Monday, December 29, 2008

Finding New Business Ideas

Finding New Business Ideas

Q: What opportunities do you see out there for new entrepreneurs? Where can someone turn for new business ideas?

—A.C., Florham Park, N.J.

A: Ideas are everywhere. It's execution of good ideas -- not the ideas themselves -- that makes for successful businesses.

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That said, uncovering real opportunities and fleshing them out requires some foresight and research. Aspiring entrepreneurs should generally stick with industries or subjects they are already well-versed in, since they'll then be in the best position to spot opportunities and take advantage of them, says Bo Fishback, vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, a Kansas City, Mo., entrepreneurial research organization.

"If you don't have a unique skill set in a space," he says, "it's going to be very hard for you to just jump in and compete with everyone else who does."

The best ideas, Mr. Fishback adds, are those that solve vexing problems -- and often spring from firsthand experiences. Of course, some trends, such as the aging baby-boomer population or the boom in online social networking, naturally present lots of opportunities for entrepreneurs.

Mr. Fishback recommends identifying the "smartest" people you can find in any industry you're considering starting a business in and speaking with them extensively about the industry and the issues they face. These people will not only feed you ideas, but can also act as a sounding board for any ideas you have. Closely monitoring the news, blogs and industry Web sites also can help sprout ideas.

The Internet offers plenty of resources as well. Social-networking sites for entrepreneurs, such as ClubENetwork.com, Vator.tv, Entrepreneur.Meetup.com and PartnerUp.com, allow people to swap business ideas and provide feedback to each other.

Other sites like ideablob.com, run by credit-card firm Advanta Corp., let users pitch business ideas and have their ideas voted on by other community members -- with the chance to win cash prizes.

Three Ways to Build Innovation Into a Day's Work (WSJ)

Three Ways to Build Innovation Into a Day's Work

Game-changing ideas may abound at your workplace – in the minds of your employees. The hard part is figuring out how to tap into those ideas and make creativity part of the daily routine.

But regularly harnessing your staff's brainpower can provide an important edge to small businesses competing against larger competitors with bigger budgets and deeper resources.

Here are three ways small companies have figured out how to make the most of employee contributions.

1. Awards and Recognition

Allison De Meulder wanted to hear new ideas from employees at her online custom-invitation store. Her staff of 24 rarely made suggestions, but she had a feeling they had more to offer than they were letting on. "People don't always feel comfortable coming into my office," she says.

Ms. De Meulder, who is president of Tampa, Fla.-based Invitation Consultants Inc., bought a white mailbox and installed it in a central spot in the office.

Employees are encouraged to drop in new ideas and lift the red mailbox flag. Once a quarter, Ms. De Meulder and her husband, Olivier De Meulder, the company's vice president, select a winner from as many as 30 ideas. They host a catered lunch and read the top three aloud. The winner is awarded $500 cash and a sculpture resembling a glass-encased electric-blue light bulb.

"I really wanted to do something to motivate people," Ms. De Meulder says. "People are motivated by recognition."

A recent winning entry came from a graphic designer, who pointed out that free photo touch-ups on wedding and graduation announcements can consume a lot of time and energy. The new idea: Charge a few dollars for labor-intensive work, such as removing objects from a background. As a result, Ms. De Meulder says, the company made an extra "couple thousand dollars" during the recent graduation season.

Another recent winner: A vendor-relations manager suggested that brides shopping for wedding invitations should be able to save favorites and send a poll to family and friends, who can vote for their choice. That poll could be landing in the inboxes of other future brides who will need their own invitations one day. Attached to each poll is a coupon code to help drive new business.

Not every idea works. One winning suggestion proposed drop-down menus for customers searching for invitations, a tool that proved too unwieldy to implement. Despite spending fruitless time on that project, Ms. De Meulder says, "I don't give guidelines. I want free-flowing creativity."

