Putting Time Into Your Product From inventor to overnight millionaire? Not exactly. Here's the long-term solution to developing a product effectively.
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As an entrepreneur--and the founder of a company that supports and encourages entrepreneurs--it's frustrating to see media reports of inventors and entrepreneurs who've become millionaires "overnight." While there are certainly cases of those who've achieved that level of success very quickly, it's far from the reality for most entrepreneurs. And that can breed misleading and potentially damaging expectations among many people who are considering going into business.
I'll give an example. Last month, I received a phone call from a woman who'd been developing a new product. Although she was in the early stages--she was far from having final packaged goods--she explained to me that she had to move fast to get her products sold because she needed the money to pay her mortgage next month. I explained to her that if she needed money that quickly, this was not the solution. Even if she licensed her product, which is what she hoped to do, the development process takes years before significant revenue starts coming in.
The fact is that it takes a lot of time, and a lot of patience, to bring a product to market. And media stories--those that count on sound bites and telling the short version of an entrepreneur's story--often gloss over the actual time, effort, setbacks and reality of the process. They just don't have the air time to get into the nitty-gritty of the entrepreneur's experience, and that can make the whole process appear much easier than it actually is.
This isn't meant to discourage you. On the contrary, I'd like to provide a better picture of what's real so you know what to expect and how you can plan your business realistically and successfully. In other words, it may not be wise to quit your day job just yet, or to empty your bank account of every last penny, because you probably won't make the money back soon enough to compensate. That's because bringing a product to market and becoming an entrepreneur isn't a short-term solution. It can, however, be an amazing way to build long-term wealth, as well as provide other rewards like creativity and flexibility. If you go into it with your eyes open, the better your eventual chances to make those millions you're dreaming about.
How Long is Long?
While there are exceptions to every rule, I want to provide a framework to keep in mind. If your product is in demand and you do all the right things, it will still take the average entrepreneur a few years to gain distribution on a large scale. So why does the process take so long?
There are many steps to bringing a product to market, and these steps take time. First, you must create a prototype, perform market testing, hone your product, and get it manufactured and packaged.
Even if you do this in record time, there is still a long road ahead, and one you can't control quite so easily: sales. You will inevitably find that the hardest part about inventing isn't creating the product--it's selling your product to retailers.
To illustrate this, two years ago, a buyer from a major national chain accepted one of our products on a test basis. We were thrilled! What we didn't realize was the time it would take to conduct that test--one and a half years.
Fortunately, the test marketing went extremely well and the chain decided to pick up our product at its stores across the country. But even from that point, it took an additional 12 months or so to get into the distribution channel and hit store shelves on a large scale.
It's also important to note that there are steps we took well before that point to grow the market for our product--we needed a proven sales record before even considering approaching a national chain. As a rule, large retailers are in the business of minimizing their own risk, so they take on proven products. This is why the sales cycle can take such a long time for new products and small businesses.
What About Licensing?
So what if you license your idea to another manufacturer--one with experience and contacts in the retail world? Shouldn't that minimize the time it takes to start generating revenues?
Perhaps, but not necessarily. There are still many steps ahead if you choose to take the licensing route.
First, you must take the time to prepare the product, file appropriate intellectual property, prototype or graphic representation of your invention--then create a product sell sheet. If you've never done any of these things before, the learning curve can also lengthen the process.
Next, you must take the time to identify appropriate prospective licensors. You don't want to waste your time, energy and money, say, pitching a baby product to a household-products company, or a textile product to a company that specializes in electronics. So, developing an accurate and appropriate target list--with the proper contacts within each organization--is key. This will take time and research.
Once you've got your list of target companies to approach, it will take time to find an interested party and negotiate a deal. Again, there are exceptions; however, it can take up to a year or longer and there is still no guarantee. Then, just when you think you're home free, you realize the licensor will take a year or more to develop and manufacture the product, get appropriate safety tests, get a proper distributor, and get it on store shelves. That means the whole licensing process can take from two to five years.
No matter which route you take, know that it does get easier--and faster--with each subsequent product you introduce to the marketplace. That's because you've already created relationships with manufacturers, potential licensors and other vendors who make things happen.
With all that time ahead of you, you'd better get moving today.