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You Have a Great Idea. Now What?

Discussion in 'Entrepreneurship' started by indira, Jul 23, 2005.

  1. indira

    indira Junior IL'ite

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    It has happened to me a couple of times. For a fraction of a second, an idea for a new product or service strikes me. It is more like.."Why don't such a product exist?".."If a service like this exists, I would pay to get this issue fixed?" But in the busyness of our lives, that thought quickly fades away.

    If you are interested in pursuing your product/service idea into a business, this article addresses a lot of good points on what you do with your idea and what the next steps are..

    Indira

    You Have a Great Idea. Now What?

    By GWENDOLYN BOUNDS
    Staff Reporter of THE WALL STREET JOURNAL
    May 9, 2005; Page R1

    Call it the Day Two dilemma.

    You have a brainstorm, wake up the next morning, and need to figure out whether the idea is actually worth pursuing -- or better left under the covers.

    This is the murky time before investors, retail space or product packaging come into the picture -- a time to figure out where that big idea might actually fit, or not fit, in the marketplace. After all, there's no shortage of would-be visionaries out there: last year alone, there were 674,499 applicants for a new trademark or patent registration.

    While groups abound to help entrepreneurs find financing, pen a business plan or secure a patent, on Day Two it's mostly up to the individual to do some reconnaissance, and soul-searching.

    "It's amazing to me how little common-sense research people do," says Mike Collins, chief executive of Big Idea Group Inc., which helps match inventors with companies that can market the idea.

    What's necessary is everything from gauging the interest of real end-users (not just friends and family) and figuring out an initial price to checking out available Web domains and crystallizing personal goals.

    Take Jeremiah Hutchins, who did a lot right when his idea for producing digital ID cards for children was nothing more than a gut instinct.

    As a California truck driver, Mr. Hutchins had plenty of dream time on the road and admits to having multiple closets filled with brainstorms that never got off the ground. It was on a stretch of highway between Riverside, Calif., and Los Angeles, in August 2002, that inspiration struck again as he listened to radio reports about a missing girl in Southern California. "All the talk shows kept saying, 'If only they'd had better identification information about her....' "

    Mr. Hutchins, along with a security guard for his trucking firm, already had been toying with producing business cards on mini-CDs, and the driver wondered: Would this work for kids' IDs? The next morning, he got in touch with a police investigator his wife knew in Barstow, Calif., who considered his idea from a user's standpoint and expressed a great deal of interest.

    Figuring he was onto something, Mr. Hutchins hit the Internet and was relieved when his search under "child identification" didn't yield much in the way of competition. He asked the investigator for all the kinds of information the police would want for a missing-person report: a child's allergies, scars, birthmarks, blood type, habits like nail biting -- "things parents don't know in times of hysteria," Mr. Hutchins says -- and then set about figuring out how much information could be put on a mini-CD that parents could have ready if ever needed.

    Mr. Hutchins also thought about how he would use the Internet. "I didn't want to build something until we had a good name with an available Web site." It took about three days of searching to find a catchy domain name (www.safekidscard.com) that wasn't already registered. He and his partner also developed a rough prototype, testing CD burners, digital cameras, printers and even ink to see what wouldn't smudge in a washing machine.

    Within a week and a half he had a mock ID, which he showed to his police contact. She shared it with her colleagues and, impressed, they in turn invited him to a local safety fair where he set up a computer system and sold 150 IDs that day for $20 a pop to parents, which helped him gauge his product's value in the marketplace. This was just three weeks after his initial brainstorm in the truck.

    Today, Safe Kids Card Inc. has 44 U.S. franchises and three international operations selling the cards at about $13 each. Systemwide revenue was $360,000 in 2004, with a projected increase to $1 million in 2005. Meantime, Mr. Hutchins's experience points to some of the crucial first steps that experts advise would-be entrepreneurs to take before investing significant time and money.

    Find Out If It's Really a Good Idea

    "Ask more than your mother," says Mr. Collins of Big Idea Group, based in Manchester, N.H. Mr. Collins spends his days canvassing the country getting pitched by inventors. Those whose ideas he likes -- and there aren't many; "99 times out of 100 I say, 'No thank you' " -- he adds to his inventor network. Sometimes he'll pitch a person's idea to a bigger company for development, or the big companies come to him looking for talent; he gets fees from the companies and takes a cut of any licensing deals.

    Mr. Collins likens the process to "American Idol," the TV show where would-be singers compete for a shot at the big time. "For every great singer," he says, "there are a hundred people who can't hold a note and think they can."

    Getting a reality check means soliciting a wide swath of opinion from people already established in the industry. That was the approach Anne Maxfield took when she and a partner began developing Project Solvers Inc., a New York-based talent agency that places free-lance and full-time job seekers in the apparel industry, primarily in product development.

