Inventing is a challenging profession: it is capital intensive and many big costs occur in the beginning and the profits, if any, may not come until years later, if ever. Who wants to sign up?
Obviously, I ‘signed up' or I wouldn't be writing this blog. Fortunately, I have achieved success and have learned a lot along the way.
Today, I'd like to talk about three big financial blunders many inventors make and how to avoid them:
- Filing a Utility Patent – too soon
- Going to QVC without fully preparing or understanding the risks
- Invention Marketing Companies
Filing a Utility Patent Too Soon
In 2002 I had an idea for a thin, flexible wallet design capable of holding many cards, but comfortable to carry in a back pocket I trademarked as Savvy Caddy – that is now sold in retail stores everywhere as Wonder Wallet. I achieved success by licensing my product, it only took me 13 years.
But, in 2002 I knew nothing about inventing except than I would need to have a patent to “protect my idea.” Like many novice inventors, I rushed out, hired a patent attorney, and filed a utility patent – at a cost of about $5,000.
I would never do such a thing again, however.
It takes a long time – typically 3+ years – for a patent to be issued if your patent is allowed by the US Patent Office (USPTO.gov).
Often about 2 years after your initial filing, the patent examiner may find a patent very similar to yours. If so, one of two bad things will happen: your patent claims must be trimmed so much only a weak patent will be allowed; or you are allowed no patent at all.
A weak patent has no commercial value as it can easily be worked around without infringing. No patent simply means you have spent $5,000 or more for nothing.
The solution? The solution is to do a lot of due diligence, at minimal cost to you.
First do your own free patent search on USPTO.gov of existing patents. Learn how to the use the extensive search tools there by reading info on the site or doing a bit of Google searching. You may find there are already too many items similar to yours and save thousands of dollars as a result.
Assuming your free search still looks encouraging, you may pay Patent Search International to do a professional detailed patent search for you for $250. By taking these two steps, spending a maximum of $250, you will feel reasonably certain it is worth the expense of a utility patent. Such due diligence has a great ROI for you in that you may save thousands in unnecessary expense and emotional pain.
Going to QVC Without Preparation or Understanding the Risk
My thin wallet product was a perfect product for selling on TV – first QVC than later on DRTV (direct response TV – commercials) and also HSN. QVC is a phenomenal way to gain access to a very large retail market – over 93 million viewers tune in (and buy) regularly from QVC.
But, if a QVC buyer chooses to “buy” your product, she will issue you a PO for roughly $50,000 – $75,000 worth of retail product (they buy at wholesale, of course). Your risk lies in the fact that the PO reflects a commitment to pay you only for what you actually sell on QVC – whether it is $100 or $10,000+.
During the two years I was on QVC, I saw many “one and done” vendors who exited the stage in tears after selling $200 in product from a $5,000 PO. They knew that $4,800 of product was going to be shipped back to them. You must have a plan B in case sales on QVC don't go as planned.
Before I went on QVC for the first time, I watched hundreds of vendors present their products on QVC and carefully observed what worked well and what flopped.
I realized that even though the average QVC airing is perhaps 5 minutes long, the vendor, at best, may get 2 minutes to speak (the host will talk a lot). So, I carefully honed a brief 2 minute presentation that included three different product demos. That preparation paid off handsomely – in one presentation I sold over $7,000 per minute (quite good for wallets). Prepare or despair!
Invention Marketing Companies
I have written more than a few blog posts about the hazards of invention marketing companies – most of which are hucksters anxious to separate you from your hard earned capital. Their pitch is always the same:
- They have relationships with all the ‘big box' retailers
- For a ‘small' investment from you (typically $10,000 – $20,000) they will make you a success
The reality is that no one can predict with certainty how well – or poorly – any new product will fare in the marketplace until it is rolled out and tested.
Remember New Coke, Coors Rocky Mountain Spring Water, Pepsi A.M. or the Apple Newton? All were highly anticipated, huge product launches that failed.
The quickest way to ‘smoke out' any company that approaches you to market your product for a substantial fee is to ask three simple questions of them:
- Why, specifically do you think my product is great? Who are the 3 biggest competitors?
- If I work with you, what will be the first three steps you would take with my product and why?
- Could you please give me 3 to 5 names and phone numbers of other inventors who have had success with you so I can contact them?
If you ask any of these questions of a typical huckster invention marketing company, the only answer you will hear is crickets.
They will be very anxious to get you off the phone. I have tested this and I guarantee that will be the result. But you will have some fun and save $10,000 in the process. That is an excellent ROI!