Wednesday, 27 August 2008

How to Not Go Broke on Your Million Dollar Idea

Before you bet the bank on your next million dollar idea, you should do a reality check to see if the idea is worth it. People often fall in love with their ideas and as a result can experience tremendous pain if it turns out the idea is a bad one.

Developing ideas into commercial successes is generally difficult work since there are many steps involved and the odds of success are not very high. You need to approach this with a process orientation and come at it with sufficient leadership skills and abilities to carry it though. Thinking in terms of getting rich on a one shot idea or expecting someone else to take the leadership initiative while you sit back and wait for a million dollar check to come in the mail will not work. That is something that people with inventoritis do. They almost always meet with poverty and its close companion – misery. On the other hand, people with good leadership abilities and skills who are teachable and follow sound marketing processes have a much greater chance of enjoying positive financial and career-enhancing experiences. Persistence counts and people who can pull this off tend to do so repeatedly. Famous American inventor Thomas Alva Edison was a master of developing ideas into commercial successes and died a rich and powerful man after a long prolific life. He cranked out over 1000 patented ideas, many of which were commercially successful.

We have prepared a list of questions you can use as a way to perform a reality check on your idea. It is intended to help you determine whether or not you actually have an idea that is worth something. If you are in a company, you want to know whether this is a career builder or a sure fire way to have the security people escort you from the property and demagnetize your company identification card. No lunch, no watch. If you are an inventor or entrepreneur looking for the million dollar check, you want to know this too so that you or your spouse does not end up having to take a part time job at Wal-Mart to help cover the losses. Anyone with inventoritis should make special note of the following 10 questions that will help you determine if your idea is worth pursuing:

1. Can you explain your idea to someone within 5 minutes using no more than a single sheet of paper and a crayon as visual aids?
2. Can you define your marketing strategy in 5 words or less?
3. Do you know your 6 best potential customers twice as well as they know themselves?
4. If someone stole your idea today, would you be willing to proceed anyway?
5. Are you willing to proceed if it costs twice as much and takes three times as long as your presumably reasonable estimates suggest?
6. Are you willing to sell it door to door if required?
7. Is your idea media worthy? – Have you asked?
8. Do you have a network of credible and qualified advisors who can help you through the process and to help assess things at various stages of the process?
9. If it fails, can you afford the losses?
10. Do you believe any of the following statements?

“The idea will sell itself.”
“Everyone will need this.”
“There is no competition.”
“I don’t have a problem letting go.”
“No one can copy it.”
“No one has thought of this.”
“The marketing is no big deal.”
“‘Insert big company name’ will pay millions for this.”
“It’s not about the money.”

If you do believe any of the above statements derived from a list of common lies told by inventors who are the best known group of people trying to turn ideas into money, you likely have inventoritis. If you have inventoritis then stop right now. Do not bug your boss. Do not go to the bank, family or friends to borrow any money. Get the condition treated first or you will fail.

Assuming your idea passes the above reality check, then before launching into a whole bunch of expensive technical work into turning the idea into reality, do more up front marketing work. If the idea is for a product, find an inexpensive way to prepare some samples or mock-ups then conduct further customer prospect interviews, focus group sessions, surveys, test marketing trials and so on while observing customer behavior and developing the business case for your idea. As the business case develops, apply reasonable resources in a reasonable way toward developing the market in a profitable way. Do this whether you are selling the idea to a single customer for a simple check or moving toward a full blown multi-million dollar product launch. The process should be roughly the same.

If your idea fails these above tests, then move on knowing you haven’t bet the bank, risked your job prematurely or unduly stressed your personal relationships. This is not the same thing as giving up on your ideas. It is much better to kill something that doesn’t make sense than to have it kill you.

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