You Need More Than a Better Mousetrap

"I'm sitting on a gold mine," the inventor emailed me. He desperately needed money to turn his cool invention into a success. He was frustrated that lots of garbage inventions were for sale in the stores, but his wasn't. If he only had some money, he could make a TV commercial to get people to buy his invention. He also needed money to manufacture the invention. 

He didn't like it when I suggested that he get help from SCORE or from a Small Business Development Center. But this is exactly what he needs to do, if he wants free help to raise the capital he needs.

Does this sound like you? Does this sound familiar?

You may have a brilliant idea, but in the words of one of the original Mad Men, David Ogilvy, "It's not creative unless it sells." I've seen too many truly great ideas and great products fail. Only 10% of new products make it. So as hard-hearted as it sounds, I don't care how great your idea is, if it doesn't meet a real need, it will not sell.

Since the inventor wouldn't tell me what his invention was, and since I charge by the hour to consult, I have no idea if this particular gizmo does meet a need. But even if it does, the inventor will have to get it into stores or catalogs so that people can buy it. Or he will need to create a website and sell it directly online. There are many very inexpensive ways to do this. However, what you say to stores or to consumers about the true value of your product is what will get it into the hands of consumers. I'm not talking about the technological, gee-wiz stuff. I'm talking benefit.

But turning an idea into a success isn't just about benefits. You also need to know how much money it would take to manufacture your gizmo and how much money you can charge for it. Apple knows it can charge premium prices for its inventions. A certain segment of the marketplace will pay more for Apple's sleek, cool products. But not everyone will. Apple makes lots of money, but they don't have a huge market share. Truly, if you have a new invention, think "what will consumers pay for it?" What markup will stores put on it? How much money will I get from the wholesale price? Will this give me a decent profit margin? When will I break even? No investor or lender will give you money, unless you can answer such questions.


If you have questions about manufacturing and marketing your invention, contact me at: upstartwyn@gmail.com.

If you have stories about your successful invention, post it on this blog.

Digital vs. Print Newspapers

I just read one of the most elucidating articles ever on the real difference between print and digital newspapers. I'm pasting a link below to the source, "Business Insider". This piece really laid out the essential distinction at the heart of the two business models. Henry Blodget, the author, clearly explained the economics of a print newspaper and a digital one and why it's so hard for a major, established newspaper like the New York Times to morph into a digital paper successfully.

I'm not going to repeat everything Blodget said, but I realized as I read his piece that one advantage digital media has is that advertisers can know if readers are engaging in their advertising. This idea really struck me because back in 1999, I was part of a team that wrote a business plan for a pre-Google pay-for-position/pay-per-click search engine called FindWhat.com. In that plan I quoted John Wannamaker who famously said he knew half his advertising was wasted. He just didn't know which half.

Previously, a store like Saks Fifth Avenue could run full page ads in the New York Times and never know how many readers actually saw and remembered the ad. The advertiser had to make a guess based upon the Times' circulation. But with a digital news site, advertisers can post contextual ads and actually know how many people clicked on the ad. It's all about the clicks and the marketing intelligence marketers can pick up from those clicks. That can be worth a lot of revenue. Just think of how rich pay-per-click has made Google.

Blodget goes into much more detail. If you want to really understand the future and the economics of newspapers and digital media, read "On Our Third Birthday, Some Thoughts on Digital Media and the Future of the Newspaper Business."

http://www.businessinsider.com/dear-newspaper-folks-no-one-else-is-being-honest-with-you-so-we-will-be-2010-7

Surprises From Congress and the IRS for Small Business

I'm still glad I read old fashioned papers like the Wall Street Journal. Last week an editorial alerted me to a new hidden burden in the ObamaCare legislation. Approximately "30 million sole proprietors and subchapter S corporations, two million farms and one million charities and other tax-exempt organizations" will have to report to the IRS the value of goods they purchase from a single vendor that total more than $600 in a year. This means ink, paper and other office supplies. Business entities already are supposed to tell the IRS about services they purchase that equal at least $600 from a single vendor, using the 1099 forms.

I'm familiar with the this, since my clients send me 1099s that report the value of my writing and planning services to them. But I'm wondering now about the headaches for all small organizations to not only keep track of all purchases they make from specific vendors, but also to send all that paper or electrons to the vendors, as well as the IRS. Bookkeepers can earn more money. And 1099 services can, too. Can you imagine Apple, Staples and Costco receiving all that reporting as small businesses file their forms for the goods they purchased over the course of the year? That should make all their goods increase in price.

