From the December 2003 issue of Entrepreneur

The Inventor: Ron L. Wilson II, 38, and Brian Le Gette, 38, co-founders of 180°s LLCin Baltimore

Product Description: The 180°s Ear Warmers aren't your typical earmuffs-they have been modified to fit around the back of the neck rather than over the head so users don't mess up their hair. They sell in 1,800 upscale retail stores worldwide, including L.L. Bean and REI, for an average price of $20 each.

Start-Up: About $7,000 to finance the first 250 test units and approximately $100,000 (raised from 18 graduate school friends and other private investors) to launch the company in 1995

Sales: Approximately $50 million estimated for 2003

The Challenge: Launching an innovative product with a strong consumer need despite limited capital

Before Ron L. Wilson II and Brian Le Gette got into the earmuff business, the product category had become stagnant in terms of innovation-winter after winter, people warmed their ears by donning the same old style of earmuffs. But this tired product category spelled opportunity for these partners, who were sure they could catch consumers' attention with a better solution. From getting financing to test-marketing the concept, here are the steps they took to launch their innovative product:

Steps to Success
1. Draw upon your experience. Wilson first got the idea for the 180°s Ear Warmer in 1986 while attending Virginia Polytechnic Institute and State University in Blacksburg, Virginia. His ears were cold, but he didn't want to wear something that didn't look good. Because of his personal experience with traditional earmuffs, Wilson knew an improved version that was stylish and hairdo-friendly would be successful.

2. Consider improving a product that hasn't had much innovation. The 180's Ear Warmer idea had a key success criterion: "We were looking to reinvent a product where the existing products were stale," Le Gette says. "Nothing new had happened [in the market] for years."

3. Make sure there's a market for your product. "We knew people had cold ears but didn't want to wear hats or earmuffs because they ruined their hair," Wilson says. But to ensure the market was right, they polled friends, family and acquaintances.

4. Offer customers a product with perceived value. New products fall into three categories: low-priced goods that sell at mass merchandisers, midrange products that sell at specialty stores, and high-value products that target high-end shops. Because inventors without capital usually have trouble investing enough in manufacturing to keep prices down, they need a high-value product that can sell for a higher price. In this case, the 180°s Ear Warmers sell for $20 vs. $3.50 to $6.50 for regular earmuffs. As long as customers believe your product has value, they'll spend more for it.

5. Produce tangible results that show your product will sell. Wilson and Le Gette initially sold 250 of the Ear Warmers at their graduate school, the University of Pennsylvania, during a cold winter. "We sold [them] on campus out of a cooler with a thermometer in front showing the temperature," Wilson says. He and Le Gette used the profits to produce another 750 units to sell on campus.

6. Raise enough capital to launch the product. Once they had some sales, Wilson and Le Gette asked friends and classmates for money-and raised $100,000. Other options might have included either bank financing or acquiring an SBA loan. Inventors without cash can also choose to launch in disadvantaged neighborhoods, where loans and grants are available.

7. Use the edge you've developed to market other new products. Wilson describes the 180°s concept as "products that help people deal with the elements." Two new products build on this tradition-the 180°s Exhale Heating System gloves, which let users blow into the gloves to warm their fingers, and the 180°s Eyegear sunglasses, which fold forward instead of backward to protect the lenses from getting scratched during storage.

THE SEARCH IS ON
The National Mail Order Association (NMOA) is searching for unique, American-made products in its fourth biennial Made in America Contest. Winners get free publicity in Mail Order Digest, one year of placement on the NMOA Web site (www.nmoa.org), one year of free Web store hosting on 411Shops.com, $25 credit on wholesale bid-for-placement search engine Wholesale411.com, and a winner's publicity kit. Entry forms will be accepted from manufacturers of all sizes. But hurry: The contest ends on December 31, 2003. For more details on how to enter, log on to www.nmoa.org/contest/index.htm.

Lessons Learned

1. Use your available cash to produce at least one unit of your product. It's tough to get people to invest in your product unless you can show them a completed model or, better yet, show them you've already sold some products. Investors can't always understand a product, let alone decide it's worth investing in unless they can see and touch a real model. Also, compared to a simple drawing, a finalized model conveys the impression that you're really committed to your idea.

2. Don't think you are the typical consumer. Just because you like it doesn't mean everyone else will. Use your own instincts, and confirm those feelings with the opinions of others. But the only way to know ahead of time if your product can really sell is to sell some units prior to launch.

3. Retailers like innovative products that can revive stale categories. To a retailer, a stale product category typically means low profits. That's because similar retailers sell the same or very similar products. So consumers tend to know what the price of the product should be, and they buy from whoever has the lowest price. However, retailers get much higher margins from products that are new and innovative, and they like to try new products in stale categories that might give them that higher margin.

4. Lots of small investors are better than one big investor. When you lack enough money to launch your business, you have to select a product with somewhat limited sales potential so you don't compete with large companies, which tend to avoid smaller markets. However, with 4.5 million units sold per year, the 180°s Ear Warmers have found a much bigger market than expected. Big investors who are looking for a big gain aren't interested in a product with a small market because it doesn't offer the potential to earn a lot of money. Ideal investors are people who don't often have the chance to invest in new products. People like neighbors and family members are better candidates, and each can offer a small investment to get you off the ground.

INVENTING 101
Successful inventors know how to walk before they run. In other words, before spending their life savings, they make sure ahead of time their ideas will work. The Inventor's Bible: How to Market and License Your Brilliant Ideas (Ten Speed Press) by Ronald Louis Docie Sr. offers a basic understanding of how to evaluate the marketability of your idea. For instance, it includes an invention evaluation and scoring guide to help determine the risk-reward ratio for a product. Your results will help you determine whether to pursue your idea.

While the book focuses more on inventors licensing their ideas and overlooks how inventors can market products on their own, it's one of the better books about how inventors come up with and test ideas prior to making that big investment. The book also contains a handy flowchart of the invention commercialization process, which novice inventors (and many experienced ones) will find useful.


Don Debelak is author of Entrepreneur magazine's Start-Up Guide #1813, Bringing Your Product to Market. Send questions to dondebelak34@msn.com.