So, you want to make an honest living as an inventor.
Commercializing one of your inventions won’t be easy. Hard work, a good idea, and a roadmap are required. That roadmap is just a starting place, though, because the path to market is never straight. There are going to be plenty of detours!
I’ve been an entrepreneur my entire life, but I don’t relish taking risks. I think of myself as a no-risk entrepreneur actually, and that’s why I prefer the licensing business model over venturing.
Licensing your invention doesn’t require that you know how to run a business, quit your day job, or mortgage your house to pay for expensive prototypes and patents.
It is a numbers game, though. Only sometimes do inventors license the very first idea they pitch. What I’m trying to say is, you need to have a lot of ideas.
After making a living as an inventor for decades, here’s my advice.
Before you begin taking action on any one of your invention ideas, consider the bigger picture. How much money can you spend on each? Patents are expensive, so are prototypes.
Spending all of your time and money on any one idea, I have discovered, is not the recipe for success.
If your goal is to become a profitable inventor, you need to be frugal, and spend the least amount of money possible testing an idea to see if it’s marketable first.
After 30 years in the game, here’s what I’ve learned about the difference between inventing fiction and reality.
Myth #1: You can find someone who will do all of the work required to bring your idea to market for you.
Truth: You must become the expert of your invention — you and only you.
There are people in the inventing industry who will promise you the moon. Which is, unfortunately, exactly what inventors want to hear.
In reality, no one but you will care enough about your product idea to overcome the hurdles, roadblocks, and rejections along the way.
The very first thing you need to do is educate yourself about your options, so you can develop your own roadmap. Read as much as you can on the topic of bringing products to market. Take classes that are available online. Reach out to multiple people who have made a living as an inventor to help you truly understand what is required and where the pitfalls are. Be curious. There are so many different ways to sell new goods and services today.
In my experience, product licensing agents are akin to unicorns and leprechauns. Do they really exist? I don’t hear or read enough about their success to be sure.
Myth #2: You must have a patent.
Truth: Most patents aren’t worth anything.
Hey, you watch Shark Tank, don’t you? If you don’t patent your great idea right away, someone else is going to steal it from you, right?
Patents don’t stop people from stealing your inventions. In most situations, a patent is not required to license a simple consumer product. I know this for a fact, as I see many signed licensing agreements every year, and there’s no patent in play — only a well-written provisional patent application (PPA). Put another way, a well-written PPA creates the perceived ownership you need to license an idea.
Here’s the good news: Filing a PPA with the United States Patent & Trademark Office is relatively easy to do, costs very little, and gives you “patent pending” status for one year. And, a PPA gives you or potentially your licensee the option of filing a non-provisional patent application moving forward. (Keeping your options open is a smart move.)
Please remember, the ideas that people go to the effort to knock off are the ones doing extremely well!
I truly believe having an idea stolen is not the common occurrence we were led to believe.
Given the short lifespan of most consumer products, the volume of potential online sellers copying your product, and the time and energy required to file patents, chasing people down might not be your best strategy long-term.
Be careful, not fearful. Embrace selling first and selling fast!
Trademarks and copyrights, which can help with online copycats, are also extremely affordable to obtain.
You will save money by using a provisional patent application to test the market first.
If you try to patent every idea you have, you won’t be in the game long.
Myth #3: You need a prototype.
Truth: Submitting a sell sheet first will save you time, money, and heartache.
I absolutely love building prototypes. It’s magical seeing your idea come to life. But in time, I realized that if I were to build a prototype for every idea I had, I’d go broke. That’s why you need to sell the benefits of your invention with an affordable sell sheet (essentially, a one-page advertisement) first.
If your sell sheet generates some interest, there’s a very good chance you’re going to be asked for proof of concept — and that’s the perfect time to build a prototype.
So, the question isn’t whether you should build a prototype, it’s when do you build a prototype. If someone tells you that you need a prototype, it’s either to their advantage or they’re trying to sell you a service.
Testing the waters with a sell sheet that highlights the benefit of your idea first will save you time and money, which is crucial to your success in the long run.
Remember that prototypes don’t sell, but do break easily. Make sure to videotape your prototype in action, which you can share over and over again.
In an interview for my book Become a Professional Inventor, entrepreneur and inventor Louis Foreman — the founder and chief executive of Enventys Partners, founder of Edison Nation, creator of the TV show Everyday Edisons, and publisher of Inventors Digest — confirmed.
“In many cases, just rendering a product — a drawing of a product — is sufficient to at least get early interest.”