And what about the increased expenses for the government to keep track of all this reporting? According to the Journal, even Democrats are complaining about the new burden.

If you're wondering what the IRS expects your business to report now, take a look at www.irs.gov. The information is all there. What isn't there yet is all the fine print hiding extra costs, regulations and reporting created by ObamaCare. 
 

The Launch of The Daily Darien

Last week I attended the launch party for several new online news communities, all owned by Mainstreet Connect.  The party reminded me of the media parties I used to attend when I worked in advertising. (No, I'm not as old as the Mad Men people.) It was beautifully catered, and we heard good, short speeches. The event hearkened back to the heyday of print media, even though it was for new media. As I nibbled my hors d'oeuvres and sipped my sangria, I kept wondering what these new community news sites were going to do for us and if they would be as successful as their founders believed.

But the next day, I was summoned for jury duty. Out of a roomful of 45 people, one other person and I were the only ones reading printed newspapers to pass the time. A handful were reading books. But most of the room was glued to a screen -- either the giant TV at the front of the room or the tiny screens held in the hands of about one third or the prospective jurors. Yes. We are in the age of the screen and the instant download of data and news.

That made me realize that Mainstreet Connect is probably on the right track. They're using economies of scale to create a network of online news communities. But will the initial traffic turn into loyal viewers that interact with advertisers and generate revenue? I'm particularly interested in The Daily Darien because I live in Darien, CT. But I'm also interested because as a business planner and consultant, I like observing how different startups behave. I like trying to figure out how their marketing works and how they've positioned themselves in the marketplace.

The founder, Carll Tucker, clearly has a vision and the media and advertising experience and management team to make a successful business. He can see what I saw in the jury waiting room. Younger people are not reading newspapers. The Daily Darien is exploiting that. But their print-based competitors are too. It's going to be interesting to see what happens. Which competitor will come out on top - The Daily Darien, the Darien Patch, The Darien Times or the Darien News-Review (the oldest of the lot)?  Can the Daily Darien discover the weaknesses the other papers have and exploit that in their online-only environment? Do they realize that many of the residents of Darien are actually the type of people who still enjoy print newspapers? (I've seen the statistics.) Upscale, educated, northeastern. We read the New York Times and the Wall Street Journal., but our kids don't.

What do you think? You can see The Daily Darien at: www.thedailydarien.com.

Another Facebook Mistake - the Marketplace

What is Facebook management thinking? Is Zuckerberg off his rocker? Today, I received an email update from Facebook alerting me to my "friends' marketplace for Darien, CT". Being a curious soul, I clicked on it and saw ugly paintings of naked women, real estate for sale in Florida and other things I really didn't care about or want to waste time looking at. These items were being sold by "friends of my friends." It made me wonder about my friends' friends.

Even worse, the whole thing really turned me off. It left a sour taste in my mouth. What is Facebook trying to do, besides make money? This is not as clean or elegant as Craigslist or Ebay. I don't want these things. I'm not looking for them. This feels like an invasion of privacy and cheesy waste of time. If I'm in the market for such items, sold by friends or not, I will search for them. Facebook keeps messing around with its model. This needs to stop.

Companies that are successful are successful because they are coming from a vision of what they believe in. They have to understand why they are doing what they are doing. Companies that just set out to make money for money's sake are doomed to fail. That's what caused the financial meltdown and also the dot-com bust. Investment banks are supposed to help the flow of capital from people who have it to growing companies that need it. But instead, they're focusing on making money by selling new securities that they've made up out of thin air or junk. We've all seen the unfortunate result.

Facebook started out as a great, simple idea, filling a real need for people to connect with one another. But its mission to make money has taken place without soul or vision. I watched a great video yesterday on TED about what makes people into real, successful leaders. It's worth watching. Mark Zuckerberg needs to watch it, too. Then, maybe he'll do the right things with Facebook.

http://ht.ly/29iow

Inventions, Entrepreneurs and Success

Last night I watched "How I Made My Millions" on CNBC. The show gave excellent capsulized stories of how people had really great, simple ideas which they turned into businesses. It's clear that it's not easy to execute ideas, but the people profiled in the show had the tenacity, passion and focus to do it. And they made millions.

