3 Things You Need to Know About Launching a Product Business
It is a golden-age for innovation with companies revamping the business of invention and democratizing the way we monetize new ideas. Think Kickstarter, Quirky and -- shameless plug of my own business -- Trident Design.
If you have an idea for a brilliant invention (you know you have at least one!) and are thinking about pursuing it, your options -- apart from suing people based on patents -- can be grouped into three categories: make and sell it yourself, license it or submit it to a crowdsourcing site.
How do you know which one of these paths is the right one for you and your idea? That can be a confusing question, and there is no "right" answer. Let's take a look at the first option: starting a company to make and sell your invention.
Making and selling a product yourself means setting up production, business systems and a sales team. It is exciting, challenging and a lot of work. It can't really be done casually given that a normal manufacturing company can have many employees.
I have seen many lives made stressful by people underestimating the challenges of starting a product company. You should only pursue this path if you are so passionate about your product that you want to sleep with it under your pillow. It should be your undying dream to stand at the prow of a yacht with the name of your product on its side.
Related: The Benefits of Flat Design
1. You can make (or lose) a whole bunch of money. The pro side of the equation is that starting a company can add up to bigger numbers for you and your business. If you build a successful product, you can sell a business rather than license intellectual property, which can have a much higher value.
Starting a business has the biggest potential payoff out of all the ways of commercializing your idea but you will need the wherewithal, ability to build a team and passion for your product. Be honest about your level of commitment to a product before you risk too much.
Despite what you might think from seeing "easy" Kickstarter successes, starting a business requires tremendous effort and investment. Once you have half of your life savings invested will you be able to walk away? Only go down this path if you can't help but do it because you can't not do it. If you can conceive of a world where you license the product, that is probably your best option -- at least at first.
2. It takes twice as long as you think to get to market. I have launched more than 70 products myself. Products take about twice as long and cost twice as much as people think they will, no matter how well you think you've planned. This means you need to be extra conservative when assessing what you can afford to risk in a product venture. I have seen many promising products fail because the inventor had to return to other employment in order to pay the bills.
3. You can't stop at just one product. Another thing to be aware of is that you will need to immediately start developing follow-up products in order for your company to survive. Very few companies survive on just one or two products. You have to keep adding new items every year in order to stay relevant and ahead of the innovation curve. If you don't have ideas, you need to be considering where you are going to source them. They will cost money to develop and may need to be brought to market before the first product is fully developed in the marketplace.
I do not intend to sound discouraging. Making and selling your own products is a rush and we are getting ready to launch a couple of Kickstarter campaigns here at Trident for products we feel passionate about ourselves.
But go in with their eyes open, ready to smash all the obstacles that will present themselves and stick it out through the long slog to victory. I've met many inventors who unwittingly got in way over their heads and could have pursued a much lower risk path to commercialization, like licensing or submitting.
Take a look at your idea. Ask yourself the following questions and answer honestly:
- How much do I love this product and want to live and breathe it every day?
- Do I want to keep my day job?
- Am I in love with the industry of my idea, or do I just want to make money?
- How much do I love sleep?
- How much money can I access? How much will I need?
- What lifestyle do I want?
- According to experts, how big is the opportunity is this idea?
If you are honest with yourself and still want to start a company, go for it! If I raise doubts in your mind, please, seriously consider other options.
Entrepreneur Editors' Picks
This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
After He Was Fired From the UFC, This Former Fighter Turned His Passion Into a Thriving Business
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.