Eureka! Now What?
Q: I've built a small company from scratch and done well. I now have another unrelated business concept that I think could be very big. However, I'm a realist and know I don't have the capital or expertise to make this idea happen. Do I drop the idea, or pitch it to someone else and hope to capitalize on the concept? -- S.S., Fresno, Calif.
Q: I've built a small company from scratch and done well. I now have another unrelated business concept that I think could be very big. However, I'm a realist and know I don't have the capital or expertise to make this idea happen. Do I drop the idea, or pitch it to someone else and hope to capitalize on the concept?
-- S.S., Fresno, Calif.
A:Great ideas come and go, but great companies are much harder to start and run. A naked idea, before it is fleshed out with research, market testing, legal protections, and practical planning, usually isn't worth much to anyone.
"If you are not in a position to bring more value beyond the idea, it is going to be hard to get anyone to pay you for it," says Will West, president and CEO of Control4, a home automation company he founded in 2003. "You may find someone out there willing to give you credit or compensation for the idea, but that is probably the exception rather than the rule."
When does a great idea become a great business? When it has a great person behind it: someone willing to bolster it with market research, champion it through the test of public opinion, revise it, refine it, revise it again, and finally realize it, or sell it to someone who can.
The question to ask yourself is, How committed am I? As a startup entrepreneur, you surely realize that even the cleverest idea takes tons of work to develop into a viable business concept and make it profitable.
If your idea is just a passing fancy that you're unwilling or unable to develop further at the moment, consider quietly filing it away and returning to it some day, says Hal Wing, inventor of the Little Giant Ladder and founder of Wing Enterprises, a ladder manufacturer in Springville, Utah.
KEEP YOUR DAY JOB.
"Over the years, I've had many worthwhile and valuable ideas, and had several offered to me. But I've always tried to make a decision that would have the least effect upon the most important projects already underway. In other words, be careful not to let new ideas distract you from what is already working," advises Wing.
As Wing points out, your current business must remain your first priority. But if you feel convinced it won't detract from that bedrock -- and your new idea is so gripping that you are willing to invest considerable overtime into developing it -- you have some additional options.
The first is to flesh out the concept. Has anyone attempted the idea before? What industry does it apply to, and what state is that industry in now? What forces are shaping it, and what will affect it in the next decade? What competition will your idea face if it becomes reality? (The Thomas Register can provide you with lists of manufacturers of nearly any type of manufactured product.) How financially viable is this idea? What will it cost to produce, market, and sell? What reaction does it get from potential customers? What movers and shakers might want to take your idea and run with it?
Think all these points through -- and any others that arise logically -- and write up some informal conclusions. After completing your due diligence, you may decide the negatives far outweigh the positive possibilities of your idea. Or you may find that you have come up with a terrific product or service that has true potential in today's market.
If the latter scenario plays out, think about legally protecting your idea, says Alan Arthur Tratner, president of the Inventor's Workshop, a nonprofit group based in Santa Barbara, Calif. "Secure as many intellectual property rights as you can -- whether that means patents, copyrights, trademarks, domain names, or trade secrets -- and then write up an executive summary or prospectus for licensing," he recommends.
Next, seek out the manufacturers and/or marketers in the germane field. Then, after asking them to sign nondisclosure and noncompete agreements, let them evaluate your idea to see if they want to buy or license your intellectual property. Under this scenario, you would be rewarded for the idea with a flat fee or royalties, but you could allow someone with deeper pockets and more experience to actually carry it out, Tratner says.
THEY WILL COME.
You might also want to contact a business broker or mergers-and-acquisitions expert to help you sell the idea, as long as you have established ownership rights legally up front, Trattner suggests.
If your idea truly possesses greatness, you'll find that interested parties will come to you. And if not, applaud yourself for having the wisdom to recognize your limitations and walk away early.
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