From Pet Project to Profitable Business - Five Questions to Answer Before Starting the Journey

02/10/2013 12:08 BST | Updated 23/01/2014 23:58 GMT

If you're an innovative thinker and entrepreneur who wants to turn your pet project into a profitable business, you'll need the right blend of two characteristics: creativity and application.

On the one hand, you must have the facility for original thought; the ability to conjure up many 'Eureka!' moments. Most of the inventors I meet can do this - but alone, it's not enough. To succeed, you also need access to the right skills and knowledge: the ability to translate and apply ideas for products and services into something that can be designed, produced and sold.

At our creative agency we receive speculative approaches from inventors every week who want to turn an idea into something more tangible. To determine their chances of success, we have a well-proven screening process that focuses on five key questions.

Before we explore those, it is worthwhile noting that often, the most commercially viable ideas come from people who've spent time in a specific industry and have spotted a gap in the market. Their 'insider-knowledge' can prove invaluable to the design and development process, leading to the delivery of a cost-effective, marketable and ultimately successful product or service.

Perseverance may also play a part in an inventor's success. According to the Dyson website, it took James - now one of the UK's best-known engineers & entrepreneurs - 15 years and more than 5,000 prototypes "to finally launch the Dyson DC01 vacuum cleaner under his own name." Still, his resolve proved worthwhile: "Within 22 months it became the best-selling cleaner in the UK."

Perhaps the Dyson example is the exception that proves the rule, since the failure of most inventors is due to an unwillingness to listen to people with more experience. Is it because they've spent so long on the project that they can't accept expert criticism? The project is their baby after all, and they want to stay in charge of its development. Helping struggling innovators who simply haven't done enough homework due to inexperience rather than inflexibility is easier. Which brings us back to the five questions...

Sorting the duffers from the Dysons

Inventors who approach design consultancies such as PDD, or seek any other professional advice in this arena need to answer these five fundamental questions:

1) Does the invention, product, or service already exist?

It's an obvious enquiry, but surprisingly quite a few inventors simply don't research enough. For example, at least once a quarter, we're told about "a new kitchen product that will eliminate the drudgery of cleaning dishes." Yes, it's a sponge attached to a tube full of washing-up liquid- already available from most supermarkets!

2) What's the status of the intellectual property (IP) relating to the invention?

According to the government's Intellectual Property Office (IPO), "intellectual property is any form of original creation that can be bought or sold - from music to machinery."

There are four main types of IP rights: patents; trademarks; designs; and copyright. Even products that have never been sold may still have some associated IP - precluding the exploitation of the idea by anyone other than the original inventor. The IPO can help you navigate this maze.

3) Do you have a sensible and coherent business plan?

Many inventors fail to appreciate how much time, effort and money it takes to get things into production - and their business plan, when they have one, reflects this.

For example, a common error is for people to estimate their profits based on an over-simplified equation: selling price minus production costs. This fails to account for the costs associated with marketing and distribution, or for paying taxes, and any number of additional 'hidden' costs.

The figures also go awry when the inventor assumes that everyone in the UK needs at least one "Product X". Pound signs proliferate on their spreadsheets as they multiply the current population - almost 64 million - by the selling price. Yet these sums ignore the accepted wisdom within business that few products achieve more than a 5% market share: for the UK, that's 3.2 million people.

4) What funding, if any, do you have in place already?

While a few well-prepared inventors manage to secure funding from the millionaire investors on the BBC's TV programme "Dragons' Den", the majority (even on the show) do not. This is usually because the invention, the business plan, or both, are unable to withstand the scrutiny of experienced financiers - whether on television or in investor circles.

The costs of researching the market, then designing, producing, distributing, and marketing an invention are beyond the reach of most individuals. To stick with it, they need financial assistance from a third party; ideally, an angel investor who doesn't attach too many strings to the deal.

The reality is that venture capitalists can sometimes inadvertently influence product or service development in a rather challenging way, particularly when phased funding is involved. The need for the inventor to achieve agreed milestones - before being able to receive more money - turns up the pressure to produce something (e.g. a prototype) before the time is right.

5) How do you want us to help you?

Innovation partners- design consultancies or others- provide professional advice and expertise, as well as practical design and development skills, to inventors and larger companies.

Most individuals or start-up operations - and bigger organisations, for that matter - need multiple suppliers and partners to turn their vision into reality. While it's possible to research, meet and hire many third-party organisations from scratch, getting them moving in the same direction at the same time always proves much harder.

Assuming the answers to questions 1-4 make sense, working with an innovation partner that has an established global network of manufacturers, sub-contractors and other entities that can collaborate in a typical supply chain should expedite the journey to market.

Even for those inventors with partners in place, there is still a benefit from working with such innovation experts to spot any weak points. Ignoring helpful advice could turn into very costly mistakes and unfortunately some decisions may become irreversible.

By seeking out the knowledge and application of an experienced partner and combining creativity with more due diligence, the anxiety and cost of such mistakes could be avoided.