To make a treadmill, you need to first break it down into the individual parts

Sorry for the delay in getting this next post up but we have been super busy expanding our business (a topic for another day once we have you up and running).

Okay, so you’ve come up with your crazy idea, built your first prototype to prove it works, searched high and low on the Internet for any patents that might stop you from moving forward, filed your own provisional patent application to put your stake in the ground, performed your initial market research and found that there are indeed people out there that will buy your product and… now what?

Now it’s time to get an idea of how much it will cost to produce your product. All we are looking for at this moment in time is a back-of-the-envelop estimate so that we can make a judgment as to the whether or not we can make this thing.

The first thing to do is break down your invention into the basic components that make up the whole. Then figure out how each of those parts is going to be made. And how you are going to put them together.

Most likely, some of the parts you need will already exist out there in the world and all you will need to do is buy them. For instance, the SurfShelf comes with two nylon straps that each has a snap-in buckle attached to it. I obviously did not produce the snap-in buckles myself, but instead bought them in bulk from another manufacturer.

There will also undoubtedly be other parts that do not exist in the world that you will need to produce yourself. Are these parts molded plastic, machined metal, electronic?

The SurfShelf back plate and tray are molded parts, so I needed to find an injection molding manufacturer to do the job.

Ultimately, for each part that you will need to produce, you will need to find the right manufacturer to produce it for you. But right now we just want to get an idea of the cost, so it’s time to get some quotes.

Get on the Internet and start doing localized searches for the types of manufacturers you need that are in your area. These are the people you are going to call and go visit.

For instance, I visited five different injection molding facilities in Los Angeles and got quotes from each one of them to make the SurfShelf. I also met with them each individually and learned a great deal about the injection molding process, what it took, the costs involved, how to improve the product design, etc. Don’t feel bad about asking them to spend some time with you and to prepare you a quote — this is what they do all the time. And who knows, you might even end up doing some business with them in the future.

It’s important to note that at this time I did not have the final design of the SurfShelf in hand. In fact, it wasn’t even close. All I had was a PowerPoint sketch of what I thought it might look like. And this was close enough to get me some quotes to give me some ballpark information. All I really wanted to know was is it going to cost me in the neighborhood of $10 to make or $50? At $10 I might be able to make a business, but at $50 no way. This is what you need to find out.

If you can’t find local manufacturers to do the jobs you need done, that’s no problem. It’s easy to have phone conferences while sending drawings and quotes to each other using email. People do it all the time. It’s just fun to actually visit a manufacturing plant if one is close by.

Get ballpark quotes for each of your components and add them together to get your final cost. I took the quotes from the five different manufacturers that I met with and entered the information into an Excel spreadsheet to order to compare them and get the average.

Now take the average cost and DOUBLE IT. Seriously. DOUBLE IT.

Then throw in another buck or so for packaging (depending of course what the packaging is going to be) and maybe a few more bucks for stuff you never would have imagined.

And that’s your number. At least for now…

You will most likely be able to trim it down when you actually move into production, but use it as it stands for now. If you can make things work with this number, then any money you trim off the top is just an added bonus (but don’t necessarily count on it, trust me).

So, can you now add a profit margin to this number and still have a price that you think people would pay for the product?

What’s profit margin? Profit margin is a way of representing how much you are actually going to make on each unit sold after you pay off all the costs to produce and get the product into the hands of your customers. So we’ll talk about that next…

Cheers,

Randy

So far we have talked about…

Coming up with the crazy idea

Building the first prototype to make sure it works

Performing your initial patent searches to make sure you can legally sell it

Filing your Provisional Patent application to put your stake in the ground as the inventor

And today’s topic… performing your initial market research to see if there is anybody out there in the world who would buy this thing.

That’s the real bottom line right? If you build it, will they buy it? And exactly how many people is “they”?

So that’s what you need to figure out.

Who is your user? Does your user have a specific attribute that will influence them to buy your invention?

For instance, the shark attack suit mentioned in the post about patent searches would only be sold to SCUBA divers right? And of all the SCUBA divers in the world, only the ones who dive in shark infested waters would really want to buy the suit. And why would someone dive in shark infested waters? Are there professions the require someone to do this. Or diving clubs for people who like to chase sharks? Who the heck would want to chase sharks?

Make a list of the type of people who you think will want to buy your product and try to break it down as far as you can.