Full disclosure: My company inventRight offers sell sheet design services. You can find people to help you on platforms like Fiverr and Upwork.
Myth #4: Every company wants to hear a good idea.
Truth: Not every company wants to work with independent inventors.
Who doesn’t want to hear a good idea? In reality, although open innovation is more popular than ever, not everyone is on board. Meaning, not every company will want to work with you.
Here are some red flags to help you discern between companies that are genuinely interested in hearing about your product idea, or just paying you lip service.
If a company says it only looks at patented ideas, it’s not genuinely interested in working with inventors. Wait for a patent issue, and you could miss the market.
If a company does not have an internal team evaluating your product idea, it’s not truly invested in open innovation. Companies that have third-parties do their product reviewing for them aren’t serious, as this is another way of keeping you at bay.
As soon as you file a provisional patent application, the clock has begun ticking on your IP. You can’t afford to waste your time pursuing the wrong companies as partners.
Myth #5: If you have a great idea, you’re going to be a millionaire!
Truth: A great idea can make very little money.
Multiple factors determine profitability. Always do the math! And the math is based on the distribution points of your licensee.
Licensing products in different industries produces different kinds of royalty streams.
For example, if you are a toy inventor and you’re inventing for the specialty retail market, there are fewer stores that sell these kinds of products. Your royalties will be smaller because there are fewer distribution points.
I loved inventing and licensing novelty gifts for holidays, but each season was so short. As a result, my royalty payments for those products never lasted that long.
If you license an invention in the packaging industry, where the market is massive because the product is a consumable, your potential royalty stream could be very large.
Before you get started, you should have an idea of what your potential revenue from royalties will be. I never guess, I always do the math.
Myth #6: You can figure out how to do this along the way.
Truth: You need good information to become a profitable inventor.
Do doctors learn on the job? How about professional athletes? Remember that a small percentage of inventions are profitable! If you want to beat the odds, you need to invest in yourself.
Why would you take inventing advice from someone who has never made a living as an inventor? Seek out the mentorship of professional inventors — people who have actually invented something, filed and had multiple patents issued, and taken multiple products to market. It’s called experience! And it can only be earned.
Taking advice from someone who has not actually done the hard work of commercializing their invention could provide you with the worst roadmap ever.
Don’t spend a lot of time and money going down a road that does not lead to anywhere.
Don’t let yourself become that frustrated inventor who has a garage full of inventory they can’t sell.
Myth #7: Licensing agreements are all the same.
Truth: If you’ve never negotiated a licensing agreement before, it’s all but guaranteed you will leave money on the table.
That boilerplate agreement you found online will do the trick, right? No! You’ve made it this far, now is not the time to cut costs.
No two licensing agreements are the same. Without the help of an experienced licensing contract negotiator, you could definitely lose money by failing to understand the fine print. (Full disclosure: My company inventRight offers licensing contract negotiation services.)
For example, how net sales are defined. Some licensing agreements throw the kitchen sink in when it comes to calculating net sales, which hurts your bottom line in terms of royalties. If your licensing agreement has padded net sales, you’re going to lose money.
Likewise, you could leave money on the table by failing to negotiate around exclusivity. You must understand what you’re giving up. If you successfully negotiate carveouts, you can license your invention again in another industry to increase your revenue stream.
I also recommend negotiating that you own all improvements made to your invention, including line extensions. (That is, if you want to get paid.)
Becoming a profitable inventor requires that you don’t leave any money on the table when it comes to licensing agreements. Please, get help from someone who has done this before.
Myth: Some people can spot a winner when they see one.
Truth: No one has a crystal ball.
When someone tells you, “I can spot a winner,” run. These s0-called experts are letting their egos get in the way.
Truly, no one knows for sure. Evaluating ideas is not a science. People can be wrong. In fact, they’re often wrong! Consumers are very fickle. Companies that do loads of testing still make mistakes all the time.
Having a product that sells well is truly special. All the stars need to line up correctly. So, respect the process. Come up with lots of ideas and test them quickly to see if they generate interest without spending a lot of time, energy, and money. Do not put all your eggs in one basket.
If you spend years and years on your product idea obtaining multiple patents and building expensive prototypes, there’s a very good chance you will not be able to recoup those costs with future royalties.
In 30 years, I’ve seen it all. And the only opinion that truly matters in the licensing game is that of the company you’re licensing your idea to.
There is nothing like the feeling of seeing something you came up with on the store shelf. So, take a deep breath, accept that this is one tough industry, and celebrate — there’s never been a more exciting time to be an inventor.