This article was written by John Rau, SCORE Orange County Business Mentor
Lots of people have invention ideas, but never do anything with them. Why? One reason might be that they don’t know what to do next. They don’t have a plan and, as a result, don’t know how to proceed. Here’s how to address this dilemma. It is generally recognized that all new business start-ups should have a business plan, so why not inventors? They should have an “Invention Business Plan” that provides the details as to how the inventor should move forward with his/her idea. Think of the Invention Business Plan as part of your “due diligence process” wherein you are laying the foundation as to how to proceed. In addition, this plan could eventually become the basis for the inventor’s business plan should he/she decide to create a business venture to manufacture, distribute and sell the new product idea.
A suggested template, based on commonly used business plan templates, is as follows:
Brief overview of your invention plan, citing the important and noteworthy elements, and generally written after the other sections are completed. This is the “eye catcher” section to get the attention of potential licensing candidates and companies that may have an interest in your invention idea as well as potential investors so that they will want to read more about your new product idea and perhaps invest in it. You should include a brief summary of what your invention is (name), what it does, what problem(s) does it solve, how it may be an improvement over existing or similar products, and how it is useful. (Note: Keep this to 1-2 pages max.)
Description of the Product/Idea
Describe the main parts or components that make up your invention, how it works, what it does, its main features, and how it can be used. Show applicable schematics, diagrams, prototype photos, etc. and, if applicable, cite the claims in your provisional patent application (PPA) if you intend to file for a utility patent. Remember one key advantage to filing a PPA, in addition to getting you an early filing date, is that you can claim patent pending on your idea.
Present the results of at least a preliminary patent search, preferably conducted by a patent agent/attorney or patent search firm. Credibility of these results is important. These results would be more credible than if you conducted the search even though you might be able to do a good job. What you want to avoid is the situation where you say that you conducted a patent search and couldn’t find anything. Let someone who is in the business and has no vested interest in your invention idea say that. In any case, the point here is that you should always do some type of initial or basic patent research to either make sure that your patent idea has a good chance of receiving a patent or, if you don’t plan to pursue obtaining a patent, make sure you are not infringing on some other patented idea(s). Documenting these results in your plan is important.
Describe where and how your new product idea fits in the marketplace. What is the target market--total size, current demand, growth history, sales trends, statistics, potential customers, etc.? Are there similar or potentially competing products? If so, how do they compare with your new product idea? How is yours different or potentially better than theirs? What companies sell and/or manufacture these products? (Note: The value here is that they could be potential licensing candidates or even buyers of your new product idea.) Here is where you present your market assessment.
The objective of the exit strategy is to determine the best way to take your invention idea to market. Describe the development options you are considering and how you plan to implement them. Depending on the results of your research and analyses, the logical choices would include the following:
Plan A—You have determined that you won’t be infringing on any other patented idea(s), you don’t want to bear the expense of patent filing and, as a result, you plan to move forward and develop and market your new product idea yourself, in which case you will need a detailed business plan.
Plan B—You have determined you want to pursue patent protection and the best approach for your invention idea is to file for a design patent. Since design patents generally issue more quickly than utility patents, you should start focusing on your marketing plan.
Plan C—You have determined that the best approach for your invention idea is to pursue patent protection via a utility patent. You have the option in this case of starting with a Provisional Patent Application (PPA) to buy yourself a year’s time for further homework and research.
If either Plan B or Plan C is your choice, then, as with Plan A, you can still move forward and develop and market your new product idea yourself in which case prepare your business plan. On the other hand, if you are thinking about licensing or selling your patented new product idea, then start focusing on your marketing plan.
In summary, as pointed out by Brian Fried in his article “Develop an Invention Business Plan for Success” (see: http://gotinvention.com/detail.php), “An Invention Business Plan is an effective communication tool for providing a clear and tangible description of your invention while conveying its viability and value. It tells a detailed story about your invention including what it is, how it works, and why your invention is a believable business opportunity. It can generally be described as an organized all-in-one depository of everything you know or have learned about your invention. It includes every angle about your invention so as to be used as a reference point for the development and/or submission of audience specific requests.” SCORE counselors can help you with all of your business planning needs.