The world of business and inventing is cutthroat to say the least. When it comes to creating new products, everyone with a serious stake in the process knows that time is of the essence. The reason for the frantic pace lies in something called the first-mover advantage. According to Wikipedia:
First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match.
There are several advantages that can be gained from entering first:
- Scarce resources can be preempted, e.g. occupation of prime retail locations
- The ability to register patents and trademarks that will protect the first entrant from future competition.
- Changing the economics of the market in a way that second entrants will not have an economic justification to enter.
- Early profits can be re-invested in improving the resource base.
- Reputation will likely have the advantages that come from suppliers, distributors and customers who are familiar with and loyal to their products.
Those are some pretty hefty advantages for first-movers. With all of this being the case, is it any wonder that competition is so fierce? This is where the saying “your competition never sleeps” comes from. It is an immutable law of business has been operating and will operate so long as there is business to be conducted and profit to be made. So what should you do about it? The best defense is to protect your secrets, get to market as fast as you can and protect yourself once you arrive. Fortunately, there are some savvy, common sense steps you can take to achieve this.
1) Secure intellectual property protection
One effective way of shielding yourself from fast-working competitors is to get a patent, trademark, or copyright for your invention. Most likely, a patent will be what you are going for. The chief benefit of having a patent is that it gives you the right to stop others from capitalizing on what you have the patent for. Therefore, if you have invented a new, lighter and more puncture-resistant bicycle tire that utilizes new rubber alloys and aerodynamic formulas, you can secure patent protection and, in effect, retain the sole rights to capitalize on those things. Clearly, this is one way to make competing with you a less attractive prospect for anyone who was planning on it. However, you probably will not succeed in getting a patent unless you..
2) Create a prototype
The United States Patent and Trademark Office requires that you produce some actual, tangible embodiment of your idea before you can receive a patent for it. For this reason, it makes a lot of sense to create one. But the other important reason to create a prototype is that it gets you from dreaming to doing. Ask yourself this question, and be honest with yourself: if your competitor has a prototype already and you do not, which one of you is likely to reach the market first? All else equal, the answer is obvious. Once you reach the prototype stage, you are much closer to that glorious day when your creation reaches paying customers. And rest assured; your competitors know this and know it well. You would do well to make creating a prototype your number one priority in your day to day efforts.
3) Negotiate exclusive agreements with vendors
Once you are ready to hit the market, see if you can get creative with your vendors. If you are selling via the web, for example, you may be recruiting affiliates to sell for you. Promise them an extra cut if they abstain from selling competing products alongside yours. If you are selling in stores, the same principle applies. Many vendors can be talked into an exclusive relationship with you if the price is right. This is one reason that Microsoft holds such a dominant position in the operating systems market, and you can benefit from a similar approach. If you can secure some type of exclusive agreement, you will make it that much harder for competitors to crowd in on your target market and take away your hard-fought sales!
4) Get your partners to sign NDAs
If you have partners or employees, you should get them to sign Non-Disclosure Agreements whenever possible. Although they are not airtight, they legally compel those who sign them to keep your secrets under wraps from anyone that you do not explicitly authorize. If anything goes awry down the road, you will have the early workings of a case against them, perhaps even the ability to seek damages. In the best case scenario, the NDA will simply function as it was intended: to keep your private information under wraps.
Follow these simple tips and, you will be armed for the never-ending battle of speed, wits, and savvy with your competitors.
Eric Corl is the Founder and CEO of IdeaBuyer.com, the online marketplace for intellectual property that gives inventors the opportunity to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers. You can email him at EricCorl@IdeaBuyer.com.