Creating a Business Around a PatentSome of the most ambitious inventors seek not to sell or license their patent, but personally see to it that a thriving business is created around it. It is for these prime movers that this article was written. Today, we will discuss some important yet overlooked steps to creating a business around a patent.
The first step is to determine the viability of your patent idea. This means checking up on potential competitors in the market. For example, if you have created a new and more delicious ice cream topping, you have to check up on anyone who could be perceived as a competitor. Who else is making similar toppings? What types of ice cream are most likely to be eaten with your topping, and who makes that ice cream? Can you see them becoming a competitive threat at some point? Clearly, a SWAT (Strengths -- Weaknesses -- Opportunities -- Threats) analysis is in order here.
The second step is scoping out the market for your product. You might have the greatest product imaginable, but in the wrong market, you will not gross dollar one. Your surfboards might catch more waves than Kelly Slater, but you wont sell too many of them in Colorado. This means you need to put serious thought into how you will reach your market. Who is your ideal customer? What are their buying behaviors? Is your product seasonal, or do people typically buy it each and every month? If your product is seasonal, you had better think about how you will survive the lulls. The importance of scoping out the market cannot be stressed enough, as it will determine your distribution plans, price structure, and other important factors.
The third step is assessing the financing options open to you. Some businesses are simply more capital intensive than others, and if yours is, you will need to have some financing to get out of the blocks. Get an idea of what your operational and startup expenses are, and then weigh your options on where to get the funds needed. Will you use your savings? Borrow from friends and relatives? Seek angel investors or venture capital? The latter options will require some paperwork to ensure things are on the up and up, legally speaking.
The fourth step is to plan out your operations. This is when you decide where your materials and supplies are going to come from, how much they will cost, how your packaging will be done (if any), etc. This is also the time to determine your distribution strategy -- ie, who will sell your product and where. Distribution is a crucial aspect of any business. In fact, it can literally determine the success or failure of the product. Whether you sell primarily in stores or online (or both!), for example, will have huge ramifications for your entire cost structure.
The fifth step is developing a marketing program. How do you plan on moving your product? How will anyone know it exists, or why they should buy it? You have several options in this regard. You can advertise in trade journals or magazines, showcase your invention at trade shows, TV ads, and the like. The idea is that your marketing efforts should be the result of conscious decision making and not "just hoping it works." The goal is to demonstrate how your product will solve an unsolved problem or need.
Finally, the sixth step is writing a business plan. By this point you will have enough information to write down some goals and projections for yourself. They can be sales goals, profit margin goals, or just about any other goal you can quantify and shoot for. Investors and business partners will request to see a business plan before working with you.
If these are steps you are ready to take, IdeaBuyer.com might be worth looking into. They are an up-and-coming intellectual property marketplace connecting serious inventors with top companies in various sectors. One of their focuses is working with inventors who are trying to build businesses around their patents. Using their accumulated expertise and industry connections, IdeaBuyer will work hands on with inventors to avoid common pitfalls and red tape.
The startup resource AntiVentureCapital.com warns that many entrepreneurs use planning as a way to indefinitely postpone "that fateful day when the marketplace decides whether the idea will fly." The experts at IdeaBuyer.com have the polar opposite of this mentality. The goal is to help you bring the rubber to the road as quickly as possible, without unnecessary delays and distractions.
If you are looking at creating a business around a patent, please contact us at 832-683-1527.
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