How to Build an Invention Business

Inventors can license ideas without the need to manufacture products.

Building an invention business is a dream job if you're a creative entrepreneur who enjoys dreaming up new ideas or improving old ones. It can be a challenge to launch one, but it gets easier once you license or manufacture your first product. Here's how to get started and build your business:

Instructions

1. Decide whether you want to license your inventions or act as a manufacturer. It costs less to start up and operate an invention-licensing business. Convince companies to buy the exclusive rights to use your invention for a specified time if you want to license your ideas. As a manufacturer, you would bring the product to market and work to ensure that it's not copied by your competitors.

2. Find a patent attorney to join your team. You'll need the help of a lawyer to file your patent applications and to draft non-disclosure agreements (NDAs) you should give to prospective companies and individuals interested in your patent. Ask your lawyer for advice along the way as you work on your ideas. A patent lawyer may have the connections you need for additional support and potential clients for your business.

3. Write a business plan for your invention business. Find free business-plan templates or buy business-planning software to help you write the lengthy document. Conduct market research to see who your competitors are, including companies that buy invention ideas or those that act as a broker for inventors. Your business plan is your roadmap for how to run your business, and you'll need to share it with investors if you want their help to finance the business.

4. Create a prototype to show to product managers and company executives who are potential clients or investors. Don't rely on drawings to describe your idea, because it won't have as much of an impact as a physical prototype that company representatives can touch and handle.

5. Patent your idea with the help of your attorney. The attorney will know what claims to make and can represent you in hearings if another inventor objects to your application. Get your NDAs so that you can approach companies about your inventions.

6. Choose the right business entity for your business to protect your personal assets in the event of a lawsuit. Ask your attorney whether a limited liability company, S corporation or other business entity makes sense for your invention business. Apply for the license and permits you need based on your state and local laws to operate a business.

7. Manufacture your products if you choose that approach for your invention business. Find investors if you need additional funds to lease or buy facilities and equipment. Outsource your manufacturing needs to cut down costs and keep your operations small if you prefer. Solicit distributors to bring your product to the marketplace.

8. Market your products to companies if you prefer to license them instead. Ask for meetings with key decision makers and prepare a presentation to sell your inventions. Communicate the value that these companies will gain by licensing your product instead of going to your competitors or copying your ideas.

9. Improve and innovate your products over time to remain competitive. Use customer data and feedback for research and development purposes. Replace products that are not profitable over time. Introduce new products to grow your business.

References

• Entrepreneur.com: The Complete Inventor's Guide
• Delta College: How to Start a Small Business Inventions