Got a New Idea?
The Entrepreneur: Chris
Lawson, 35, founder of Lawson Hammock Co. in Raleigh, North
Product Description: The Lawson Hammock, a one-person, off-the-ground tent for campers that features a mosquito net
Start-up: $25,000 in 1997
Sales: Approximately $150,000 for 2002
The Challenge: To market someone else's invention when you lack your own million-dollar idea
Chris Lawson didn't have an invention of his own, but that didn't stop him from finding one and bringing it to market. How did Lawson do it?
1. Find the ideal product. Lawson felt most comfortable selling a product in a market he was already familiar with. He hoped to find an invention significantly different from others in the market; identify a small base of customers ready to buy the product; ensure there was potential for large orders, which would secure sales growth; and hold down expenses with a product that could be easily outsourced.
The Lawson Hammock fit the bill perfectly because no one else sold a tent/hammock, plus Lawson had no trouble identifying his target customers: campers wanting to have a minimal impact on the environment.
Lawson found his product through a business broker. You can find local brokers in the Yellow Pages or on the Internet. Your area's inventor's club is another good spot for locating an inventor looking to sell. You can track down a local inventor's club through the United Inventors Association) or at www.inventorsdigest.com, the Web site of Inventors' Digest magazine.
2. Ensure the inventor is ready to sell at a reasonable price. Lawson explains why the inventor he found wanted to sell: "She was doing everything herself," he says. "She sewed all the products herself. She was just overwhelmed with the amount of work required, and she wanted out." The inventor also hadn't invested too much in her tent/hammock concept, so she was willing to sell the product for a reasonable price.
3. Identify a production source that will allow you to make a profit on the product. At first, Lawson let the inventor continue making hammocks while he searched for a low-cost production source. After researching other similarly made products in the outdoor market, he found that "most were made in Korea," he says. "So I contacted the Korean Embassy in Washington to get a list of manufacturers. I found one that made tents and was able to start overseas production."
4. Look for a small market of customers likely to generate immediate sales. Lawson sells his product, which retails for $172, mostly to camping catalogs such as Piragis Northwoods, through ads in Backpacking and Sierra magazines, and at camping stores in areas with lots of bugs, such as the Florida Everglades, Minnesota's Boundary Waters and tropical rain forests.
5. Use word-of-mouth publicity and a Web site to your advantage. As Lawson explains, "The product is starting to get a reputation for quality among camping enthusiasts, and sales over the Internet have been increasing every year."
6. Start working on the big customers. Lawson expects business to take off once he lands a big account. "I've been calling on the big four--L.L. Bean, Cabellas, REI and Eureka--since I've been in business, and they are waiting to see how the product sells. I've received an order from Bass Pro Shops, and I'm hoping to add the others over the next few years." Large buyers are reluctant to buy from a new company with few financial resources; they're afraid it will go out of business. But if you start calling on them early, they'll see by your third or fourth year that you have staying power.
|Not like the rest of us. An interesting book on the topic is The Patent Files: Dispatches From the Frontiers of Invention by David Lindsay. The book tracks down inventors of products such as handwriting identifiers, a solar-powered interstellar spaceship and air-purifying helmets. The book's essays are amusing, and the author's firsthand experience with trying to get an invention through the patent office on his own is something every inventor can relate to. This book isn't a how-to, step-by-step approach to inventing, but it does offer insights into how inventors really deal with the world around them.|
So what can you learn from Lawson's entrepreneurial
1. Do some thorough research to be sure you understand the product. A good start is to subscribe to your industry's trade magazine, which targets the industry's retailers, distributors and manufacturers. As you read each issue, you'll learn about relevant trade groups and trade shows. To find the appropriate trade magazine, try Gale's Directory of Magazines and Broadcast Media (Gale Publishing), available at most major libraries.
In addition, try talking to five or 10 potential customers--they will be able to point out all the strengths and weaknesses of your product.
2. Make sure the inventor is willing to release control of the product. Inventors will often want to stay involved in the process of bringing their product to market--after all, to them, it's their "baby."
But sometimes inventors can get in the way, unwilling to make or allow changes the product needs to succeed. Also, inventors often have expectations far too high for what anyone could be expected to do with the product.
3. Determine a fair price for the inventor's product. Sometimes, inventors will want a substantial sum for their product, and you'll have to negotiate a fair price. Knowing the true value of a product is important because inventors often base their price at least in part on how much they have invested. That value may not be anywhere close to what the product is actually worth, especially if the inventor has spent too much on his or her invention.
So before agreeing on a price, be sure to investigate how the business should be valued. Helpful resources include your local SBDC, Valuing a Small Business and Professional Practice, Fourth Edition by Shannon P. Pratt, and Web sites such as www.bulletproofbizplans.com and www.bvresources.com.
4. If the inventor's price is more than you can afford, consider licensing. Instead of purchasing an idea outright, you can license it, which means that you pay a percentage of your sales to the inventor in addition to any upfront fee.
To learn more about this option, check out the Licensing Executives Society International Inc.. This organization publishes some of the best titles on licensing, including Basics of Licensing. Also, be sure to check out the Licensing Industry Merchandisers' Association.
5. Don't expect miracles right away. Entrepreneurs often try to keep their prices low in hopes of getting a big customer, but that might not happen for several years. Instead, you should price the product so you can at least break even on your sales to a smaller market.
|About.com has a Web page devoted to new inventors and those with limited experience. Comprehensive and easy to use, the site examines such topics as famous inventors, inventing basics, invention funding and marketing ideas. The site gives a broad overview aimed at helping visitors strengthen their understanding of the invention process. Also included is an "Ask the Expert" page, where you can post your most pressing questions. Don't forget to take a look at the e-booklet A Practical Guide to Licensing, a particularly useful resource.|
Don Debelak is a new-business marketing consultant and author of Think Big: Make Millions From Your Ideas. Send him your questions at email@example.com.