Research before marketing your invention
Dear Karen: I have a great invention but have no idea how to market it. Where do I start?
Answer: Back up and answer a couple of crucial questions.
Does your invention meet an unfulfilled need or improve on an existing solution? If so, get validating market data from your target customers.
Is your invention the basis for an entire business? It can be tough to build a company from scratch based on one product -- even a great one, said George Tierney, chief operating officer at QuantumMethod, a Los Angeles professional services firm.
“If you have a single product, you may not have the platform to support an enterprise. In this case, you should consider licensing your product to a partner who already has capital, infrastructure and distribution channels,” he said.
How do you find a partner? Search out “other brands that own distribution in or near your market. These brands are located on the shelf right next to where you want to be,” Tierney said.
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When certain workers are crucial
Dear Karen: Certain employees are responsible for a great deal of my company’s success. I worry about them getting sick or dropping dead. Anything I can do?
Answer: It’s common for small businesses to rely heavily on a select group of indispensable individuals. These key employees become so crucial to the business that their loss could cause a severe drop in efficiency and revenue.
One remedy you might consider is “key person insurance,” said Patrick Smith, a vice president and director of estate and business planning at Hartford Financial Services Group.
If the key employee becomes disabled or dies, the benefits allow the company to keep operations running smoothly, assure creditors and suppliers that they will be paid on time, assure customers that the business will continue operations and cover expenses related to finding, hiring and training a replacement.
“As the sole owner and beneficiary of the policy, the business pays the premium and receives all of the benefits. While premiums are not tax-deductible, the benefits are received income-tax-free,” Smith said.
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Steps in getting a venture started
Dear Karen: I am planning a venture in which I will purchase products from a distributor for resale on EBay. How do I get started? I have limited capital.
Answer: Write at least a brief business plan that will crystallize your idea and organize your business and marketing tactics.
“Know exactly what your expenses will be -- considering every related expenditure -- and what profit margin you’ll need to aim for in order to establish a healthy business,” said Frank Stokes, a Los Angeles entrepreneurial consultant with Stokes Pacifique Associates.
Check with your city to see whether you need a business license. Then file your fictitious-business-name statement with the county and reserve a domain name.
“It’s very important to register your business name as an Internet domain name before someone else researches your DBA filing and purchases your domain name for speculation,” Stokes said.
To buy and sell products, you’ll need a state seller’s permit. In California, registration is done through the state Board of Equalization ( www.boe.ca.gov /info/reg.htm). You can apply in person, by telephone or online.
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Got a question about running or starting a small enterprise? E-mail it to karen.e.klein @latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.
