How to Look Big, Act Big, Get Big

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How to Look Big, Act Big, Get Big

• Andy Daniel
• President, Enginuity LLC

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Disclaimer

• Enginuity currently only looks and acts big
• I dont always follow my own advice

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Businessperson vs. Inventor

• Businessperson looks for a way to make money
• Inventor does something they enjoy and tries to
  make money at it.
• Do what you enjoy - don't just chase
• If you're unhappy, you won't have the energy to
  continue

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Licensing or manufacturing?

• Licensing is much less risk
• Unclear which is more profitable
• Sometimes nobody wants to license
• Dont ignore manufacturing then licensing

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Licensing

• or, "Why are those crooks offering me so little?"

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License Terms

• What rights are you licensing?
• Exclusive / non-exclusive
• Royalty rate
• Annual minimum
• Escape clause

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Value order

• A product with a strong sales history
• A product that is actually being sold
• A product that it ready to ship
• A product that is in first production
• A finished prototype
• A functional prototype
• Used dishwater
• A fantastic idea

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Patents

• Do you really need or want one? The answer is
  not always obvious.
• Patents are quite expensive to obtain legal
  fees, filing fee, issue fee
• Patents require payment of maintenance fees
• Patents take about 2 years to issue

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Patents

• Many patents are easily circumvented
• Unless your value is in the brilliant invention
  rather than in its brilliant execution, the
  answer is probably no.
• However you can use Patent Disclosure, PPA, and
  filing without issue to buy time at comparatively
  low cost

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Manufacturing

• Economies of scale are critical
• Good artwork is no more expensive to print than
  bad artwork
• Spend money/time up front
• When shopping for manufacturing, stop thinking
  like a consumer

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Manufacturing

• Murphy's law everything that can go wrong, will
  go wrong
• Andy's law everything will go wrong (at least
  slightly)
• Check like a hawk at every step
• Control as much of the process as is worthwhile

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Home-based manufacturing

• Often lower quality at higher cost
• Very difficult to succeed this way (except for
  artists)

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Product Testing

• Don't use your friends/relatives - they can't
  give an honest opinion
• Unless you plan to ship yourself with each copy
  of the product, hand it to the tester and stand
  back - say nothing.
• When they ask you a question, ask them "what do
  you think?"

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Packaging

• Your most critical component
• That's what people see in the store
• Hire an artist

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Typical product costs

• Customer buys product for 19.95
• Retailer buys product for 10.00
• Distributor buys product for 8.50
• Publisher manufactures product for 5.00
• Don't forget reps, advertising, etc.
• You must produce your product for 1/4 to 1/5 of
  what consumers will pay

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Perceived Value

• Consumer should feel that they are getting value
  for their money
• Big consumer likes this, retailer doesn't (takes
  shelf space)
• Heavy consumer like this, retailer tolerates it
  (higher freight costs)

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Advertising

• Does it really work?
• You need 1000's of ads for an order
• You need repetition before people will remember
  you (some say 7 times)

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Advertising

• The Internet
• as a source of info, it's the best thing since
  sliced bread
• The great equalizer - NOT!
• unless you're Microsoft, it's a "pull" medium
• Face-to-face selling
• far and away the most likely for a sale (call
  first!)

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Find Novel Things to Do

• Look for novel ways to sell
• Look for novel things to do
• Look for free/inexpensive ways to do things better

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Chain Stores

• Much tougher to get into than small stores
• But - convince one (tough) buyer, sell to 100's
  of stores all at once

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Chain stores

• Lots of customers
• Much bigger orders
• - Usually demand a price break
• - Not interested in pioneering anything - want
  proven sales
• - Often demand return privilege and dating

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Small Stores

• More willing to try a new product (if not avail
  at K-Mart!)
• Willing to try "local" product to help fellow
  small business
• - Usually tiny order
• Able to steer customers toward your product
• Can result in a more targeted customer, esp. at
  high end

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Competing with existing brands

• Why should the consumer buy yours?
• Why should retailer carry your product?

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Learning About Your Industry

• Every industry has a "way they do things". Try
  and learn it.
• Your customers will usually want to do them the
  same way.

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Trade Magazines

• A great source of information.
• Very often FREE, otherwise fairly inexpensive.
• Ads are the most useful part for learning about
  the industry.
• First issue - read every word.
• Other issues - skim it.

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Trade Shows

• Attending - often free to attend you'll learn
  alot
• Exhibiting - quite expensive be sure you can
  deliver product/service immediately - buyers are
  not interested in "later"
• Attend before you choose to exhibit
• Follow-up is everything

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Appear Professional

• Business cards, stationery, 800 numbers
• Try to appear much larger than you are
• It helps to appear like a serious player with
  both customers and suppliers, but it's much more
  important with customers

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Web Sites

• www.enginuity.com
• www.aol.com/members/enginuity.htm
• andy_at_enginuity.com
• andy123_at_freemail.net
• need I say more?

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Your Home Office

• Separate business and fax lines (not a home line)
• Fax machine
• Letterhead
• Business cards
• Separate checking account
• Answering machine in business voice
• Laser printer

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Efficiency

• Develop your systems
• Try to group your work - it's very inefficient to
  switch tasks constantly
• Develop your relationships with vendors - once it
  works, it's trouble-free
• Use your computer to manage tasks

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Phone calls

• "Hello, this is John/Mary Smith of Incredibly
  Successful Inc. I'm in the office but don't want
  to speak to you right now. Please leave your
  message at the tone and I won't return your call"

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Phone Calls

• Buyers will never call you back
• Vendors will call you back within 15 seconds
• if a vendor doesn't return calls promptly, find
  another vendor

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Long-term success

• Don't become an individual service provider
• Theres only 1 of you, and there are only 24
  hours in a day

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Plan to Succeed

• Don't leave yourself with 2 losing possibilities
• example short run of a product that cannot
  be remanufactured

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Important Lessons

• You never know what people will like
• You never know which contact is important

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In Conclusion

• Its not for everyone
• You may or may not succeed
• Its quite a ride
• Questions?