Did that headline grab your attention? We hope so! The all-too-unfortunate truth today is that many inventors waste tons of money on things that they A) do not need yet, B) could get cheaper, if they did their homework, or C) may not ever need at all. This is a major problem, for even inventors with market-busting ideas will probably not see a dime from their efforts if they go broke by making these types of mistakes first. That said, let’s cover some of the most common and not-so-common inventor debt sinkholes.
1) Applying for a patent too soon (or right away).
By far the biggest money-wasting mistake inventors make is to apply for a full utility patent too soon. Why is this a waste of money? A few reasons. The first is that patents are expensive. Really expensive. The cost of filing a patent (including attorney’s fees) ranges from $4,500 for a “relatively simple” invention to $15,000+ for a “highly complex” invention. Now, take a minute to reflect on those numbers and ask yourself, “Am I at all certain that my invention is going to do well enough to justify those fees?” If you’re just getting started, and you’re honest, the answer is probably “I’m not sure.” Don’t spend money on a patent until you are more sure than you are now. Talk to some trusted sources, do some market research, and see if your invention has legs before spending this kind of money.
2) Pouring your savings into a “really great” (but unresearched) idea.
A similar money-wasting mistake is when a starry-eyed, novice inventor dumps his life savings into creating “This really great idea” he thought of. The problem with this approach is the huge risk. Tragically few inventors take the time to do any kind of market research or in any way answer the question, “Does anyone but me think this invention is worthwhile?” But if you haven’t answered that question (and if the answer isn’t “yes”), you should not be spending a lot of money pursuing it. Of course, you’ll never be 100% sure your invention has a market. To paraphrase Perry Marshall, “If inventing were a color-by-numbers activity where you followed a blueprint and got a guaranteed result, it would be a job.” But still – do at least some homework before emptying your bank account on an invention.
3) Borrowing money to finance an invention with no repayment plan.
If you’ve avoided the two pitfalls above, congratulations! – but you’re not out of the woods yet. Even the most realistic inventor pursuing the most surefire idea can go broke by financing the invention without a repayment plan. By “repayment plan” we don’t necessarily mean a fixed, signed agreement to pay a set amount over a set time. Rather, we are just saying that you should have some rough idea of how and when you will repay what you borrow via a credit card, cash advance, or bank loan. Don’t rush into the first financing opportunity you think of if not repaying it on time gets a lien placed on your house. Try instead to approach the matter of financing your invention in a sensible, logical way, researching your best options and consciously planning how you will repay.
4) Agreeing to supply your invention to stores without enough inventory or capacity.
If you have persevered through the first three mistakes and actually have gotten your invention on store shelves, give yourself a pat on the back. You are savvier than most. But beware, for if you don’t take the proper precautions, you could soon become a victim of your own success. Many big-name retailers (and especially “catalog” companies) want you to have excessive amounts of inventory available to handle a sudden spike in demand for your products. If your invention becomes a hot seller, they need to know you can produce enough to keep up. If you can’t, you will either go under completely, or go into crushing debt to stay afloat. Neither of these are at all desirable, so make sure you can keep up!
If there’s a common thread in all of these mistakes, it’s lack of preparation and foresight. Luckily, these are skills you can learn and even master if you are truly committed to doing so. We can’t teach you everything about inventor planning, research, and risk management in one article. But you should continue doing this type of homework before spending money on an invention. (With IdeaBuyer or anyone else.)
To that end, we’ve put together a free, five-day e-mail course called “5 Secrets of Savvy, Successful Inventing” that will show you the ropes. It’s packed with common mistakes, examples of successful and unsuccessful inventions, and proven strategies you can apply to your invention today. If you’re at all serious about inventing something and making a profit (without losing your lunch in the process), sign up for the e-course and take its wisdom to heart. You’ll be glad you did.
About the author of this article:
Eric Corl is the President of Idea Buyer LLC, a new product development company and the parent company of IdeaBuyer.com. IdeaBuyer.com is a marketplace for new technology and products that gives inventors the opportunity to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers.