Make Your Big Idea Small

By Neil S. Siskind, Esq.
Owner, Pres., The Siskind Law & Consulting Firm

Yes, that’s right. Making your big idea small can help you move it forward.

You may have a business you’d like to start or a product you’d like to launch. But you may be employed full time and/or have limited financial resources. The best option in one of these situations is to start small.  Starting small has different meanings depending on whether you have a product or a service idea.

Product Ideas

In the case where you have a product you want to try to market, you need to understand the financial implications. It costs money to develop a product, get patent protection if necessary, market the product to wholesalers and retailers or end users, manufacture the product and package it, and warehouse and ship the product. So starting small is the best idea until you see that you have something that is marketable and saleable.

Begin by developing a single prototype on your own or through a manufacturer to test how the product looks and works. Once you get a prototype working as you want, show it to people close to you and see what they think of it. Disinterested people can give objective advice on what they like and what they don’t like about your product. This will help you to create a more effective prototype. Make sure your product will comply with laws related to that type of product.

Once you have a prototype that you like, you need to determine how much it will cost to manufacture the product per unit and how much it will cost to package it in an effective manner. Once you know your per unit cost and determine your distribution strategy- wholesale, internet or catalog- you can determine your manufacturing strategy- a dropship structure or warehousing. Even if you are planning to sell directly over the Internet, you may want to order a test number of units to see what sells. It may be a less expensive option since a dropship method can be more costly, and dropshipping of a new item may not be an option.

Next, you may decide that you want to get a patent. Getting a patent is not always necessary and is a strategic business decision. While it surely can't hurt to have one, obtaining a patent costs money and a patent does not by any means guaranty sales. You have 1 year from when the product is publicly disclosed or sold or offered for sale to file your patent application. So you may want to see if the product is saleable first before you spend the money on a patent (just don't miss the 1 year deadline). It may help in placing the product with retailers if it is patented. A patent will also stop large retailers form ripping you off if the product sells well in their stores.

Once you develop and price your prototype and get a patent (if the product is patentable) you may want to seek out a wholesaler or retailer to license the patent and manufacture the product themselves. This method will relieve you of manufacturing costs, insurance costs and overall risk.

Service ideas

If you have developed a service concept, you can find a way to inexpensively launch the service. Set out with the goal of marketing to only local customers to see if the idea is viable. Offer to provide the service only at certain times, such as on Saturdays when you are free. Consider hiring one employee to actually perform the service once you get a customer, or you can set up numerous independent contractors to do the actual work on an as-needed basis. Setting up a service business in this way limits your investment to setting up a corporation, developing some nice marketing materials offline and online, and only paying employees to do the work once it comes in. You should have some business insurance and make sure you obey state and local licensing laws. Once you begin to generate a consistent interest from customers, you can then ramp up a more professional operation by registering trademarks, setting up accounting software, leasing an office and hiring administrative employees.

So you can see, when you have a great business idea, whether it is an idea for a new product or a new service, even if you are short on cash or have a full time job, you can start your business slowly and inexpensively to test the market demand. Once you see an interest in what you are offering, you can step up your investment and efforts.