Once you have your detailed list of exactly who these people are and why, you can go online to see if you can find any market research for these groups.

So for me, my customer was someone who already owned an exercise machine, someone who wanted to buy an exercise machine in the near future, or someone who frequented the gym.

The lowest hanging fruit was the home exercise machine user. So it makes sense that the first thing I did was to get a number on how many treadmills, exercise bikes and elliptical trainers had been sold in the U.S. in the last five years. This was my first potential customer pool.

Here’s a trick I use all the time. I perform Google searches on keywords to find as many articles, research papers, market reports, etc. pertaining to the fitness industry and home exercise. Then I scoured the articles for any references to market reports (“according to the recent market study America’s Home Gym Market published by Marketing Inc., the home fitness market grew 10% last year…).

Then I Google the name of the report (“America’s Home Gym Market”) and who wrote it (“Marketing, Inc.”) to try to find excerpts I can use from the study. Many times these types of reports cost thousands of dollars, but if you can find an executive summary re-printed somewhere, or a few sentences here and there from the report that gives you some info, you can sometimes get the market numbers you need for free.

Using this technique, I was able to find several reports from the Sporting Goods Manufacturers Association (SGMA) that gave me the yearly sales figures for exercise equipment broken down by category. Bingo.

Make a spreadsheet of all the different market figures you can find for all the different potential customers you can think of. Then add all the numbers up.

How many potential customers did you find? If you get 1% of these customers to buy your product, how many people is that? Run the numbers for a few different levels of penetration, like 1%, 2% and 5%.

Also, are the sales recurring (is the product disposable)? Or is the sale a one shot deal. Employ this into your spreadsheet as well.

So now that you have an idea regarding how many people might be interested in buying your invention, you need to figure out how much money you think you can make on each unit sold.

This is going to require that you get a rough idea on how much it’s going to cost you to make your invention.

So that’s what we’ll talk about next time: Estimating your cost of production.

Have a great day,

Randy

First thing to do: Get Patent Pending!

Welcome to my series “What it Took – My Journey Starting a New Business and Becoming a New Father.”

We’ll look back over the last 2 roller-coaster years and use my experiences with bringing the SurfShelf to market as a case study of the do’s and don’ts of starting a new business.

What does it really take to bring a new product to market? We’ll go step-by-step…

Last time we talked about doing a patent search to see if there was any prior art that would prevent you from making and selling your invention. This week we’ll talk about filing a Provisional Application for Patent, what it is and why you want to do it.

So here’s why you want to file a Provisional Patent Application ASAP

1. To receive an early effective filing date for your invention

2. It’s easy and inexpensive

3. It gives you 12 months to work on your invention before the formal patent application must be filed

4. You can use the term “Patent Pending” with you with your invention

Let’s discuss these benefits in more detail…

The provisional application for patent is an application that you file with the United States Patent and Trademark Office (USPTO) that does not require claims or any of the paperwork that a formal patent application does. In fact, all it really requires is for you to fill out a 2-page informational form (to be used as a cover page), sign it, and attach it to a detailed description of your invention accompanied by drawings as necessary.

When you file your Provisional Application for Patent you will receive a filing date with the United States Patent and Trademark Office (USPTO). This date effectively puts an official time stamp stating when you filed your patent. Note that the provisional patent application WILL NOT be reviewed by the USPTO for patentability. Also it is good for only 12 months and will expire if you do not pursue a formal patent within the 12 months after filing. But, when (and if) you do file a formal non-provisional patent, the formal patent application will be able to claim the date from the provisional application. So basically it puts stake in the ground with the USPTO that you will be able to take advantage of later if you choose.

Now, it’s important to be as detailed as you possibly can in your invention description that is included in the provisional application. The reason for this is that the formal patent application can only take advantage of the early provisional filing date if and only if the formal application is supported by the description detailed in the provisional application. In simple terms, if it’s not described in the provisional application, you can’t claim the provisional date in the formal application.

For this reason, I suggest that you brainstorm and include all of the possible different elements, features and ways your invention could possibly work that you MAY end up developing. I capitalize MAY because you are not held to anything here. Throw in the kitchen sink and when it comes time to file your formal application (after you fine tune it), hopefully you have some verbiage in the provisional application that will support the final invention you intend to develop.

And it’s inexpensive! I think the latest fee schedule shows it to be $110 for small entities for applications of 100 pages or less.