I know that there are thousands of entrepreneur wannabes and inventive tinkerers out there with the big idea and the next great business. Some of you will fail because your ideas really aren't that great. Some will fail because you don't have a plan or funding. Some will fail because you just don't have the energy to take the idea to fruition. You'll let roadblocks get in the way.

But the entrepreneurs and inventors in this TV show didn't let any of that stop them. Their creations and ideas filled needs and resonated with the public. Take a look. You can watch it on HULU:

http://www.hulu.com/watch/46543/cnbc-originals-how-i-made-my-millions

If you need a business plan or some mentoring along the way, contact me at: upstartwyn@gmail.com. Visit my website: www.upstartbusinessplanning.com.

Old-Fashioned Soda in Connecticut

When I was at my local Shop Rite last week, I noticed Foxon Park soda. It looked old fashioned, all natural and authentic, not like your usual store brand or cheap rip-off brand. I wondered what Foxon was. It turns out it's a small Connecticut creator and bottler of soda that's been around for 80 years.

http://foxonpark.com/cart.php?m=splash

You can order the soda online or even visit the bottler. An article appeared this weekend in the New York Times that mentioned Foxon Park and several other old fashioned soda makers in Connecticut. In some, you can even go and make your own soda. You can have a kids' party at Avery's where kids make up their own from the ingredients available.

More and more people are buying soda from small businesses like this because consumers want to buy locally. I think this is great. A few years ago, when I was teaching business plan writing, I had a student who was going to open a fruit and tea drink company in Fiji in order to compete with Coke. These soft drink bottlers make me think of her. It takes a lot of work to run a company like this, especially fighting for shelf space and share of mind against the big guys like Coke and Pepsi.

Here's a list of the companies mentioned in the Times: Avery's Beverages, Castle Beverages, Foxon Park, Hosmer Mountain Bottling Company.

It's great to see small businesses doing well in this very tough economy.

The Crazies - Worth Seeing

I normally don't write movie reviews. But I've decided to write reviews of DVDs, books and music from time to time because we all need a little entertainment in our lives. And all creative endeavors are like small businesses, requiring creativity, management, financing, a great team and marketing. So here goes:

The Crazies

My heart was thumping as I watched the action in The Crazies unfold. Although marketed as a horror movie, Breck Eisner’s remake of the 1973 George Romero film struck me as more of an intelligent thriller with some bloody scenes.

What makes this movie particularly good is how it takes the point of
view of the protagonists, a local sheriff David Dutton and his doctor wife, played by Timothy Olyphant and Radha Mitchell, as they are confronted by more and more of their friends and neighbors strangely changing into vengeful, unstoppable killers.

They, along with the deputy and his girlfriend, slowly realize that they seem to be immune to the epidemic which is taking over the good people of Ogden Marsh, Iowa. At the same time, they find they are also cut off from communicating with the world beyond its borders. Soon, they’re not just running from the local population, which is becoming steadily more crazy and murderous, but also from government troops who have moved in to quarantine the town and annihilate all the infected residents. It turns out that a military plane crash unleashed a bio weapon into the town’s water supply, and the government has to stop its spread and the knowledge of the catastrophe. The premise of a U.S.-made bio weapon getting loose, its devastating effects on the humans living there and the government’s heavy-handed response all seem plausible, when you think of recent environmental disasters.

I thought Eisner directed his characters and action well and developed high tension with some really cringe-inducing scenes and surprises. The acting was much better than a typical horror film. I particularly liked how the film’s creators interspersed calm, personal sequences, like the sheriff waking up with his wife in their peaceful house, summer breezes blowing the curtains, with sudden scenes of violence. The scenes of
surprising or unrelenting attacks truly had me gasping and tensing up far more than I do in most movies. I had actually thought this kind of movie making was dead, but I’m glad to see it isn’t.

I also really liked how the production design (art direction) aided in creating the bucolic feel of the Iowa prairie, in contrast to the bloody mayhem and military response.  And I enjoyed the percussive score written by Mark Isham. Isham created music that sounded at times like the bells of a railroad crossing. I loved that because it evoked the image of fast-moving, unstoppable danger.  He also wrote lovely melodies for the calmer, more personal parts of the film, again, helping to create more suspense and a sense of dread.

If you missed The Crazies when it was out in theaters, get the DVD now and treat yourself to a good, scary evening.