Chapter 5: Selling Your Idea
IDC Inventors Guide / Chapter 5: Selling Your Idea
Being able to sell the benefits of your invention is crucial to success. Think hard about how to communicate the benefits of your idea to consumers and buyers. Selling is also important if you are looking for licensees or investors. You have to be able to convince them that your idea makes sense to invest in and that you will in turn provide them with a fantastic return on investment. A good, well-thought out and structured business plan is the key to making investors want to invest in you, your product and your business venture.
Your business plan is the blueprint to how you are going to make money from your invention. Writing a business plan will help you plan out your business, pre-empt some of the difficulties and, crucially, estimate the capital required and the likely return on investment for your product.
There are many books and websites dedicated to writing business plans but the basic should be:
- Executive summary – about you product, patent and the business opportunity
- Marketing research – analysis of the market potential, competitors, pricing etc
- Commercialisation plan – detail of how will you profit from the invention, e.g. licensing,
- Sales projections – estimates for pricing, sales volumes and profit margins
- Manufacturing – plans, costs and timescales for development and production set up
- Management team – profiles for your management team
- Financial statements – projections for cash flow, return on investment and profit and loss
There are many different ways to profit from a great invention. It is important to think carefully to choosing the best one for you and your investors.
Selling your Patent
It may be possible to sell your patent to another person or company and receive a one-off payment for it. This will mean you will lose the rights to your invention and not receive any future royalties so if the product is a huge success you will not see the benefit. On the plus side you will potentially get cash in hand without risking much of your own capital if the product fails you still have your money.
Licensing your Patent
Another route to commercialise your invention is to licence it. This means that you will retain the ownership of whilst allowing another party to make, use and sell the invention in exchange for royalty payments. The license may be exclusive or to more than one party. You may grant a worldwide license or agree deals territory by territory. You may also choose to issue licenses for specific uses or industries. Use industry and product directories and registers to identify potential licensees.
Start your Own Business
You can of course launch your own company, which will sell the product. This means that the entire responsibility of fundraising, manufacturing, selling as well as distribution, is on you. You will have to come up with a business and sales plan and conduct a market survey to make sure that your start up company will be able to fully exploit the opportunity.
Your business plan is the blueprint to how you are going to make money from your invention