Formal non-provisional patent applications can cost tens of thousands of dollars depending on how you go about developing them (by yourself or with the help of a patent attorney) so you definitely don’t want to go down that path until you are 100% sure that your invention is commercially viable (that will be a topic of another post, don’t worry).

Because the provisional patent is cheap and easy, it allows you to defer the high cost and hard work of a formal patent application until you are completely ready. And maybe by then you have been successful raising some capital from investors to help you with the expenses (another post on how to do that is coming soon).

Lastly, by filing a provisional patent application, you are officially entitled to use the term “Patent Pending” with your invention. Once you can do this, make sure to put these words on all of your marketing materials, investor relations materials, etc. These words always seem to get people’s attention, and if that person happens to be a potential investor then it might give you an edge you need.

Here are a couple of links to the USPTO website that will be helpful with filing the provisional application:

USPTO Information re: Provisional Application for Patent. This webpage gives you all the information you will need to file with provisional including addresses, HELP phone numbers, etc.

USPTO Form for Provisional Application for Patent. This is the form you fill out and sign to use as a cover page for your invention description.

So now that you have done your patent search and determined that there are no patents out there in your way, and you’ve filed you own provisional patent application so that you are officially “Patent Pending”, it’s time to do some research to see what your market potential is.

This will be the topic of our next post – Initial Market Research

See you soon,

Randy

Welcome to my series “What it Took – My Journey Starting a New Business and Becoming a New Father.”

We’ll look back over the last 2 roller-coaster years and use my experiences with bringing the SurfShelf to market as a case study of the do’s and don’ts of starting a new business.

Last time we talked about coming up with the crazy idea and building a rudimentary prototype. This week we’ll talk about doing a quick patent search to make sure there isn’t a patent out there that will stop you from marketing and selling your product.

Patent illustration for "Shark Protector Suit". Why didn't I think of that?

As I’m sure you know, a patent is a set of exclusive rights granted by the United States Patent and Trademark Office (USPTO) to a particular idea for a fixed period of time (17 years in the U.S.). The rights granted by the patent exclude others from making and selling the invention. Therefore, it is important to determine if a patent has been issued to another inventor that would exclude you from manufacturing, marketing and selling your idea.

It is very important to have a general understanding of how patents work. Patents can be very complicated and I will not go into excessive detail regarding the intricacies of patent law, but I will explain a few fundamentals that will help you determine whether or not an existing patent is blocking your journey.

First, there are two types of patents that you will run across: the utility patent and the design patent. The type that you are interested in is the utility patent. The utility patent is a patent on the functionality of an invention while the design patent is simply a patent on the aesthetic design of the invention (i.e. how it looks).

Within the utility patent application, there are several different sections including the specification, the drawings and the claims.

The specification is a detailed description of the different aspects of the invention and may include several different sections including the field of the invention, the background of the invention, the summary of the invention, a brief description of the drawings and a detailed description of the preferred embodiments of the invention. The detailed description of the invention will go through every detail of the invention and will refer to the numbered elements shown within the patent drawings.

Now, while the specification is extremely important, the claims of the patent are what actually determine what can and cannot be made and sold by others. The claims are a series of statements at the end of the patent that state what parts of the invention are actually covered by the patent. So it is the claims that you are most interested in.

For instance, the first claim for the patent of a “Shark Protector Suit” is:

1. A suit for protecting its wearer from attack by sharks comprising:

• rubber suit means for substantially completely covering the wearer’s body;
• closed helmet means including a face mask attached to the suit means for substantially completely covering the wearer’s head;
• glove means attached to the suit means for substantially completely covering the wearer’s hands;
• shoe means attached to the suit means for substantially completely covering the wearer’s feet;
• elongated spike means for repelling sharks extending outwardly from the suit means and helmet means;
• and rigid plate means attached to an outer surface of the suit for protecting the wearer.

So if the shark protector suit that you have invented is different than what is claimed, you may still be able to make your fortune!

There are several websites that you can go to in order to perform your search for prior art (“prior art” is the term used by the Patent Office to refer to existing patents).

The United States Patent and Trademark Office has an advanced search functionality that will allow you to search through the millions of patents that have been granted.

In addition, Google Patents also has a large database of patents (7 million) that you can search as well.

I recommend doing detailed searches using both resources as I was actually able to find patents on one service that did not show up on the other and vice versa. (I was told that this should not happen, but in fact it did).

