Send in the Clones

Lessons Learned

1. Don't think all the advantages lie with the big guys. While it's true growing businesses have trouble breaking into a market established by big companies, they have plenty of breaks if they can get into a market first. Customers like supporting the small company that created the innovation, and they'll support that company as long as its pricing and delivery are right.

2. Drive customers to distributors. At one time, before he added distributors, Sorensen had more than 5,000 customers. That's too many customers for one small company to support. When customers call you direct, find out if their distributor will furnish the product to them. Tell customers that ordering will be easier if their distributor will carry a product. Distributors will add a product if they get enough requests for it. While distributors cut into your profit margin, they make up for it by stocking and delivering your product, and they can also help you rapidly expand your market.

3. Don't waver on supply. Customers will stay even if you're small-unless they fear you won't be able to supply them. That's when a big competitor has the chance to step in. If you can't afford to support rapidly increasing sales, make a deal with a manufacturer, seek a loan from a bank, or take on a partner to be sure you can ship enough products to keep customers happy.

4. Keep your visibility high. Attend trade shows, trade association meetings and industry conferences, and maintain a prominent advertising presence in trade journals. Buyers are concerned that a small supplier may run out of funds and go out of business, so it's important to maintain your visibility. If you drop out of sight, some of your customers might think this is a sign you're in financial trouble.

5. Be vigilant about patent and trademark violations. When you're sitting on a hot new market, competitors will test to see how vigorously you'll defend your intellectual property. They might try to test-market a similar idea, or they might try to market another product with a name similar to yours. A quick response from your patent attorney is enough to stop many companies. Your best chance at minimizing your legal fees is to stop these companies before they get started.

PATENT MATTERS
A patent is a useful tool for inventors, but as you start to develop your businesses, you need to look at the role of patents in your overall strategy for growing the business and increasing profitability. An intriguing new book, Essentials of Patents (John Wiley & Sons) by Andy Gibbs and Bob DeMatteis, takes on patents from this perspective, detailing how a business can benefit from creating a "patent consciousness" among its management and employees. The book includes information on some of the new patent changes in 2003 as well as a comprehensive look at how companies should manage their patents.

Don Debelak is the author of Entrepreneur Magazine's Start-Up Guide #1813, Bringing Your Product to Market. Write to him at dondebelak34@msn.com.

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This article was originally published in the September 2003 print edition of Entrepreneur with the headline: Send in the Clones.

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