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Successful invention marketing requires research, business planning

by Kathy Hagood
Brevard Technical Journal

Many bright ideas have motivated engineers, technicians and others to seek venture capital, but an innovation has to be more than a gleam in an inventor's eye before savvy investors will be willing to back it.

A technology must be developed to the point that specifications for the product's manufacture have been perfected and the business case for the innovation has been detailed in a sound business plan. In addition, a solid, experienced management team must be assembled to carry out the plan.

"One of the biggest mistakes inventors make is seeking money from investors before they're ready," said Ned Buffington, managing partner for Florida Capital Network LLC in Melbourne. His group provides consulting and management services for start-up technology companies.

While inventors may be able to bring their technology to a mature enough state that it can be easily manufactured with a "bill of material," they most frequently stumble over preparing a convincing business plan, Buffington said.

A good plan details the market for the startup's product and the means for getting the product to the market. It also offers realistic projections for profits.

"The problem is that technical people frequently underestimate the effort it takes to research and write a solid business plan. They don't realize that business is just as challenging as their technical area of expertise,"Buffington said.

It typically takes about $500,000 to bring a product to market. Unless a startup has a product that realistically can generate $50 million in sales within five to seven years, it's doubtful investors will want to get involved, Buffington said.

But investors also want to see that an inventor has "skin in the game," the inventor's own money and the money of family and friends in the project.

"No investor is going to want to put money toward an idea the inventor isn't completely behind," Buffington said.

But passion for the product isn't enough. The innovation must be marketable.

"I've seen inventors throw away their life savings on an idea for a product that can't be manufactured or just won't produce enough sales to be worthwhile," Buffington said. "Inventors need to research the viability of their idea before they sink a lot of money into it."

Too often inventors focus too much on the product and pay short shrift to considering whether it will make money. That can produce a Don Quixote-like pursuit leading nowhere and causing heartbreak to family and friends.

"Inventors can get addicted to their idea. It becomes a sickness rather than a business venture," Buffington said.

For best results inventors should bring themselves up to speed on business basics then call in experts to help round out their business understanding and help them assess their product and develop a business plan, Buffington advised.

The Small Business Development Center at Brevard Community College-Melbourne Campus can provide invaluable business information. The center sponsors free and low-cost business seminars, among its other small business development services.

Local members of SCORE, a national network of retired business leaders, are available to offer helpful business advice. The Small Business Administration is another great source for start-ups both for general business startup information and information on the Small Business Innovation Research grant program.

Consulting companies such as Florida Capital Network can also be good resources for helping inventors create or shape up rough drafts of business plans and apply for SBIR grants. While the seasoned advice of the best of such companies isn't free, it can be worth the investment.

"At a certain point startups need evaluation and advice specific to their product," Buffington said.

On the other hand, technology startups should take care in choosing a consulting company, opting for one with a proven track record in developing related businesses.

Florida Capital Network is currently helping a doctor develop her startup and seek venture capital to get a promising medical device to market. She's invested $240,000 of her own money already in addition to receiving a $100,000 Small Business Innovation Research grant.

"She's doing it the right way," Buffington said. "The odds of obtaining venture capital is much greater if you've gotten SBIR grants."

The SBIR program, which is coordinated by the Small Business Administration, provides that federal agencies allocate a portion of the research and development funds to award to small businesses developing technologies applicable to their needs.

Participating agencies are the Department of Agriculture, Department of Commerce, Department of Defense, Department of Education, Department of Energy, Department of Health and Human Services, Department of Transportation, Environmental Protection Agency, National Aeronautics and Space Administration and National Science Foundation.

Each of the agencies accepts proposals for grants in specified research areas.

"Getting an SBIR grant is a great early step in the process of getting a technology to market," Buffington said.

For more information on starting up a technology company and getting a product to market, visit the Small Business Administration Web site at and Brevard Community College's Small Business Development Center's Web site at www.brevardcc.edu