Here's a step-by-step process for turning a good idea for a new invention into a financial success.
You've got a great idea. But negotiating your way from the invention you first sketch out on a napkin to a successful product can be daunting.
Laying careful groundwork can make all the difference in whether your invention ever makes it to market. 'I'm continuously surprised by the number of entrepreneurs who throw a product up on the wall and see if it sticks,'' says Professor Tim Faley, managing director of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan.
Faley cites four steps in the successful inventor's approach:
Define your product.
Define the market.
Define the business itself.
Understand the 'metadriver' that's pushing your invention at this moment. 'Why is this a business opportunity now?' says Faley.
Within those steps are a number of factors every inventor needs to address.
Refine Your Invention It's a no-brainer, right? You know what your invention is. But your idea might evolve as you do more research, says Faley. Too often, inventors worry about rushing to the marketplace, but don't spend enough time evaluating the product or what niche it will fill. 'Inventors think ‘I've got to get it out there before anybody else. They forget to design the business, to look at who the competitors are and who might be complementary businesses,'' Faley says.
As you evaluate the marketplace, be receptive to the needs of your potential customers, advises Faley. Some entrepreneurs are content to conduct what Faley calls 'big market research,' looking at megatrends. Too often, he says, 'they miss that individual conversation in which people really reveal what they need.' This is good news, in a way, for the independent inventor operating on a shoestring budget. Faley finds you can learn a lot simply by observing and talking to individuals anecdotally. See how consumers use a similar product or participate in an activity where your invention would be used.
It might seem early in the process, but it's not too soon to start thinking about the second generation of your invention, either. Plan for the adoption curve, noting who is likely to use your invention first, and how you can improve it for subsequent users.
As you develop your idea, the question becomes how to protect your intellectual rights.
Protect Proprietary Information For most individual inventors, evaluating whom to trust is critical, notes Faley. Know that you'll need to collaborate at some point in the process and decide exactly what aspects of your invention are proprietary, he advises. Protecting your idea is an essential early step, says Iowa patent attorney Ryan N. Carter.
Be careful about talking freely even with friends, Carter advises. 'It's hard not to when you think you've got this great idea,'' he says. 'But one of the things you have to be careful of, in patent law, the second you disclose your invention to a third party without a disclosure agreement, you have a one-year time frame to file your patent application.'
And that grace period won't apply internationally, says New York patent attorney Ian R. Blum. However, you can file a provisional patent application that allows you a year to commercialize your product, then file a non-provisional patent application. 'For most entrepreneurs, that provisional patent application is a great idea,'' Blum says.
Decide on a Marketing Plan Designing a business to market your invention or licensing your invention to another company are the two pathways to market. Certainly, handling the manufacturing and marketing of your product involves considerable more work and risk. It can be hard to fight for space on store shelves for your product or to establish your customer base. However, cautions Carter, 'Many big companies don't want to buy an idea from somebody unless he had a track record of proven sales. It's kind of like winning the lottery.'
As you approach companies, you're also not likely to get them to sign non-disclosure agreements, Carter says. You have to weigh the risks involved in sharing information about your idea. 'If you're an individual inventor without much money, you really don't have much bargaining power. You really have to find a company you trust. Tell them your idea, and see if they want to work with you.'
Most companies have channels by which ideas are submitted. Some large corporations even offer submission areas on their web sites. A reputable licensing agent can help your invention find a home with a manufacturer but will take a percentage of the royalties.
Conduct Research Feasibility studies will let you know if planning your own business makes sense. 'People way underestimate the startup costs. They way underestimate customer acquisition time and cost,'' Faley says. 'Make sure your plan holds water.'
Think Like a 3-year-old Throughout the process, don't be afraid to ask questions and to search for explanations. 'You have to talk to people like you're 3,'' Faley says. ' ‘But why?'''