The Creative Coast’s blogspot is Savannah’s sounding board for local thinkers, innovators, wanderers and wonderers. Guest bloggers share their thoughts, opinions and creative noodling from all over the map. This week’s blog is from David Paddison, Savannah native, insurance professional and local entrepreneur with an eye on the big picture. Read on for David’s advice on getting dirty…
Innovators and entrepreneurs are full of great ideas and exciting concepts. In fact, the scrap heap of failed ideas is littered with some really good ones that ran out of gas before making it into the world of commercial success. When we look at the reasons good ideas fail to launch, there are many culprits: lack of capital, management weakness, marketing flops and sometimes new competing technologies that cut a product’s life short.
But more often than not, the real killer is not understanding the “dirty” world of commercialization, i.e. how to turn an idea into a revenue stream. Successful entrepreneurs are able to answer these key “commercialization” questions: Who is going to buy it? How much will they pay for it? How to sustain sales momentum after the buzz of the launch dies down?
To understand commercialization, we need to think of all the ways people buy products and services. The first and most tradition is a retail transaction where an individual pays for what you are offering. If that is your revenue model, you must figure out how to get your product or service in front of your target audience. Advertising, blogging, social media, public demos and print media are all ways to create awareness and drive interest. The marketing of products in the retail space is widely studied and many people are available to help build strategies and plans to help you identify and penetrate your market. Retail is a tough market to break into, but with careful planning and effective execution, retail is a gift that keeps on giving and can be wildly successful.
The second avenue of commercialization is the business to business segment. Fewer and larger buyers of goods and services are the hallmark of this distribution channel. Sales and marketing efforts are much more tailored in this space and you better make sure your business model can sustain the lower margins and higher volumes associated with dealing with established businesses. Working through industry publications, trade shows and involving yourself in professional societies of your target industries are ways you can elbow your way into the b2b world.
The third way to commercialize your product is through a liquidity event – selling your company to another business or investor who will take your idea to the next level. Many companies in the Information Age have used this model to solve their inability to commercialize in the retail or b2b segments. If your idea can help drive an allied business or service, there are companies out there who make a good living out of commercializing the ideas of others.
Regardless of what direction you take your idea, you must understand your potential sources of deal flow. In the world of commercialization, nothing happens until you sell something. Your job is to figure out three things: who, how much and how often!
Happy hunting.
David
Good and salient reading. I have noticed that when people don’t understand their market, it often leads to not understanding their product. I recently met with an inventor of a very cool device. When asked how he was going to get his device to market, he said he was going to create a game that made the device compelling to consumers. So the question becomes “are you in the device business or the game business”? If you don’t understand your business when you are starting out, you are either not going to get to market or it is going to be economically prohibitive to do so.