Most inventors are not a start-up business. However, some inventors really are wired to be a “start-up”. They have experience, a team and deep pockets (or someone willing to give them lots of money!)
Instead, most inventors have an “ah-ha” moment and a very good idea. Frequently the next piece of advice they get is how to be a start-up business and the small budget they have quickly gets sucked up by things that don’t really matter in the inventing world. So let’s look at what you need to be a start-up business.
What you need to be a start-up business
- Experience: Business experience, Marketing experience, and Manufacturing experience. This is not the time to learn as you go. Some inventors might have experience in one area but rarely do they have experience in all three areas. Each is a full time job when it comes to getting a new product to market. FYI you will need to keep your current full time job to pay for the adventure.
- A Team: You need people around you who have real experience in the areas you don’t. Friends and family who want to help won’t get you where you need to go.
- DEEP pockets!! No inventor ever comes to me saying “I have $250k to spend on this, can you help me”. Everyone is on a budget. That said, if you think you are a startup, you can easily spend $250k to get to market.
- Investors: You will need money and every inventor believes there are investors just waiting to give them money. NO!! That is wrong. If you do find someone to give you money, it is usually a friend or family member who knows you and believes in you; however, if you lose their money, they will be angry. A real investor is going to want a bigger piece of you and then tell you everything you are doing wrong. Investors/partners can play an important role in your success but you have to be fully aware of the advantages and disadvantages.
- Understanding and implementing the multiple of 5. If your product is a $10 retail item, the store bought it for $5. A distributor bought it from you for $2.50 to sell it to the store for $5. You had to make it, package it and ship it for $2. This means you had to do all your marketing, pay your investors, pay your attorney and accountant and any staff out of the .50 cents left over. There is no profit.
If you have control over the 5 bullets points above, good for you. If you don’t, then you are not a start-up business.
What to do if you are not a start up business
Your best option is to license: let a company make it, sell it and send you a check. In addition, a licensee usually pays to fight any patent infringement and covers the product liability insurance. These are big ticket items for most inventors.
The best thing an inventor can do to have a fighting chance at success is to be aware of options, to ask questions, and to be honest with his or her abilities.
Where to find advice on getting an invention to market
For some free advice on getting your idea to market and NOT trying to be a start up business, check out the info on my website. Inventor’s Galaxy Guide.
Inventor Meetings are a great way to find more information and hear from other inventors on do’s and don’ts. The link here is for a group that meets via the computer, but you can also search your area for local groups. Archimedes’ Offspring Meetup Group