2. Required Suggestions

When Talia Mashiach co-founded Eved Services Inc. four years ago, she instituted weekly company-wide think-tank meetings. As her event-services company grew – it now has 27 employees, most scattered at several hotels around Chicago -- meeting weekly proved impossible. Last year, it moved to a monthly meeting. There, each of the company's five teams – grouped by hotel client, plus a support-staff team– is required to present three new ideas. Some ideas are embraced on the spot; others are studied by executives in the following weeks.

Among the ideas adopted: Instead of staff working at hotels wearing their own choice of business attire, they all now wear a black suit with a black or white shirt, along with a lapel pin bearing the company logo.

"It's been a game-changer," Ms. Mashiach says. "Hotel clients talk about it. They say it creates a professional image."

Last year, an employee suggested reaching out to third-party meeting planners who work with corporate clients. Eved had been concentrating on hotels, but now works with 10 such event planners. Ms. Mashiach estimates those connections will bring as much as 25% of its anticipated $10 million revenue this year.

With the constant flow of ideas, Ms. Mashiach says she has to be careful not to discourage people when their suggestions aren't implemented – and to encourage them to keep trying. Some employees may approach her to complain that an idea wasn't adopted, "which is something we watch carefully," she says. "If they don't get the sense you're listening, it won't last," she says.

Those who see their ideas implemented are rewarded with stars, which also are awarded for other performance-related accomplishments. Each year, the top three star earners are rewarded with lunch with the executive team.

3. Online Document Sharing

The test-prep and subject tutors at C2 Educational Systems Inc. rely on stacks and stacks of books and manuals. A few years ago, when they discovered a teaching tool, or a mistake in a book, they'd fire off emails to the Duluth, Ga., company's headquarters, where curriculum staff struggled to stay on top of the suggestions.

"When we had five centers, it was doable," says C2 chief executive David Kim. Today, C2 Education has 110 centers and 440 tutors. "As we grew, it was harder to keep track."

Three years ago, Mr. Kim began posting teaching materials in Google Docs – a free online service that allows people to create, share and jointly edit documents. He and other employees encouraged tutors around the country log in to the tool to check for new resources and share their thoughts about books, classroom activities and teaching tips. Tutors can also post new materials they've found useful.

C2 tutors can log on and add teaching suggestions and other comments from anywhere. Google tracks changes and saves previous versions of the document.

While some of the updates are nuts-and-bolts suggestions -- better ways to teach fractions, for example -- others have the potential to invigorate the business. At the prompting of a tutor who said parents wanted their children to learn persuasive-writing skills, the company posted a teaching document to its Google Docs page. Tutors downloaded it over and over again, and continually made updates and suggestions. One suggestion: Start a formal debate class.

In May, the company rolled out the debate classes at 24 C2 centers. Parents pay $45 and up per hour for their children to attend. The classes are now bringing in about 10% of C2's revenues.

"Parents thought it was a huge benefit to their children, to further those debate-and-writing skills," says Mr. Kim.

Mr. Kim would like to move from Google Docs to a more sophisticated proprietary system, but so far he hasn't found the time or the money. Another potential problem: The more-innovative suggestions tapered off recently, and the majority of new posts are errors in test-prep books and other routine comments.

"We'd like to get some of that rah-rah spirit back," he says. He's considering compensating employees for the best new ideas.

What Business Owners Should Know About Patenting (WSJ)

What Business Owners Should Know About Patenting

Thomas Edison once said, "To invent, you need a good imagination and a pile of junk." He might have added a third ingredient: a patent. Without one, inventors can't sell, license or protect their creations. Edison understood that very well: He held 1,093 patents, still a record for an American.

For many small businesses, knowing when and how to obtain patents can be confusing. So, too, can be knowing what to claim in the patent and when to sue over infringement and --when not to.

To help clarify these matters, we spoke to James McDonough, an intellectual-property attorney at Fish & Richardson P.C. who specializes in advising start-ups and small companies on intellectual-property strategy and technology commercialization. Mr. McDonough talks about the current climate for patents and looks at the perils companies face and what steps they should take to protect themselves.

