Great IT inventions do not always translate into successful businesses. In fact, according to a Toronto-based SMB (small and medium sized business) mentor, many inventors end up wasting time and money on developing software or hardware tools that never were viable business investments in the first place.
“There’s a huge difference between developing a good IT product and developing a good business. Not everyone has the skills to do both,” according to Agnes Haak, founder of Sparkit, an organizational development and change management firm in Toronto, and a mentor with the Innovation Synergy Centre in Markham (ISCM). The ISCM is a non-profit organization that serves as a support hub for Ontario’s tech start-ups and innovative SMBs.
Haak acknowledges that developing software, tech components or IT systems require considerable amount of skill, knowledge, training and insight. Very often many tech start-ups struggle because their principals have piles of technical know-how, but are not versed in the ins and outs of seeking funding, marketing and business planning, she said.
Fortunately there are many organizations that provide training on these topics. For instance, ISCM’s Building Your Business Workshop offers for free, practical tools, professional advice and valuable peer feedback that many startup owners can use to help them get on the right track, said Haak.
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“The Internet also offers a lot of information on these topics but in my experience I find that many entrepreneurs and inventors also need someone to walk them through the process,” said Haak.
Although there is no one-size-fits-all solution, she said many tech SMBs can benefit by following a simple formula.
Is your invention marketable?
People who want to turn their invention into a business should ask themselves this question: Who will buy my product?
“Perhaps even early on in the development stage – well before the product is finished – inventors should determine if there is a market for the invention,” said Haak.
In many cases, she said, it’s not a question of whether or not the product is good but whether or not it is desirable and if people will be willing to pay for it. “Having a good product doesn’t necessarily mean it will sell.”
Inventors need to realize that they have to deal with a lot of competition in the market place. “You need to develop a competitive edge that will set your product apart,” said Haak.
Take the case of downloadable software or more recently mobile applications. There are countless freeware being offered on the Internet. Free to cheap mobile apps abound, Haak pointed out. “If you’re developing a software or application, ask yourself why people would pay for it or find out other ways of monetizing the product or service.”
Haak said, in some instances, developers might have to go back to the drawing board to work in some differentiating factor that would solve a previously un-served need.
Focus on the right customer
It is often very difficult for entrepreneurs to shift focus from the development of their product, through the design and testing phase and to the potential market phase. This was what the founders of LC Scientific Inc., a chemical synthesis lab in Concord, Ont. found out.
The company was originally set up by Eva Goss, a chemist who in 2006 decided to strike out on her own and set up a business developing chemicals for various international clients in the education, government, and pharmaceutical fields.
LC Scientific initially took on difficult chemical development projects to prove itself in the market. But later on, in order to round up business, LC Scientific developed into a “chemical catalogue” firm that sells off-the-shelf chemicals online, said Barbara Goss, daughter of Eva.
“It was only after taking part in the ISCM workshop that we realized we were missing out on a larger opportunity. We were not marketing to our strengths,” she said.
Projects developing variants of a certain chemical so that they could be suitable for human testing can many weeks or months to finish and bring in more than 200 per cent of revenue over selling of the shelf chemicals.
“ISCM helped us realized that we had a niche market willing to pay top dollar for custom chemical projects,” said Barbara.
Seeking partnerships
Inventors also need to do an honest appraisal of themselves to determine if they have what it takes to bring their invention to the level of a successful business.
Business owners need to be:
- Willing to take calculated risk
- Able to indentify solutions to a problem
- Aware that their business success is important
- Able to deal with business setbacks
- Willing to work with partners
Entrepreneurs need to realize that they can’t always control it all.
“In many cases tech people team-up with partners that have the business savvy to steer the company to success,” said Haak. “This could mean giving up a fair amount of control.”
Nestor Arellano is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blog, and join the IT Business Facebook Page.