Note: We will be running a series of articles from the time when I wrote monthly columns for Entrepreneur magazine from inventors that have succeeded. While the entrepreneurs stories are dated, they strategies these inventors employed are still applicable today.
The Entrepreneur: Shawn Donegan, 46, founder of Trac Tool Inc. in Cleveland
Product description: The Speed Rollers paint applicator system targets professional painting contractors. Featuring two rollers, the system is fed by an airless paint pump that dispenses paint onto the top roller. Because the applicator system eliminates the need to dip into a roller pan and also minimizes the so-called “back roll,” it’s four to five times faster than a traditional roller system. While Donegan didn’t invent Speed Rollers, he was able to launch his company after signing a licensing deal with Mike Puczkowski, the product’s inventor. The Speed Rollers system retails for $349 and is sold through major paint retailers such as Sherwin-Williams.
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Startup: About $150,000, which was spent to launch the product at the Painting and Decorating Contractors of America trade show in 2004. Costs included marketing materials, booth rental, product development, patents and 10 laser-cut prototypes.
Sales: $3 million projected for 2005
The challenge: How does an entrepreneur who knows an inventor with a great idea decide whether or not the product is worth pursuing?
Inventors are often great at creating innovative products, but they’re often lousy at turning their inventions into businesses. Not surprisingly, inventors represent a big opportunity for entrepreneurs. Taking an inventor’s product to market–which is what Shawn Donegan did with the Speed Rollers system–can mean big profits for those willing to carefully research a product’s viability before spending too much money.
Steps to Success
1. Recognize a good idea. Donegan had been involved in managing commercial properties and painting contractors for several years. “I knew that painting contractors were four to five times faster with spray paint than they were with rollers,” he says. “But on many jobs, the effort to cover up other surfaces was so substantial, it was just as fast to use rollers. So I was blown away with [Puczkowski’s] invention–it was as fast as or faster than spray painting, didn’t require substantial effort to protect other areas, and eliminated spray painting’s loss of 20 to 30 percent of the paint.”
2. Research the sales potential. Donegan had Puczkowski build several models until he had a rough prototype that worked well. He then got feedback. Says Donegan, “Mike and I took the prototype and ran focus groups with painting contractors, industry experts and property management firms. Everyone gave us positive reinforcement and saw the same potential for the product that we did.” Donegan was still careful, though, and he treated the first trade show in 2004 as a market research experience: “We didn’t want to invest heavily in tooling and production before the show.”
3. Explore any potential snags. The product attaches to a hose from an airless spraying system. Before proceeding with an introduction, Donegan had to be sure the Speed Rollers could attach to the current airless systems on the market. “I recognized one immediate problem in the prototype: The ball valve that released paint to the roller could only handle a fraction of the pressure that airless systems typically deliver,” he says. “Also, we needed to redesign the product for smoother coupling without any leaks. Once we redesigned the components, we tested them thoroughly. We wanted to ensure worker safety and product quality before proceeding.”
4. Make a deal with the inventor. Says Donegan, “Once I was satisfied the product could be a success, I agreed to a royalty agreement with Puczkowski.” In June, Donegan purchased all rights to the product from Puczkowski for a lump sum.
5. Launch a sales plan. “Interest in the product was so great, I knew I couldn’t afford to supply the world at once,” says Donegan. “So I decided to focus my sales efforts on the Ohio area so we could build up the product and a financial base that would become self-sustaining. I’ve worked hard to match my sales efforts with my operating capital. I’m still doing $3 million in sales in my limited geographic and industry markets. I expect to expand to select markets globally in the next six months.”
1. Know your market. The key to selling a new idea is to understand the end user and the market. That way, you know if the product’s benefits will be important to the end user.
2. Look for a well-tested idea. Many inventors have products they have used for an extended period of time. Usually, those ideas can successfully be produced. Products that are still in the drawing phase, however, need to go through several prototypes, which could be expensive, before a salable design is ready.
3. Understand the product’s distribution. Figure out how you will sell the product–for example, you might sell to retailers through manufacturers’ sales agents. Talk to the people who will be distributing the product to make sure they also feel the product has potential.
4. Remember that quality counts when selling to the trade. “Trade” is a term used for selling to professionals. Tools sold to the trade typically impact your customers’ ability to earn money, so the trade almost always buys the highest-quality products.
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