So you have made it out of your garage with the mechanical device developed in parts one and two. Your business is a growing concern. You have the vision, drive and means to produce.
You need to be aggressive. Marshal your resources and go on the offensive.
Whatever your initial intentions, understand the process to commercialization is Darwinian in the sense that you and the environment are evolving. There is fluidity and you need to adapt to changing circumstances. Timing is always a factor and there is an element of luck. Continually review your strategy, be open minded.
You may ask: manufacture, license or sell? It’s America, why not all of the above? Personally, I am striving to build the brand to the buyout and a seat on the board. What are your benchmarks? Devise a simple six-month, one-year and three-year plan and prepare for the rainy day.
Are you accentuating an existing market or creating a new one? New frontier stuff requires more patience and money because you might be slightly ahead of your time, but it wouldn’t be transformative if you weren’t. Be patient, the payoff could be enormous.
Know your industry. You are marketing to an unsuspecting world. There is tactical advantage in surprise. Wage a targeted campaign — websites, print, social media and networking — no matter how large or small your funding, do something and keep at it. Personal resources may often dictate pace but they should never govern your commitment. Get on the phone.
You probably started with your own money. I’m sure you appreciate that this endeavor will consume a large portion of the resources of a small business. So until the big deal presents itself, you need to thrive. You need to make the venture self-sustaining as soon as possible.
Sell product. Get into an industry catalogue. Don’t lose heart if your first transaction isn’t a big score. You are getting out there, building a name and momentum. I have given quite a few discounts for a foot in the door. Once in, go vertical if you can, saturate the account. Quality and service sell themselves and you are refining yourself and your plan as you go, pivot.
Continue to refine the message. You do only get one chance at that first impression. Create the 30 second elevator speech. Understand what people are hearing but more importantly what they are not. Maintain contacts via email or the occasional courtesy call.
No one will work as hard for you as you will work for yourself but you may see the need to hire a marketing rep. Vet them thoroughly. Do they have the contacts they claim? Some groups require an upfront fee but any further payment should be success based usually in the form of a percentage of revenue. Clearly define the message, the relationship and what kind of deal you are looking for. Encourage them to be aggressive but not careless regarding your intellectual property. Negotiate a time frame and a clean way out of the agreement if they don’t produce.
Whatever your market, you probably want to form a strategic alliance with a major entity in that market. You are looking for direct funding — a licensing agreement or perhaps a purchase order. There is a huge difference between the way things ought to be and the way things are. No matter how good your idea, recognize that change is not readily accepted in the corporate world.
You will meet resistance often. Bureaucracy alone can stifle. Cold calling a fortune 100 company starting with a receptionist won’t do. Believe me I’ve tried. In some instances you have to nip at the peripherals, cultivate relationships and work your way through the maze to find a champion.
Gate keepers often shield the real decision makers. Most in the entourage are simply doing their job with the best of intentions while others act like a praetorian guard.
To them, controlling access to the big dog is a manifestation of their own authority. They too court favor. This is an age old human frailty. Everyone you talk to has an ego — engineers, sales people and secretaries, etc. Recognize people are often motivated by self-interest. In the intellectual property world you will often hear the term “not invented here." This means that professional jealousy may cloud people’s judgment regarding you and your idea. They might resent a good idea from an outsider. They have to justify their paycheck and might not advance your idea especially if they have ideas of their own. Worse yet, they can delay the evaluation of your product for months.
Be careful and understand you may be also be inspiring competition, planting a seed. If you are really on to something, anticipate the potential of a design response.
To combat this, make sure you have confidentiality in place that covers not only your device but your strategy. You also have the strength of your patent literature. One way to bypass the sycophants is trade shows. Attend every relevant one you can. This is usually a less formal setting and CEOs are accessible. When you engage in conversation follow protocol as not to offend. Be courteous and respect rank but don’t waver. This is your shot so succinctly get the message out. Don’t push, get direct contact information and agree to speak again. Fortify yourself with the knowledge that you are the president of your own company no matter how small. In terms of authority you are on equal footing.
Trade shows are also invaluable for intel and further networking. Find out who is working with who. What is the pulse? Who lost or gained what contract? You never know what may happen. I’m writing to you now because I met very gracious people at a trade show.
If discussions with your CEO progress send samples, provide accurate descriptions and begin a back and forth. Get to know the people that make up the organization. Consider aspects of a potential deal, things like exclusivity, percentages, strategies, responsibilities, liabilities, money, etc. Keep your lawyer abreast of activities and move forward. When negotiating, remember there is a difference between ownership in your patents and ownership in your business and never be afraid to walk away from a bad deal.
So let’s say you haven’t locked up a big deal yet and you are looking for funding. As far as banks go I’m not a big fan of debt, I pay as I go. Things have changed too. Stated income loans are gone and nobody loans money based on dreams anymore. But if you have your ducks in a row and have the work to justify, go for it. A sizeable, credible purchase order will still get you funding to fulfill it almost immediately.
Remember the incubator? Most are supported by local communities that welcome investment. Meet and greets are organized and often angel investors or venture capitalists attend. Again, exercise caution and carefully read the fine print. The percentages can be heavy.
I don’t have much experience with Kickstarter-type entities, but they might work for you. Also, universities, think tanks and the federal government often supply grants to worthy endeavors. Consider SBIR and STTR if you have the patience. These federal programs could supply up to $100,000 to a small business. Intended to foster technological advances, the application process is extremely tedious based on very specific government solicitations.
I once attempted SBIR funding. After a great deal of preparation, submission and a black-out period I found out my application was rejected out-of-hand because I didn’t have an appropriate table of contents! The government administrators never read beyond it! I lost interest after that.
Apparently there are even ways to convert intellectual property into trading instruments much like stocks, as I understand it, there is even an exchange for such activity but I haven’t explored further.
A hot topic is often the popular reality TV show, "Shark Tank." I watch it, too. Sure, I have considered it but I have reservations. My innovations are precise mechanical time saving devices, process refinement tools. My company is solutions-based. I feel it’s just not the right forum for me.
It is however, hard to resist the temptation but carefully read through the contractual fine print. If you feel comfortable with the venue go for it. I get it, there is a trade-off and you can’t easily get in a room with that kind of cash, but what price glory? I have seen people subjected to ridicule or scorn under the guise of helping them cut their losses. I’ve fought too hard to be put down.
The show has changed things radically. As if it wasn’t hard enough now every potential investor is a “shark”. They watch the show religiously and quote it chapter and verse. They also fancy themselves omniscient. I am reminded of the adage whispered to conquering Roman generals, “Thou art only a man."
The journey from concept to commercialization is probably one of the hardest things you will ever attempt. You will have moments of doubt and pain. You have to learn to pay the price and it’s more than money. This project will affect every aspect of your being. However, it will also be one of the most rewarding periods in your life.
Most will tell you that you can’t. That’s because they can’t. You have the strength that comes from knowing you are right but I caution you to know the difference between single-mindedness of purpose and willful blindness. Determination easily degenerates to stubbornness. Be wise and flexible.
Remember, even a Pet Rock made money. Keep at it, you will get there. Once more into the breach dear friends!