The easiest way to start is to come up with a list of keywords and/or descriptions that describe your idea. Then, use the two resources above to perform searches on these keywords.

It is very likely that you will find prior art on your invention. But don’t panic! Your method of accomplishing the invention may be new and improved compared to the existing patent. This is what I found when I did my search for treadmill laptop holders. There were indeed a number of inventions relating to this idea, but none of them were what I had envisioned. Therefore none of them stopped me from producing the SurfShelf.

The first thing I always did was I examined the patent diagrams carefully. A picture tells a thousand words and you can usually see right away if the patent is similar to your idea. If it seems similar, read the entire patent and pay special attention to the claims to see if they describe in detail the way you envision developing your invention.

If it seems like the patent describes your exact idea, but you wish to pursue it anyway, I would highly recommend getting the professional opinion of a patent attorney to see what your challenges may be. Who knows? He may find that the patent doesn’t block you and that you are free to pursue your invention.

And if you don’t find any prior art regarding your invention, congratulations, you are ready to take the next step. But just because you are not blocked by an existing patent, this does not necessarily mean that you yourself can obtain a new patent on your idea. However, don’t worry about that right now; we’ll get to that later.

In fact, the next thing to do is to file what is called a “Provisional Application for Patent”. This is easy to do and will give you the date stamp of your idea.

So that’s what we’ll talk about next post. See you then…

Randy

We’ll look back over the last 2 roller-coaster years and use my experiences with bringing the SurfShelf to market as a case study of the do’s and don’ts of starting a new business.

And this week we are at the beginning of my story… the crazy idea and the first prototype.

The First SurfShelf!

Obviously it all starts with the idea. I’ve had a few others in my day ranging from a rubber sole that covers the spikes of your golf shoes to interactive online movies (I actually have U.S. patents on both of these and had an interactive movie in the 2003 Sundance Film Festival, but those are different stories). And now a “treadmill laptop holder”.

When the idea hits you, the first thing you need to do is build a rudimentary prototype. There are a few of reasons for this:

1. To see if your product idea can be designed to work the way you envision it

2. To have a model to test in order to see if it’s really that great of an idea

3. To show the concept to other people to see if they think you are crazy (and if they do, you might be really onto something)

4. To see how it might be manufactured

5. And to have some creative fun! It’s good for you.

The first prototype does not need to be pretty, just functional. Also, if the product involves parts that you cannot fabricate out of supplies from the isles of Home Depot or your neighborhood hardware store (like electronics with a particular function), then you may have a difficult time building your prototype yourself. If this is the situation I recommend first working on a “proof of concept” instead. Start by making drawings of your product showing what it is, how it works and how it will be constructed and/or manufactured. You also need to show that it can be developed using technology that already exists or that could exist given the right research and development.

I was lucky… all I had to do was go to Home Depot to buy a piece of plywood, a 2×4, some screws and some metal brackets, the neighborhood hardware store to buy a nylon packing strap with a plastic pull-tight loop, and REI to buy a nylon camping strap with a plastic snap-in buckle.

Ideas typically sprout from a need that needs to be filled… “If I only had a [insert crazy idea name here], then I would be set! Wow, I should make a [crazy idea] and I’ll be a millionaire!”

On December 21^st, 2006 I was alone in my home office (i.e. the garage) running on my treadmill. And I was bored out of my mind. My garage is dimly lit and there is no TV. I had listened to the songs on my iPod a million times and the print in the magazine I was reading this particular night was so small that there was no way I could read it while jogging.

Then I looked over at my desk to where my laptop sat with its broadband Internet connection. And the light bulb went off in my head. Get the laptop onto my treadmill console so I could watch online TV, news and sports highlights.

The next day I spent a few hours building my first prototype. Luckily I have a small workshop in my garage (i.e. my home office) where I have all the tools I needed.

That same day I used my new prototype and watched a full episode of NCIS. After that I was hooked – I couldn’t wait for my next workout to watch all the shows that I didn’t have time to watch at night. Now I can watch TV on my laptop on my treadmill and not feel bad about it!

As it turns out, hour-long shows last about 45 minutes online (the commercials are very short and far and few in between) so they are absolutely perfect. And there are a ton of online shows available, all on-demand and best of all… free. And if I don’t finish a show during one workout, it’s like “to be continued” and I can’t wait to pick it up the next day when I jump back on.