WSJ: Is it more difficult to obtain patents than it was five or 10 years ago?
Mr. McDonough: It is getting harder to a certain degree. The [U.S. Patent and Trademark Office] appears to be rejecting claims at a greater rate the first time through. I think that reflects a backlash in response to some of the problems we've seen with the issuance of poor-quality patents and how they are being misused by patent trolls [a derogatory term for a company whose only business is to buy patents to collect license fees or court-awarded-infringement damages].

WSJ: What does it cost and how long does it take to secure a patent?

Mr. McDonough: It's hard to say with certainty how long it will take, but, depending on the technology that's being patented, it can take anywhere from two to five years for a patent to issue. As far as costs, expect to spend anywhere from $10,000 to as high as $30,000 for highly complex technologies. Patentability searches account for up to a thousand of that, application fees can add up to another couple thousand, and the rest is attorney fees for patentability opinions, initial patent drafting, and [Patent and Trademark Office] action responses and appeals.

WSJ: Who doesn't really need to hire an attorney? Who really should and at what point?

Mr. McDonough: The only time I would not advise an inventor to seek counsel from an attorney is if the act of patent drafting is itself a hobby to the inventor and he has no intention of selling the invention. If there is even a remote chance that the inventor will commercialize the technology, he should get an experienced attorney involved as early as possible in the process.

WSJ: Where do most companies go wrong when they're trying to get a patent?
Mr. McDonough: First, a small company may want to start patenting without thinking through its long-term [intellectual-property] management strategy. Before patenting, you should work with a skilled intellectual-property attorney to develop a plan for building your IP portfolio. A common problem we see is a portfolio that is driven purely by research. A good IP portfolio should be designed in a way that accurately covers the business objectives of the company while protecting the technologies around which the company is built and exploiting niches of the technology field that are not yet patented.

WSJ: What's another mistake companies often make?
Mr. McDonough: An inventor may want to apply for a patent at the wrong time. For instance, it may be too early if the invention is not yet developed to a point that it can be sufficiently described in the patent. It is too late if, for example, the inventor publicly used or sold the invention more than a year ago. If it is too early, an attorney might advise the inventor to spend more time researching and developing the invention before patenting, but if it is too late, the invention may no longer be protectable.

WSJ: I've heard some inventors may claim too little or too much in the patent.
Mr. McDonough: Often, an inventor's instinct is to describe his invention by describing its specific parts, which can result in inadvertently limiting the scope of the patent. As a general rule of thumb, the claims should include all possible versions of the invention, which can be accomplished by using broad, functional language in the patent. The inventor and attorney will work together to refine the scope of the patent to ensure it is as broad as possible while still being able to withstand a lawsuit.

WSJ: Is patent infringement more common than it was five or 10 years ago?
Mr. McDonough: I don't know if there's more infringement, I just think that there's more patenting going on. Also, the value of a lot of large companies nowadays is based on their IP.…So now you're seeing companies actively seeking to protect their assets.

WSJ: If a small company believes a large company is infringing on its patents, should it sue?
Mr. McDonough: That's a difficult choice for a small company. It's become a little easier lately because a lot of law firms out there will take on a plaintiff-side patent case on a contingency-fee basis if they think it's a good case. But generally it's pretty difficult to bring an infringement suit against a really large company because of the amount of resources available to large companies as compared to small companies. It is generally accepted in the industry, that a patent-infringement suit can cost $2 million to $4 million in legal fees. So, it's often not ideal for a small company to try to sue a really large company.

WSJ: What are some alternatives to suing for infringement?
Mr. McDonough: You might approach the larger company and offer a license, or attempt to establish a partnership. If a company doesn't have the means to sue now, it might choose to temporarily ignore the infringement and try to get its product to market first to generate sales. Sometimes you have no choice but to bring an infringement suit.