5 Key Steps For Starting A Toy Business

5 Key Steps For Starting A Toy Business

Start-up companies keep the toy industry fresh. One of the most rewarding things I have observed is seeing a start-up toy company attend toy fair, and then grow year by year until the company is a fully fledged established toy company. Needless to say though, there are significantly more companies that fall by the wayside than become successful.

There are several key steps in making a successful start-up toy company, not every company follows all of these steps, but this should be a good checklist for those planning to start or in the middle of starting a toy company:

1.       Research

a.       I’m often asked by people wanting to get into the toy business what they should research before they start…and the answer is everything! A really robust research phase is so important. You could argue that many innovators just invented something new or cool, or reworked an existing idea, but you can’t count on hitting the mark with that approach. How can it hurt to understand the retail market place, the current trends, what kids are doing/how they spend their time etc?

2.       Feedback/sense check

a.       One fact I would like to share is that I have been approached by hundreds of new product inventors/wannabee toy companies, and the vast majority of them have already developed a product…and the vast majority of them have missed something fundamental about kids, about the toy business or retail etc. The majority of new products I have seen from such toy industry outsiders are obviously flawed in some way which could easily have been addressed if we had spoken before they developed the product!

b.       The most successful toy people I know above all are great at getting feedback/sense checking their ideas & product concepts before investing their money in a product.

3.       Innovation/Origination

a.       Having given you the boring/sensible research or due diligence advice, now we can look at the fun stuff – product origination! There are many ways to develop ideas & concepts, and there are more qualified people than myself to advise on how to do this, but there are a few keys points I would highlight:

                                                               i.      True originality vs tweaking the formula

1.       If you are trying to invent something nobody has ever seen anything like before, the chances are you are not inventing something likely to be commercially successful. There are certain formulae for concepts, themes, play patterns etc.

2.       The true creatives out there may disagree with me, but a new twist on an established formula is much more likely to succeed.

                                                             ii.      Fun factor

1.       In the end toys are supposed to be fun. Good new concepts enhance the fun factor. Seems like an obvious point, but I have seen hundreds of very clever product concepts which do something beneficial/clever, but are not fun. Children are driven by simpler need states vs adults, the easiest way to make something appeal to kids is to make it fun!

                                                           iii.      In built marketing concept

1.       Often the most successful concepts have an in-built marketing mechanism/word of mouth driver.

4.       Sell, sell, sell

a.       Often new toy companies get really perplexed by all the details of the toy business i.e. manufacturing, safety standards etc. The reality is none of that matters if you don’t ever sell any product.

b.       Everything relies upon the sales process, and while you need to do enough work to have a viable product concept, the reality is that even the biggest toy companies do not fully develop & manufacture products until they have sold it.

c.       There are two realities of the sales process in the toy business:

                                                               i.      Successful companies get highly skilled/effective at selling based on a prototype/mock up.

                                                             ii.      Selling is 1% inspiration and 99% grind. It takes constant grinding effort to achieve any sales in the toy business. The annual selling cycle takes an age, and the progress made per cycle is limited, so to succeed in toys you need to be able to grind away day after day, year after year. If your company doesn’t do that you are very unlikely to succeed. There are very few short cuts, and no magic tricks.

                                                           iii.      Even if you use a distributor model you still need to sell to/recruit the distributors, and they see hundreds or even thousands of products per year.

d.       Realistic timelines are important. I’ve Consulted for dozens of companies who expect everything to happen in a few months or even just one year – it won’t! The minimum time to establish a new toy company in one market would be c. 3 years, even with money to invest & hiring toy industry insiders. If you are an outsider with no experience, why would it be any quicker…?

                                                               i.      I started a new business for a major global toy company, and another for a medium sized global toy company – in both cases it took 3 years to build with all those advantages of money to invest, toy industry contacts, top talent on the team, great product etc.

                                                             ii.      I always advise people not to set themselves up for failure – expect a 3-5 year journey to get anywhere in the toy business!

5.       Nurture & Deliver!

a.       The toy industry is a relatively small industry. Those companies who think they can burn & pillage in order to make a quick buck don’t tend to last very long. You will need to keep selling to the same customers year after year, so your success is completely tied to their success. Don’t for one second make the mistake of thinking therefore that you should give them everything they ask for, but you do need to do enough to ensure they invite you back to pitch your product range for the next selling cycle!

b.       Broader relationships are really important in the toy industry, because you see the same faces year after year, and as you go around each country in the world, there are only so many options for distribution partners or retail in each market. Burning bridges therefore is a silly thing to do!

c.       I first attended toy fair around 1999 or 2000, and I’m still meeting some of the same people I met then today – in our industry above all your contact network and relationships are your own personal equity!

There are of course other factors/areas which are important when seeking to establish a start-up toy company, but these 5 factors are key. If I had to pick one most important factor it would be ‘Sell, Sell, Sell!’ because nothing much happens until you persuade someone to buy from you, and even those successful companies developing really cool ‘must have’ products tend to be just as effective at selling as they are at developing the next big thing.