold the company to his partner and went into business with his sister.

McNaughton Inc.'s first product to be based on Patrick's inventions launched in 1987. The product, a trash can divider used to sort items to be recycled, tapped into a growing environmental awareness. The McNaughtons introduced a series of other environmental products, including recyclable tape and the Newspaper Bundler, a plastic device used to stack newspapers for tying and recycling. (Later, Patrick expanded his environmental interests to a line of bird feeders and a birdseed additive that repels squirrels.)

In the early '90s, Patrick developed a series of products that coincided with concerns about child safety. The Child Safety Buckle Guard prevents children from unlatching their seat belts; the Safety Switch Guard keeps them from playing with light switches.

The McNaughtons have also capitalized on products for home and kitchen organization. The Banana Hook, which attaches to the underside of a kitchen cabinet and folds down to hang bananas for ripening, is still on the market, as are multifunction kitchen utensils, such as the Pasta Strain & Serve cooking set (a pot with an insert that lifts out to strain pasta).

The company's products are sold primarily to catalogers and mass merchandisers, and are even manufactured under private labels for other retail channels.

The McNaughtons' latest product, the Gadjit Window Gift Vase, has suction cups that attach to any surface and includes a built-in pocket for a card. The small vases allow flowers to be used in recreational vehicles, bathrooms and other small spaces where vases weren't practical before. With the tag line "Window vases create new spaces," the vases go along with the organizational theme behind the McNaughtons' earlier products. Last year, the window vase was voted one of the Top 100 promotional products of 1998 by potentials magazine.

Fun, Fun, Fun

Selling products tailored to current trends is a time-proven tactic for inventors. But the McNaughtons take an additional step. They make sure every product is unmistakably fresh, different and fun. The name of their product line, "Gadjit," sets the tone: Bright colors, eye-catching packaging and a simple, clean design all project the image of a cutting-edge product.

Patrick says his goal is to create what he calls a "forehead-slapper"--a product that makes people slap their foreheads and exclaim, "Why didn't I think of that?" He doesn't worry too much about creating technological breakthroughs; he just tweaks existing products to add new features and new looks at a reasonable price. This philosophy has produced a steady stream of winners, and the company's frequent innovations keep Gadjit products in front of key buyers and maintain the line's momentum.

How He Does It

Want Patrick's formula for success? He's dubbed the process IDEA, which stands for Inception, Design, Evaluation and Apply.

"There's no such thing as a crazy idea," Patrick says. He writes down virtually every idea he thinks of and puts it in a folder, even if he can't immediately come up with a winning design. He looks at these ideas periodically and sometimes gets a flash of inspiration as to just how the product should be made. But he doesn't believe in forcing an idea by thinking about it too hard. It's better to let the idea sit until a solution comes naturally.

Once the idea is in place, design is his next step. Crucial to successful inventions, Patrick says, is developing a simple design at the right price.

Next is the all-important evaluation phase. The idea and design may be great, but will people buy it? "Be sure [your] product is ready for market," Patrick warns.

Finally, think about how your ideas can be applied to different uses and how different materials could apply to your ideas. Patrick firmly believes you should consider all options, that there are no rules on how things should be built, and that just about anything can be used for any product. "Think outside the box," he urges.

When the McNaughtons started out, they didn't think selling a product to mass merchandisers was "impossible" for a small company. They just went out and did it. The same principle can work for you, too. Decide what you want to do, learn as much as you can about how to do it, and then go out and do it.

Building A Brand

Patrick and Jamie McNaughton use the Gadjit brand name on all their products and strive to ensure all packaged items have a common "look." Even if you've only developed one invention so far, Patrick recommends you plan for a series of products and design your packaging and corporate image as if more products are on the way. The past success of the Gadjit brand name helps every time he presents a new product to a key buyer.

Patent Power

Patrick McNaughton, a big believer in patents, obtains and enforces them whenever he can. He patented the original Banana Hook, which hangs underneath a kitchen cabinet and folds up when not in use. Competing banana holders appeared later, but all are designed to stand on the counter top, which takes up space--a major disadvantage.

McNaughton sold out to his partner in his first business, a manufacturer of neon blackboards for restaurants, because the idea wasn't patentable. McNaughton knew fierce competition and price wars were inevitable without patent protection.

Sell Yourself

You've finally wangled that all-important meeting with a buyer for a mass merchandiser. Don't expect to just walk into the buyer's office and ask "Do you like my product?" You have to know the store and how it operates so you can tailor your presentation to the situation. Before going in:

  • Know what season the buyer is buying for. (Typically, it's six to nine months away.)
  • Know what section of the store you want your product placed in (such as housewares or sporting goods, for example).
  • Know which products you want your product placed next to based on what the store sold last year. (Ideally, get your product placed near similarly priced products in the same product category.) This means visiting stores to see what they carry. The fact that you've taken the time to do this will impress buyers. Many inventors use independent reps to sell to mass merchandisers, because reps know what's sold in the stores. By finding out on your own, you can save on commissions.
  • Be ready to show your product's packaging and explain how it will fit into that section of the store. For example, if all products like yours hang on hooks, you need to package your product to hang on hooks.
  • Know your pricing to the retailer, your suggested retail price, and the price at which smaller retailers and catalog houses sell your product. If you're charging the company freight, you should also know the freight cost per unit to its warehouses.
  • Be ready to explain your production capabilities and how fast you can respond to unexpected reorders.
  • Have a plan for handling EDI (Electronic Data Interchange) order entry and know exactly how products will be boxed and shipped. Mass merchandisers expect different bar-code numbers for the product, the case and the master carton.

"[Buyers] buy your company first and your product second," Patrick McNaughton says. He and his sister, Jamie, always present their new products to smaller dealers first so they can work out any kinks before presenting the product to reps or mass merchandisers.

Don Debelak (dondebelak@uswest.net) is a new-business marketing consultant who has introduced new products for more than 20 years. He is the author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945).

Contact Source

McNaughton Inc., http://www.inventing.org