Starting a powersports manufacturing company can be exhilarating, but there are a lot of success factors to employ. These factors do not necessarily translate directly from other markets. In my 21 years of working with startups and product launches, I've identified patterns of success and failure. Here are five best practices that business owners new to the industry should be aware of.
- Trademark and patent early. Name confusion can result in costly legal battles (a couple of players in the UTV industry come to mind) or business going to a competitor. LegalZoom can be an affordable option for small businesses to file trademarks. Consulting with an IP (intellectual property) attorney may also be necessary. United States patent law has shifted from first-to-invent to first-to-file. Provisional patent applications put your stake in the ground and buy time to develop the concept. Without IP, your product is wide-open to copying by competitors. The business world will always be a poker game, but with patents and trademarks, at least you’ll have some cards to play.
- Own your designs. Having a great idea isn’t the same as owning it. Suppliers will often develop CAD models, prints and tooling — what comprises an actual design —for a startup company in exchange for a supply agreement. But if the product has too high of a price and isn’t selling, there is no option to re-source with a lower-cost vendor. Worse, the supplier may legally own the design and could eventually offer the parts on the market directly. When outsourcing product development, plan to attain ownership of the design files at certain stages. If you are handing off your project to a low-cost manufacturing region, consider parsing the sub-components or holding something back to prevent your product from coming ashore under other brands.
- Consider SEO in all communications. Every time you publish something you have an opportunity to include keywords that search engines will find. Original content is now king in SEO, not link swapping or other outdated methods. Include a TAGS section in the communication with the main words your customers will be searching for. Tag videos too. Every word counts.
- Cost reduce intelligently and continually. Cost reduction improves cash flow, widens margins and lets your products rank higher in online shopping comparisons. But I’ve also observed an engineering VP cheapen an accelerator pedal that had been the focus of serious safety recalls. Making engineers wear red noses and use Etch A Sketch was apparently next on his agenda. Don’t relax standards on things that are important to customers and be sure to test changes before implementation. Master the art of where to spend money and where to save money on your products.
- Stay humble. Once, I was trying to convince the owner of a UTV manufacturer to test a new vehicle more thoroughly before launching. He had come from an industry where new product concepts landed on store shelves in a matter of weeks. His response turned out to be famous last words: “We are going to be more nimble and not have as much red tape as big companies like Polaris.” The product turned out to be a failure, and eventually the company collapsed. Study why things are done the way they are in the powersports industry; learning things the hard way can put you out of business.
Watch my future blogs for Part 2 with even more tips for startups.
Gary Gustafson is president of G-Force Consulting. G-Force Consulting provides a wide spectrum of solutions for powersports manufacturers, including component market reports, product development and new product launches.