The Entrepreneur: Dr. Mary Burns, 49, former veterinarian
and founder of Veterinary Ventures Inc. based in Union, Kentucky
Product Description: The Drinkwell is a pet fountain with
free-falling water, a one-gallon-plus water reservoir, a pump and a
charcoal filter for removing bad tastes and odors. The Drinkwell
offers pets a daylong source of fresh water and has a suggested
retail price of $49.95 to $74.95, depending on size.
Burns initially got the idea because her cat, Buckwheat, would
only drink running water from a faucet. Tired of getting up during
the night to give Buckwheat a drink, Burns created the Drinkwell
after observing a decorative desktop water fountain that seemed to
offer a solution for faucet-drinking cats.
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Startup: Less than $3,000 for a vacuum-formed mold, some
initial inventory and an ad in Cat Fancy magazine
Sales: Just over $3 million in 2004, with sales to pet
superstores such as Petco and Petsmart, and to independent pet
stores, as well as specialty and pet catalogs nationwide
The Challenge: How an independent, one-product inventor
with limited business skills can get onto the shelves of
category-dominating major retailers
Pets can be an important part of people's lives, so it's
not surprising that every year, individual inventors come up with
dozens of new pet inventions. But the days of the independent pet
store are over--and nearly all small shops have been replaced by
category-dominating stores like Petco and Petsmart. Inventors can
enjoy big-time success once they learn how to penetrate the big
pet-store chains.
Steps to Success
1. Obtain strong patent protection. "I knew the key
feature on the Drinkwell was the free-flowing water," says
Burns. "I started by reading the book Patent It Yourself by David Pressman. I
wrote up much of the patent description myself, but I had an
attorney write up the actual claim to be sure I had strong
protection." Burns' protection paid off--she sold the
product without competition from 1995 to 2001 and, even after a
competing fountain was introduced by a major pet-products company,
the Drinkwell held its sales level because she had the market's
only free-flowing water fountain.
2. Develop convincing proof the product will sell. Burns
explains her sales success: "I started out in December 1995,
selling directly to consumers through small ads in Cat Fancy,
Cats and I Love Cats magazines. Then, in 1996, Hammacher
Schlemmer called and wanted to carry the product, and Alsto's
Handy Helper catalog picked the product up at the end of 1997. In
2000, I started to promote the product in trade magazines like Pet
Age and started to pick up independent pet stores." Burns
didn't just have some initial success; she had $2.2 million in
2002 sales, which also included Petco sales of her product.
3. Ensure the product has a "big company" look.
Burns started with a functional product that was not stylish.
"My initial vacuum-formed tool was very cheap (less than
$1,500), but the product didn't have aesthetic appeal,"
she says. "In 1999, before approaching pet retailers, I
decided to convert to an injection-molded product, which had a
six-figure tooling cost, but which also provided a
professional-looking product. That look was essential to Petco and
Petsmart."
4. Get expert help when negotiating contracts, pricing,
allowances and returns. Burns' growing business was
starting to overwhelm her in 2000. "My investment counselor
suggested I contact Howard Consulting [a business management
consulting firm in Reno, Nevada, now called Meridian Business
Advisers], who initially provided help with my financial
books," she says. "But they came to my rescue when
dealing with Petco and Petsmart. I didn't know how to fill out
vendor qualification forms, deal with allowances and discounts, or
negotiate final agreements."
Howard Consulting helped Burns get the initial orders, and Burns
went one step further in 2002. "I ended up selling the company
to [Meridian's parent company] for an upfront fee and ongoing
royalties. I felt that I was out of my league negotiating with the
big retailers, and was also overwhelmed by the concepts of
producing the product overseas and dealing with a major pet-company
competitor," Burns says. "I felt turning the company over
to experienced businesspeople was my best choice."
Lessons Learned
1. Manufacturing costs should be no more than 25 to 30
percent of the suggested retail price. Big retailers will want
at least a 50 percent discount from the suggested retail price, and
they will also want allowances, which are a percentage of their
purchases--typically 2 to 6 percent--to cover the costs of damaged
products and advertising. You won't make any money if your
manufacturing costs are greater than 30 percent of the suggested
retail price.
2. Big retailers don't take chances. Big retailers
will rarely be the first companies to take on an inventor's
product. They want to see that the product has succeeded in several
other outlets, including some retail outlets, before they will even
put the product into a few test stores.
3. Hire professional help. An inventor's lack of
management skills is a severe problem to major retailers, as they
won't have confidence in the inventor's ability to deliver.
Paying for consulting help might cost money, but losing the
business is an even bigger problem. If you don't know who to
contact for help, visit your local Small Business
Development Center.
4. Inventors can succeed. Inventors have obstacles to
overcome, but the market is always looking for unique products that
customers want. Retailers will buy if you can prove your product is
unique in the market and meets an important customer need. Even the
biggest retailers will want your product if their customers are
asking for it.
Help! I Need Somebody
Inventors who need engineering or manufacturing help can contact
their local SCORE office, where you can find experienced executives
who can suggest product improvements or cost-effective production
methods. Log on to www.score.org to access a list of local SCORE chapters
nationwide.
If you only need a contract manufacturer, check out the Job Shop
Technology magazine website. Job shops are firms that make
small to midsize production runs for companies and often help with
design assistance for new products. Job Shop Technology also
has frequent regional shows where manufacturers looking for new
products will exhibit.
Don Debelak is author of Entrepreneur magazine's
Start-Up Guide #1813, Bringing Your Product to Market, and host of
inventor-help website www.dondebelak.com.