Many Steps to Consider Before a New Product Finds Its Way to Store Shelves
Q: We are in the process of applying for a patent on a new product that can be defined as a toy, a game or a puzzle. Now that the product has been created, we face the challenge of creating a catchy name and beginning our marketing. It could be inserted in a cereal box or listed in a mail-order catalog. Toy, game or puzzle manufacturers might want to license this product. Our resources are limited, so please give us guidance.
--John Albers, Irvine
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A: Before you spend one dime on marketing, make sure you’ve got that patent nailed down. If your product is not protected by a patent or an unusually strong copyright, it will become public domain as soon as it is distributed.
Develop an overall business plan, especially if you need financing to launch a company or finance production, packaging costs, etc. There are several ways for you to go from there. One is to manufacture and distribute the product yourself. Search for a dependable manufacturer who can produce the product, making sure you’ve got plenty of prototypes to show and give away.
Distribution can make or break the success of a toy, game or puzzle, but with only a couple of major retailers controlling the marketplace, it’s a challenge to get a product on the shelf. Single-product companies find it almost impossible, so you might want to consider selling the patent to a toy company such as Mattel or Hasbro in exchange for cash and/or royalties.
If there’s a compelling educational component to the toy/game/puzzle, seek some sort of licensing, acquisition or partnership deal with a niche toy company such as Wild Planet in San Francisco or Discovery Toys in Livermore, Calif., which was recently purchased by Avon Corp. From the sound of it, this approach may be your best chance for success.
If you still retain control of your product, at some point you will need marketing, point-of-purchase, advertising and promotion budgets.
One more thing to remember: If your product is a hit, expect a knockoff to appear on store shelves 90 to 180 days after the original reaches the marketplace.
All the big companies are looking for the inexpensive imitation of an interesting product. That’s another reason to work with a reliable distributor early on, several of whom make, package and market a product.
A resource for you is Harvey Reese’s book, “How to License Your Million-Dollar Idea,” published by John Wiley & Sons.
Before you do any of the above, think long and hard about what you are willing to do to see your dream realized. Then think again.
--Stan L. Friedman, president and managing partner, WorldCom marketing consultancy, Oakland Hills
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Q: My partner and I are looking for a small office with a warehouse space of 1,500 to 2,000 square feet somewhere between North Hollywood and Ventura. Cost is our No. 1 priority. How can we find someone who will help us choose the best location?
--Bob Davis, Thousand Oaks
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A: Your best bet is to hook up with a real estate broker who specializes in tenant representation. Find someone who is experienced in the geographic area where you want to locate. You’ll have a professional working for you who will be compensated by the landlord of the building where you decide to lease.
Ask friends and colleagues for referrals to a tenant rep or call chambers of commerce or other business groups and ask for references. Be aware that most brokers are dual agents, meaning that they represent building owners as well as potential tenants.
These brokers can help you find a location, but they will have a built-in financial incentive to locate you in a building that they’re representing--and as such, they may not be completely dedicated to finding you the best price possible.
If you find a firm or individual who only represents potential tenants, you will have a professional who is likely to be absolutely objective about finding you the best lease at the best price.
Your space requirement is very small and it’s unlikely that many of the large real estate firms will take the time to help you. I recommend that you concentrate on finding a small firm or individual agent who will work with you, knowing that you will return to them for future leases as your company grows.
Once you find a tenant rep, give him or her your geographic boundaries and space requirements. Your representative will do a property survey for you, coming up with a list of possible locations that you should look at and narrow down to one or two where you’d like to try to negotiate a lease.
When you have set up a potential lease, don’t forget to have your attorney review it before you sign. There are dozens of important issues--from parking to signage--that can turn into messy financial disputes if you are not well-informed before you get into a long-term lease.
--David M. Eichman, principal, law offices of David Mason Eichman, West Hollywood
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If you have a question about how to start or operate a small business, mail it to Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.
