How to turn your product idea into a business in seven steps
Grid Law founder David Walker helps budding entrepreneurs turn a product idea into a business with a definitive seven-step guide to protecting, licensing and launching a new invention. if you’re starting a business, don’t invent anything!? This was the advice given by a business guru? I was listening to recently as he talked to a group of people who were thinking of a starting a new business. He justified his advice by saying:
inventing a new product costs too much money;
youll be competing with much larger businesses; and
there’s too much regulation involved in getting a new product to market.
I won’t name him, but there’s no question that he’s done well for himself in one field of business. Now, based on this success, he thinks he can advise on all areas. On this occasion, I think he’s wrong. He’s a long way wide of the mark because he’s never done anything like this and doesnt understand the different ways of approaching this type of business. I have several clients who have successfully brought new products to market and have built very profitable businesses around them. Most of these clients have done this without huge investment, without needing to compete with the big boys? and without having to worry about all the red tape. So, how have they done this? Ive broken the process down into seven steps, so if you have an idea for a new product or invention, you can easily follow them to start your own business.
You need an idea
Like with most businesses, you need to start with an idea or a problem you want to solve. Often, it’s a problem close to your heart, born out of the frustration of thinking There must be a better way of doing this!? and then you find that better way. It doesnt have to be a completely new idea. Some of the best ideas are adaptations of existing products, whether it’s the way they work or how they look.
Think of the idea in terms of intellectual property, not a product
When you have found a solution to your problem, think of it as a piece of intellectual property (IP), rather than a product. This IP will become the most valuable asset in your business and can be applied to a product or even a range of products. If you havent seen my webinar, take a look now because it will explain about the different types of IP you can create. At this stage, you’re going to be thinking about how the solution to the problem works (so you can protect it with a patent) and the aesthetics of how it might look (so you can protect it with a registered design).
Check what intellectual property already exists that solves your problem
Before going any further with your design, you need to know what other products and intellectual property already exist. To find out, you need to carry out a prior art? search. This is basically a search for any evidence that someone has solved your problem before. The evidence doesnt have to be a finished product, it could be an article in a magazine or it could be a redundant piece of technology that’s no longer used. This is really important, because if you find any prior art, it can severely limit the protection available for your product. It can also mean that your product may infringe someone else’s intellectual property, which could lead to you being sued. Start your prior art search with a simple internet search, and then dig deeper in to the patent databases such as Espacenet, which is the European Patent Office’s database. If the search is clear, you can move to the next stage. If you do find some prior art, don’t despair, there are often many ways to solve the same problem so you need to think about alternatives.
When you have solved the problem in your own, unique way, you can think about protecting it. Either protect the way it works with a patent, how it looks with a registered design, or both! If you really can’t find a unique feature of your solution to protect, you have to seriously consider whether this is a problem you can build a business around. Again, it’s better to find this out now, before you have committed huge resources trying to create a market ready product. At this stage, I wouldnt worry about naming the product or registering a trade mark. The licensee may have their own ideas about this or want to incorporate it into their own product range with their own brand name.
Find someone to licence it
When you have a working prototype and the intellectual property protected, you can start approaching businesses who may be interested in obtaining a licence from you. This means you’re going to give them the right to make and sell products incorporating your intellectual property, and in exchange, they will pay you a royalty. This is the stage where some new inventors miss out on huge opportunities. Instead of licencing their rights, they want to do everything themselves. They want to finalise the design, get it manufactured, market and sell it. If you do this, the business guru is right. Going it alone can take up a huge amount of resources and is often beyond the reach of many small businesses. Either that, or their production runs are so small they never make any real profits. However, if your priority is the business (as it should be), licensing has some real advantages. You accept that you’re giving up some control, but in doing so you can often get the product to market quicker and easier than doing it yourself. In most cases, you also end up with a far superior product and greater revenue. The licensee can use all of their resources, expertise and experience to help develop the product and then get it out to a much bigger audience.
Build your business
The final stage is to build your business and licensing gives you another great opportunity to do this. If you build a solid relationship with the licensee, you can often provide them with consultancy services or design other products related to the problem you have solved. This can be the launch pad your business needs. It means you can grow your business with very low overheads. Then, as you become more established, you can decide which direction to take the business. You can continue creating new ideas and licensing your intellectual property, or you could take over the manufacturing and sales after the licence expires. As we have seen, the business guru’s advice is not good. You absolutely can start a very profitable business by inventing something. However, I will qualify that by saying this type of business is not for everyone. Whist we may all have ideas for amazing new products, it doesnt mean we can all build successful businesses around them. You have to know what you’re doing, so you need to have a good knowledge of product design. If you have any questions about starting a business or creating and licensing intellectual property, feel free to email me at email@example.com and Ill happily answer them for you.
David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.