We have met many inventors with great ideas who think they should get paid just for coming up with the idea. There’s a ton of patent attorneys out there who gladly take money to file a patent, ostensibly to license it to the big guy who can’t live without it. They’ll even write up licensing agreements for additional fees. Seems like a short cut to riches. You just invent something, get a patent, and license it to a company who pays you to use it. That’s what they want you to think so you will purchase their billable hours.
But is it really that simple? We don’t think the vast majority of successful inventors have it that easy. In fact, we think that to even negotiate a licensing deal, you are much better off with a history of sales. Ah there’s that dirty word again, the one everybody tries to avoid. “Sales!”
When you sell your invention as a product you demonstrate a market for it. It is that demonstration, and not the patent or the licensing papers, that gives your invention value. The patent shows the world your idea and perhaps prematurely. Now that its public, you invite unscrupulous imitators with big legal budgets to copy your idea and dare you to sue. Do you have enough money to defend the patent? Three years and $300,000 later you may actually win! But by then you may have gone broke fighting to protect your patent (and you may not have even sold a thing!).
We asked a well-established and highly principled patent attorney, “What is the best way to protect my new idea?” He answered, “Fill a warehouse full of them, be first to market, sell them in interstate commerce, and stay ahead of the imitators.” That way you will establish a documented business using your idea, develop a cash flow, and be in a better financial position to protect your idea. You will also discover if the idea is viable and thereby deserving of a big legal investment. We have found that businesses buy businesses, not ideas. So build a business around your idea is our advice.
Now we are back to how you get your idea to the shelf and keep it there. Sure, you can sell your idea in product form on line, but to really capitalize on your idea, you must sell a ton of product on line and relatively fast. This is why inventors should look at bricks and mortar stores with established customer bases to introduce their idea. Off-line, bricks and mortar sales can give you one big check from one big chain, and get your idea in many stores to be discovered quickly by tons of shoppers.
But aren’t bricks and mortar stores taking a big hit from online sales? Sure they are. And that’s why there are less of them. This means that it is harder to get in them. This means that bricks and mortar stores will have to offer more entertainment, convenience, and discovery to survive. Just the place for new ideas to debut!
On-line sales are a race to the bottom price-wise, but bricks and mortar stores can sell on the merits. Online sales are limited by delivery costs, while bricks and mortar stores make short, multi-product shopping trips convenient. Inventors need notion shoppers to discover their inventions even when they weren’t looking for it. Bricks and mortar stores encourages notion buying for new offerings.
Before you spend too much on a patent or a licensing agreement, demonstrate the market for your invention. Show your acquirer or licensee that your price is worth it. Develop the cash flow you need to protect it. And focus on retail sales. You’ll have a much better chance of getting paid for your idea!
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.
To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.
