Many promising inventions fail to achieve success in the marketplace.
Why? There are many reasons.
In today's blog, I want to discuss three key pitfalls that can and must be avoided for an inventor to achieve success with his or her product.
Below are three common pitfalls, more specifically, thought processes that must be avoided:
- I have a great product, just need an investor to get it off the ground.
- My patent just issued! Now they'll call.
- There is nothing like this product in the marketplace, it deserves a bigger royalty.
1. I have a great product, just need an investor to get it off the ground.
This assumption has two key flaws.
First, every inventor thinks their product is great; and, that is good, because no one else will believe in it if the inventor doesn't. Unfortunately, whether or not a product is “great” is subjective and the ultimate judge is consumers in the marketplace, not the inventor.
The second flaw is a misperception of investors.
Investors are attracted by business ventures that have a proven track record that just need an additional injection of capital to propel them to the next level. As is often asked on Shark Tank, “what are your sales this year, and what do you project for next year?” Investors look for projects that feature good growth prospects or upside potential with managed, or limited loss potential or downside risk. Unfortunately, a new innovative invention has no track record, no sales, so the upside potential is completely unknown, a guess at best. The loss potential is very high for an unproven product: significant capital will be required just to get the product launched. Once launched, its chances for success are completely unknown. Why would any investor want to sign up for that? They won't.
2. My patent just issued! Now they'll call.
Once your patent issues, you will indeed get calls and often lots of mail. Nefarious invention marketing companies are always stalking inventors with just-issued patents. Why? They know the inventor has invested a good deal of capital into prosecuting the patent and likely into prototypes and perhaps getting the product manufactured. The inventor has seen hard-earned money disappear and is primed for someone offering them an easy path to earn “millions” with their product. Beware.
But the “they” the inventor hopes will call — companies looking to license a great new product aren't going to call. You must find them and work very hard to make the case for your product. All a patent grants is a legal right to sue those who infringe your patent and choose to market a knock off.
3. There is nothing like this product in the marketplace, it deserves a bigger royalty.
This sort of arrogance gets inventors into trouble very quickly. First, there is almost certainly something like it in the marketplace or there would be no one to buy your product. Your product may be innovative and unique enough it can be clearly differentiated from otherwise somewhat similar products.
Royalty percentages vary by product type, the industry involved and the specific circumstances of any potential business venture. A solid license agreement with a good company can be a boon for the inventor: to be paid royalties each quarter based upon sales of his or her product in the marketplace.
But, the licensee sets the ground rules for what royalties may be payable and the final percentage is negotiable. But nothing will end a potentially lucrative licensing deal quicker than an inventor who immediately rejects a royalty offer and demands a much higher royalty.