    When they first started their service in 1989, Ms. Maxfield says that there weren't any agencies to represent free-lancers in the industry. She wondered: Did people even want a service like this? "We called everyone we knew who we thought could help and said, 'We have this idea,' " she says. "I was terribly nervous talking to them -- and was nervous about getting laughed out of the office."

    Instead, she says, she was surprised at how interested people were in sharing information. For example, after she made a cold call to a temp agency in an unrelated field in Boston, an assistant there sent her samples of all the forms and contracts she would need to start the business.

    Lots of times, would-be entrepreneurs don't want to reach out because they're scared someone will steal the idea. But business moves likes lightning, and such hesitancy can backfire, says Rich Sloan, co-founder of www.StartupNation.com and co-host with his brother Jeff of a nationally syndicated radio show, both of which provide tools and advice for entrepreneurs.

    "If you are on a mission, your first concern shouldn't be what someone takes away from you, but to be aggressive in refining it," Rich Sloan says.

    Adds Ms. Maxfield: "We figured if someone hadn't already done it, they weren't going to just because we mentioned it." Today Project Solvers represents more than 2,000 workers and has placed roughly two million hours of free-lance work.

    Equally important is to avoid becoming so enamored of the initial brainstorm that you forget the big picture. Davis Farmer is a former venture capitalist and now managing partner for Ulysses Group, in Exeter, N.H., which does consulting and advisory work for start-ups in the life-sciences field. He recalls once listening to an inventor who had created a way to speed up the signal from a computer keystroke to the computer's brain, which in turn would speed up how fast text appeared on the screen. The rub: Text already appears faster than one can blink.

    "He'd created an elegant technical solution to a problem that didn't exist," Mr. Farmer says.


    ......2 (contd)
     
    Last edited: Jul 23, 2005
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  2. indira

    indira Junior IL'ite

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    ......2

    He adds that some of the best inventive minds often don't take into account who will be using the end product. During a recent event called Peak Pitch, entrants in this summer's upcoming New Hampshire Business Plan Competition got six minutes on a ski lift with investors and advisers where they could practice their pitches. Mr. Davis recalls listening to one Ph.D. make a case for a new diagnostic approach in women's health, and then asked the inventor whether he had spoken to doctors in the field about his idea. He hadn't -- and Mr. Davis advised him to do so immediately.

    "If the person who is delivering the care to the patient doesn't value the technology, it won't get into the marketplace," Mr. Davis says. "One of the issues with academics is that there is a whole dimension to the things they are doing that doesn't occur to them." For the inventor riding the ski lift with him, "the notion of treating the people he's trying to help, that is very abstract."

    Know Why You Want to Pursue the Idea

    Is it money or a lifestyle change you're seeking? And are you really an entrepreneur, or are you an inventor? "Let's say you have really wonderful recipes for various kinds of bread," says Rich Sloan of StartupNation.com, and "you are considering opening a bakery. But would you be better suited to being a distributor of breads to restaurants than to running a retail store?"

    Mr. Collins of Big Idea Group echoes that notion. Being an inventor is about having a great idea for a product or service, he says, while being an entrepreneur is about building an organization. Within his own database of 8,000 inventors, he says, there are 10 times as many people who would do better licensing an idea to another company as there are those who would do well building their own organization as entrepreneurs.

    Moreover, he suggests that you really try to determine whether the motivation for pursuing an idea is money or a lifestyle change, and focus any idea toward your desired end.

    Jennifer Appel was only a hobby baker while she worked as a clinical psychologist from 1991 to 1996. The psychology work was "emotionally draining," she says, recalling how she'd come home and whip up muffins and cookies as a way to de-stress. It was in 1993, while at home on summer break editing her dissertation, that she began watching the proliferating TV cooking shows -- and started to think about turning her hobby into a profession.

    "I had friends in the food business, and I always thought they had a clear beginning, middle and end to their day," says Ms. Appel, who went on to open New York City's Magnolia Bakery with a partner and later her own store, Buttercup Bake Shop, which she is now in the process of franchising. Had she been happier in her other profession, she might have considered just selling her recipes to someone else and letting them pursue a full-time business. But ultimately, it was a different way of life she craved most.

    Says Rich Sloan: "Each of these decisions is a huge fork in the road that determines how an idea comes to life, and what it does for your life."

    Figure Out If Anyone Else Has Already Done It

    Identifying your competition, or lack of it, as Mr. Hutchins did with Safe Kids Card, is also high on the list in the early days of fleshing out a brainstorm. Warns Mr. Collins of Big Idea Group: "It's human nature that you don't want to hear the bad news that someone else has come up with your idea, so you don't look."

    In terms of cost, this type of research is easier than ever to do. The Internet allows entrepreneurs to investigate the market at a sliver of the cost and time of hiring a market-research firm. Jeff Sloan of StartupNation.com suggests sitting down and typing every possible wording incarnation of your idea into various search engines before moving forward. "It's a great enabler," he says of the Web.

