Every month I hear at least one new story of an entrepreneur forming alliances to succeed. Below are examples of three entrepreneurs who've done this, and they are just the tip of the iceberg. If you keep alert, you'll read about other examples in your local newspapers and business magazines. Might that other person's experience work for you? Remember to always be on the lookout for opportunities to make alliances.
- Karen Alvarez of Dublin, California, invented the Baby Comfort Strap, a product that keeps children safely strapped into shopping carts. When she first started her company, Baby Comfort Co., she was referred to Safe Strap Co., a manufacturer that sells shopping-cart straps to supermarkets. Alvarez asked Safe Strap for help, and the company agreed to make small quantities of Alvarez's product and to 90-day payment terms to help launch the product.
- Nathaniel Weiss, founder of G-Vox, a Philadelphia-based music company, got his start with a hardware/software product package that automatically transcribes notes played on a guitar into sheet music. His product allows guitarists to work on a new song without having to stop constantly to write down each note. Weiss has had a board of advisors from the beginning. His big break came when he formed an alliance with Fender Guitar Co. Fender agreed to sell his product to guitar stores, both as an accessory and as an option on Fender guitars. Once his company generated some initial sales success, Weiss went out and found several marketing people with extensive experience selling to retail music stores to push his product into the market.
- Gary Lewtschenko of Glenmore Park, Australia, had worked for six years on his Anywhere Tent--which can be set up in mud, shallow water, over fallen trees or on rocky ledges--without achieving any significant market penetration. Then, in 2005, he took on four partners with experience in developing new businesses, who put their expertise and $75,000 into his company. Lewtschenko gave up 80 percent of his company, which might seem like a lot, but he feels it was a good deal, and sales took a sharp upturn once he found partners. His plan is to use the income from the Anywhere Tent to launch other products on his own through his company, Unique Creations. As for Lewtschenko's partners, who were judges on Dragon's Den, a TV competition that looked for new, exciting products, they got what they wanted, too: major involvement in a new product they felt had a real niche in a promising market.
The New Product Factory
There are three tasks involved in launching a successful product.
1. Finding an opportunity in the marketplace, and then creating a product to meet that opportunity. The well-conceived product meets a consumer desire or need and can be produced at a price that provides buyers with value. This is normally an entrepreneur's strength.
2. Manufacturing the product. Tooling, manufacturing fixtures, working capital, quality control, value engineering, product liability insurance, regulatory approvals and a host of other complicated concerns are the realm of the manufacturer.
3. Marketing the product. Pricing, packaging, promotional allowances and connecting with major buyers are some of the simpler tasks of marketing. Understanding customer needs, positioning the product so it will sell, creating a memorable brand and product image, and finding customer hot buttons are some of the tactics marketers use to successfully introduce a product.
As you look at these three tasks, ask yourself: Does it make sense for entrepreneurs to try to do everything involved in bringing a product to market? I don't think so. Each of the jobs of new product development, marketing and manufacturing requires in-depth expertise. Your goal as an entrepreneur is to learn to use other people so that both you and they make money. Once you do that, you'll be able to devote your time to being creative and inventing new products.
Unfortunately, there is no single way to find partners. Each market and each product are different and require a particular approach; for each new endeavor, you will need to go to shows, make industry contacts and find just the right marketing and manufacturing partners. But once you become skilled at finding partners, you'll only be limited by your creativity and your ability to come up with new ideas that the market wants.
For more information on turning your ideas and products into moneymaking ventures, read Selling Your Products, available fromSmallBizBooks.com.