However, the prototype I made only fit my treadmill, so it was time to make a design that would fit ANY machine. That was the tricky part.

The Second SurfShelf! Notice the blue strap, that was new with the second design.

I scoured the Internet for pictures of every treadmill I could find. What did they have in common that I could utilize in my design? I also visited every sports and fitness store within 100 miles of my house to take pictures of the different treadmills and to attach my prototypes to them to test.

Without fail, the store managers would always approach me to ask “may I help you sir?” which really meant “what the heck are you doing attaching a wooden tray to our showroom treadmills and taking pictures?” But after the 3^rd or 4^th visit to their stores with new and improved prototypes, they would just wave at me and smile (which meant “there’s that guy again, but don’t worry, he’s harmless”). I’ve even become friends with a couple of them which is pretty funny.

One thing that I have learned during this process is that while 90% of the time it’s important to ask other people their opinions about your idea (because you will learn from new and different perspectives), the other 10% comes from your gut.

So if you really believe in your product, you should at least run with it for a few steps whether others think you’re crazy or not (because there will always be those people who do). And building the first rudimentary prototype can be a lot of fun, is usually quite inexpensive and will give you a lot of satisfaction. What have you got to lose?

Then it will be time to evaluate the idea before you go too far. So I’ll talk about the product evaluation process in a future post, don’t worry.

“If I had asked people what they wanted they would have told me “faster horses”.”

- Henry Ford

See you next time,

Randy

Because I had absolutely no idea of what I was doing, I had to start from scratch. And now that we’ve come this far, it’s easy to look back to see the successes and the mistakes, and to use the SurfShelf as a case study on the do’s and don’ts of how to bring a product to market and build a new business.

As far back as I can remember it has always been a dream of mine to be an entrepreneur. Another dream has always been to be a father. It just so happens that these two dreams came into my life at the same time.

We’ve all had “great ideas” for new products… but what does it really take to turn these crazy ideas into real products and bring them to market? And once they’re on the market, how do you build brand awareness so that people know you exist so they can buy from you?

In a nutshell, here’s what it took for me…

Coming up with the crazy idea • the first prototype • the provisional patent • the testing • the tweaking • the market analysis • the business plan • the product design • the industrial engineering • the simulations • the stereo lithography rapid-prototyping • the product evaluation • the mentor • the consigliere (my wife Emie) • the patent attorney • the official patent application • the patent specification • the patent drawings • time to get investors • the investment proposal • the pitch • the deal • quitting my job • reading books and articles on what the heck to do • the manufacturing agent in Hong Kong • the manufacturer in mainland China • the Polycarbonate • the injection molds • the logo • the photo shoots • the website • the packaging design • the instructions • the lawyers • not sleeping • being scared to death • the production samples • the PR firm • the product sheets • the product brochures • the pricing analysis • the first fitness trade show • our booth • our sales • the new website • the warehouse • the contracts • the online shopping cart • the merchant account • the merchant gateway • the shipping boxes • the cargo forwarder • getting stuck in U.S. Customs • shipping • the recession • running low on money • maxing out credit cards • freaking out majorly • getting the SurfShelf into stores • developing store sales displays • ecommerce • investigating infomercials • working with HSN • working with commercial health clubs • the new website • social marketing • the blog • working with new marketing consultants • building brand awareness • Facebook • Twitter • YouTube • Flickr • becoming a non-resident importer to Canada • expanding to international markets • coming up with new product ideas…

…all while trying with my wife to get pregnant, having some difficulties, trying IUI with no luck, getting as healthy as possible, stopping drinking (just when I really needed a drink), working out like crazy, doing IVF, getting lucky and having our beautiful daughter Skye.

So this is what I’ll be posting about. Step by step. It’s a lot of stuff no doubt. But don’t worry; we’ll break it all down to make it all manageable.

What I’ve also found along the way is that in order for me to keep my sanity, keep my stress to a manageable level and reduce my overall fear factor, I need to always make sure to enjoy the journey. Each and every day. Sure, we all want to be millionaires, but if you don’t enjoy the journey you will totally freak out, it’s just too much.

So the first thing on the list was the crazy idea. And then building a rudimentary prototype.

So that’s where my story will begin next time. Please come back and join me for my next post where I will tell you how I came up with the idea for the SurfShelf and how I built and tested the first SurfShelf prototype.

Then we’ll go from there…

Cheers,

Randy