    Additionally, he suggests that anyone with an idea for a product do the legwork of visiting retail stores and taking notes on any type of similar item you see. "If you are thinking about producing a unique type of yo-yo," he says, "then go to the toy department in Wal-Mart and Kmart and investigate everything on the shelves." He also suggests seeking the help of a patent lawyer as soon as possible to investigate intellectual-property issues.

    And while it's probably too soon to develop a full-fledged business plan, Mr. Davis of Ulysses Group advises people to get an outline of how one should be done and use it for guidance in figuring out the competitive landscape. "It forces people wringing through it to think through the key elements to their business."

    What are the Potential Pitfalls?

    Knowing what you might charge for a good or service is important early on because it's difficult to solicit meaningful consumer opinion without a price tag. "To say to someone that a supersonic jet across the Atlantic is a good idea because it gets there in four hours is one thing," says Rich Sloan. "But if you know the price tag and everything that goes into it, you end up with a discontinued Concorde."

    Arriving at a price isn't always as hard as it sounds. When Ms. Appel was considering turning her baking into a business, she contacted food distributors to learn what a pound of butter and 10-pound bag of flour cost. From there she took her own recipes and started to do the math -- what would it cost to make a dozen mini-cheesecakes or a dozen cookies? -- and put together a mock menu with mock pricing.

    In the early days, before taking the retail route, she and her partner began cold-calling existing cafes and restaurants with samples of their baked goods and subsequently learned what the market might pay for their work.

    "We were priced too high for certain establishments," Ms. Appel says. "But most people were pretty receptive."

    An idea can be great but go nowhere if there isn't a way to bring it to market initially. For instance, around the time of Y2K, Abe Halberstam learned that New York City was looking for ideas about how to manage food delivery to hospitals and prisons if computer networks went down. That got Mr. Halberstam, who was already in the kosher food-service business, thinking about whether he could produce shelf-stable, self-heating kosher meals.

    Without much trouble, Mr. Halberstam was able to find makers of heat systems that allow consumers to self-heat their meals in a box without electricity. The heater is a pad made of magnesium and iron that produces heat and steam when saltwater from an enclosed packet is poured onto it.

    But locating a food producer that would dedicate part of a plant to kosher shelf-stable foods, which require no cross-contamination with other food, was another matter. At the time, Mr. Halberstam couldn't promise a high volume of business, "so for someone to take a major plant and convert it to kosher was basically impossible," he says.

    Still, he didn't give up. He called anyone who made any type of prepackaged meal from the East Coast to the West Coast and asked for information about shelf-stable food production. He followed every lead he got. "They'd say, 'I can't help you, call Mr. Jones.' And so I'd call Mr. Jones and he would say, 'Call Mr. Weiss.' " Eventually, a call led to Rutgers University in New Jersey, which had its own research center for shelf-stabilization, and they helped him get a start.

    "You get us the machine to package the food," Mr. Halberstam says the center told him, "we'll give you the production space." And he was in business.

    He used a Rutgers facility to make his meals for nearly a year before he was producing high enough volumes to secure space at a major food manufacturer. Today his Labriute Meals are sold for $6.99 to $7.99 across the country in major grocery stores and other food outlets.

    Says Mr. Halberstam of his early legwork: "You've got to be persistent and figure a way to make it work and not just say, 'OK, sorry, goodbye.'"
     
    Last edited: Jul 23, 2005
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  3. kashvya

    kashvya Silver IL'ite

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    This is a great post. Reviving it for some of the others to read
     
  4. vandannav

    vandannav Senior IL'ite

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    hi

    thanks for posting.

    vandannav
     
  5. Sindhurao

    Sindhurao Gold IL'ite

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    HI Indira:

    That was a great article about entrepreneurship that you shared with us.

    Sometimes, it seems like you have so many ideas but don't know where to start. Just the other day in a webgroup, a faculty in entrepreneurship at IIMB suggested that if you have finalised on an idea, then it is good to talk to people in a similar line of business. Find out from them, the hardships, feasibility - basically information that will help you get started.

    While there are plenty of courses for entrepreneurship, there is nothing like getting first hand information from an entrepreneur himself /herself!

    Sindhu
     
  6. sharm1411

    sharm1411 Junior IL'ite

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    great article thanks
     
  7. BlueHappy

    BlueHappy New IL'ite

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    Maybe late in saying a BIG THANK U but still i would like to do just that! Need different takes/views/ suggestions/info on entrepreneurship so that people (like me) mulling on starting something get a broader view of things!
    I dunno if this thread is modified/ refreshed in a diff way on this date. Hav 2 look 4 it. Just got active on IL.
    Anyways THANKS MUCH Indira!
     

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