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Guidance for New Entrepreneurs When In Doubt, Use A Performance Contract |
We have a number of ongoing customers that we have helped over the years. These folks have a lot of experience on what it takes for a small business to successfully perform new product development. One of them was gracious enough to provide us with a guide for product development for small business. We highly recommend that you read this and take the message to heart before proceeding. If you like this brief guide, you will love the book "Will It Sell? How To Determine If Your Invention Is Profitably Marketable (Before Wasting Money On A Patent)" by James E. White which is available on Amazon.com among other places. If you read the guide and get a copy of the book to read, you can avoid wasting time and money on projects which will not pan out for you. And the book also will give you some good leads on how to improve your odds of succeeding. Another very important point to consider is whether you should patent your product idea, when you should do it and how. The large majority of patents filed by individuals NEVER produce any return on the rather large investment required to obtain them. This is no small point because it may cost $20,000 or more to obtain a US patent. Make sure that you have a reasonable expectation of making money from the patent before you invest in it, unless you don't mind wasting money. Read the above guide for product development and do not patent until you are well on the way to demonstrating that your product idea will be able to be successfully marketed. For further information you might want to consider networking with other inventors by going here. An important point for new potential entrepreneurs is that in order for you to make progress toward making money from your new product ideas, you will need to share your ideas with others. A lot of potential entrepreneurs have good ideas but when they get to this point they decide to keep it secret, with the result that it never makes it to the marketplace and never makes them any money. Share your ideas with others only after putting a confidential disclosure agreement (CDA) in place, and then you will emulate Bill Gates (but not necessarily get wealthy like him!). Having a CDA makes it clear to the person you talk with that you are very serious about protecting your ideas, and it protects your ability to patent your ideas, should you eventually decide to do that. Make sure that you only divulge your patentable ideas to someone else under a signed confidential disclosure agreement with them such as this one. If and when you are ready to file for a patent, if you want to save money, use LegalZoom to create the rough draft of your patent, only involving a patent lawyer to review your patent rough draft to suggest ways to improve coverage and other aspects that actually make use of the lawyer's critical knowledge. Good patent lawyers will be happy to work with you in this, and here is one that I can recommend. Over the years I have found that project management is a necessary tool for all projects which aren't very short duration jobs. Certainly, if a project will take at least a month to complete, there should be a detailed project plan to start with listing all major activities, costs and durations. This makes it clear to both the customer and to the work provider exactly what will be done. If either party refuses to provide/pay for project management, then you would be well advised to walk away from the project. Twice I have done projects for customers who refused to pay for project management as part of the contract, and in both cases there was ill will by the end of the project. So you should want to use project management if you are the work provider. If you are the customer, having good project management used means that you will always know where the project is in time, expenses and task completions, and that will let you sleep at night. A complete project plan would highlight costs and timeline and all of the potential obstacles so that everyone involved have a clear idea what the project entailed. Always insist on project management unless you are dealing with a very short project.
When In Doubt, Use A Performance Contract If you have ANY doubts about the capability of a supplier to deliver what they say they can (for example, anything having to do with sales), always have a performance contract with your supplier so that you can quickly end an engagement which turns out badly. (This can happen even with the best of friends). A performance contract can be quite simple, specifying how long the supplier has to accomplish a given amount of work. For example, identifying a capable marketing partner and getting them to sign a contract could be the first key performance objective to be accomplished within a reasonable time period to be specified in the contract. Failure in that would result in termination of the work contract so that a better provider may be sought. This is especially important if several partners are involved in overseeing the overall project.
Avoid Legal Liability With Patents One further idea concerning patents is to have a correct list of inventors on the patent. Make sure that your patent has all of the inventors listed on the patent and make sure that no one else is listed there. This is not the place to plump your ego or to reward your friends; it is a legal document and must be accurate. A patent with the wrong list of inventors may be challenged and overturned in court, so this is a very important consideration. If your patent is very valuable as it should be, this is an exposure that you don't want to have. Entrepreneurs who hire a contract product development team to create a new product from an idea of theirs, or more often from an observation that a new product is needed to solve a particular problem, should make sure to have the team members listed who contributed to the invention--who created the means of making your new product concept work as a product. You should be able to get this information from the team leader quite easily when you are preparing the patent disclosure. If you wanted something done, but didn't participate in the development process in a direct way, you likely are not an inventor and should not be listed on the patent. In any case, a simple contract (such as this) is sufficient to have the inventors turn the rights to the invention over to you if you paid for the development and there was an agreement that you would get the rights to the invention after payment for the work. A sample contractor agreement that covers this is shown here. Do not let pride, or the fact that you paid for the patent legal work, delude you into claiming that you were the sole inventor if you were not. Remember that product development teams develop their reputation by how many valuable patents they have contributed to, so it is very valuable to them to be listed on a patent. Don't alienate them by wrongly claiming sole inventorship, because you need to protect your reputation and you might want to use such a good development team on future products. That isn't very likely to work if you steal their IP authorship. Here is another very useful article for all entrepreneurs to read to avoid trouble. |
