353, RE: Serious and intelligent investor(s) sought|
Posted by AxCalibur, Tue Aug-14-07 03:02 PM
Thank you for your input. I have already started the business plan process, and am currently working with a patent company that is assisting me in the patent search, registration, and trademarking of my tremolo system as well as my new designed pickups for electric guitars. Yes, it is a difficult climb from a part time business, to a full time one. And yes, there are many hurdles to leap.
As for the bottom line, that would depend on several factors, such as whether I license my products for sale and outsource them to such companies as Fender, Gibson, Di Marzio, who already have the infrastructure in place to mass produce my products with minor tooling modifications, or whether I were to do it all "in house". I am opting for the first as while I may not make as much per piece, these are meaty players who hold the lion's share of the market, and already have the well established names and reputation for high quality products. Rather than fighting the competition, I prefer to work with them and utilize their assets and benefits to further my own success and that of my business. It is far easier and cheaper for them to mass produce, than it would be for me to do so from scratch.
That said, I am hoping to sell my products to one or more of these big guns on a limited rights basis, wherein they are licensed to produce and sell, but I would receive a reasonable percentage of the gross profits from the sale of each piece. I believe it is called economy of scale. If I can produce 200 tremolos per year from scratch, with a retail value of $245.00 each, and a hard cost of say $100.00 each, then my gross profit is only $28,000.00. But if I can get say $10.00 from each unit and say Fender produces 250,000 of them as both factory installed units, as well as replacement parts, then I turn out $2,500,000.00. I believe that a percentage of something is better than all of nothing.
As you brought up, you aren't well versed with all the technical aspects of the instruments or exactly what goes into them, and in truth, you are not alone by any means. Most investors are not well versed in the technical aspects. I, on the other hand am quite the opposite. Well versed in the tech part, but not so well versed in the investment/funding/ financing aspect. I can tell you what the parts and designs do, and why they will sell like gangbusters once they are marketed. I know what players are looking for in their instruments, and they will gladly shell out for anything that will increase their playing level, comfort level, tone, sustain, and sonic accuracy of their instruments.
With that in mind, I need as much info as I can get, as to the best way to approach and find truly interested and qualified investor(s) who are not out to rip me off. I have tried on 3 different occasions with 3 different so-called investors who were all nothing but frauds, wanting nothing more than to steal my inventions, or soak me for what monies I had available to further the progress of my business. In the interim, I have been acuiring the tools, materials, and equipment to build my own prototypes, field test my instruments by having other professional musicians play them live as well in the studio, utilizing their input to further refine my designs and products to be the highest quality possible.
Any advice you can give is greatly appreciated.