Odds of success can be greatly improved by taking the following steps:
Keep it simple – plan to self-fund the venture
Do a patent search early in the process
Make sure the product is marketable
Avoid scams, stay with trustworthy resources
Inventors have many product ideas, some simple and others complex or expensive. Most inventors have limited financial resources, so it is wise to choose simple, low-cost products. Furthermore, invention is one of the riskiest business ventures and it is unlikely one may obtain financing from a bank loan or angel investors for a new, unproven product. Choose a simple, low cost product so you can afford to make prototypes and to test market in small numbers, then progress to larger numbers.
A free patent search can be done on USPTO.gov website. Do this as early in the process as possible. Why? Your product may already be patented or there may be a crowded field of many similar products already patented. A patent can cost $5,000 or more to file and prosecute – there is no reason to proceed if the chances of obtaining a strong patent are not good.
Many patented products never appear on store shelves. Why? Because the inventor never did an independent market study to determine whether or not the product could be successfully marketed. Just because your friends and relatives love your product does not mean that anyone else will. Also, price points are crucial – in general a retail buyer pays only 40 – 45% of suggested retail price. The inventor must have a good profit at that margin.
Invention is very risky because process is front-loaded with costs (patent prosecution, prototypes, and packaging) and profits, if any, come later, often much later. As a result, many inventors become discouraged and succumb to the siren song of invention marketing firms. There are a small number of bona fide firms; many others are scams who have never licensed a single product. It is much better to do your own marketing – taking small incremental risks.
Resources: www.uspto.gov – patent search; University of Wisconsin Innovation Center – wisc.uww.edu - they now provide patent licensing assistance
Alan Beckley is a Business Advisor at the Collin Small Business Development Center. The Collin SBDC offers no cost, customized business consulting and training to help entrepreneurs grow successful businesses.
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