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Test The Waters

Ready to roll with your great idea? Don't make the leap 'til you know what you're getting into.
January 1, 2000
URL: http://www.entrepreneur.com/article/18888

In the middle of the night, you realize you have a million-dollar idea and you can't wait to get to the market to cash in. Nothing can stop you, so you run out and get a patent, borrow money, start production and then worry about how you're going to sell your product.

Is that the right way to get started? Only if you have lots of money to correct your mistakes. The smart approach is to hold up for a while and do some research to be sure you have a product that can make money.

Kazi Ahmed of Beaverton, Oregon, did just that. In 1993, he came up with a new product--software for monitoring and managing diabetes patients' blood sugar levels--but before rushing to market, he put in many hours of research. If Ahmed had just gone with his initial gut feelings, he would have had many problems. But the research he did not only kept him from making a big mistake, it also helped him to develop his business, NuMedics, which produced its first $1 million in sales in 1999 and is poised for rapid growth.

Ahmed, 43, discovered he had diabetes when he was 36 years old. As he learned about the disease, he felt uneasy about his total reliance on his doctor's advice. He wanted to know more about his condition and treatment options but couldn't find any diabetes management systems on the market. So, using his experience as a programmer, Ahmed developed software to help him monitor the impact of certain foods and exercise programs on his blood sugar levels. His goal was to feel in control of his eating and exercise regimen, while keeping his blood sugar at safe levels.

Convinced that other diabetics would be equally interested in such a monitoring system, Ahmed further perfected software that could download blood sugar readings from readily available analyzers, then detail the effects various meals and activities had on them. He talked to his doctor, who thought the idea was terrific--not only for diabetes sufferers, but for their doctors as well. Doctors had a compelling need for a similar product, he said, that they could use as a management tool to help patients remember and implement their nutrition and treatment regimen.

Ahmed continued his research by spending several months at the library, learning everything he could about diabetes, its treatment and the overall market size for his product. By the time he was done with his library research, Ahmed could comfortably converse with medical professionals about diabetes patients--and his product idea.


Don Debelak is a new-business marketing consultant and the author of Bringing Your Product to Market (John Wiley & Sons). Send him your invention questions at dondebelak@uswest.net

Doctors Orders

Knowing he had to get more real-world information than medical journals could provide, Ahmed took his research to the next level by assembling an informal focus group of 14 people who treated diabetics, including endocrinologists, diabetes educators, nutritionists and nurses. He talked about his idea, then asked the participants for their input. The group's advice coincided with Ahmed's doctor's advice: The product was needed, but doctors had a greater need for it at this time than patients did. The group also gave Ahmed insight into the features his product should have and offered suggestions on how it could be improved.

Ahmed originally planned to introduce three products: the Diabetes Partner PC software program, which patients could use at home; CliniPro, a diabetes management system for medical professionals; and an online service that would transmit patients' readings to their doctors' computers. Although he first thought he'd concentrate on the patient software, after his research, he changed his initial market emphasis to the clinical software for professionals.

Filling The RX

Further research helped Ahmed realize the doctors who needed his product most were pediatric endocrinologists. Children with diabetes are challenging for obvious reasons: They don't tend to like following a strict diet and medication regimen. That market, with its pronounced need, is where Ahmed ended up making his first sales.

Ahmed also carefully researched the pricing strategies used by other medical companies selling similar products. He found that downloading software from companies marketing blood sugar analyzers cost $60 to $100 and that medical record software systems typically sold for $3,500 to $5,000 per user. Ahmed set his pricing and terms similar to the norm, which helped him minimize price resistance.

Ahmed's current plan calls for him to concentrate first on setting up about 500 medical professionals with his software, and then using that medical network to help him sell his Diabetes Partner PC patient software and online record transfer system. Ultimately, this plan lets Ahmed enlist doctors as allies in selling the value of his software and also greatly reduces his marketing expenses.

The Lesson Learned

Ahmed's research played a key role in his success:

All totaled, Ahmed's research played the vital role of convincing him his invention had real sales potential and that the product was worth the time and money he'd have to invest to make it a success.

I've found time and time again that inventors move slowly on their product because they're not sure they truly have a marketable idea. If they'd follow Ahmed's lead and do early research, they'd know when they should drop their idea and when they should move full speed ahead on getting it to market.

Did Ahmed predict every possible glitch in his product and introduction plan? Of course not. But he did find and correct enough glitches to enable him to successfully launch his product.

It's not uncommon for product or marketing mistakes to cost anywhere from $20,000 to $100,000 to remedy. So if you don't have deep pockets, follow Ahmed's example, and be sure you have a product the market wants before spending your hard-earned money.

Mum's The Word

Keeping it confidential

During his diabetes monitoring product's research phase, inventor Kazi Ahmed set up a focus group with people who counsel or treat diabetics. But how could he be sure they'd keep his idea under wraps? Attorneys typically tell inventors to get a Statement of Confidentiality and Non-Use (which Ahmed used) from people to whom they reveal their idea. I find many people resist signing this statement, and that sets up an atmosphere of mistrust, especially with industry people who are just there to help you with informed product input.

Fortunately, there's another tactic for accomplishing the same agreement to secrecy. Ask people to sign a Technical Advisor Agreement in which they agree to provide you with occasional input regarding your product during its development stage. As part of the agreement, the advisor agrees to keep any proprietary information confidential. The end result? Your secret's safe with them.

Contact Source

Lentek International, 1629 Prime Ct., #800, Orlando, Fl 32809, (407) 857-8786

NuMedics, (503) 291-9190, kahmed@numedics.com