How to hedge your invention bets and minimize the risk of losing a lot of money

Inventing is a great way to spend a lot of time and money with the guaranteed result, if you spend enough, of having some pretty pictures, a prototype, maybe some production samples and your name on a patent application or maybe even an issued patent. But making a profit is hard and inventing is best considered as a form of gambling. The guys and gals who count cards in black jack, know odds and can bluff at poker, can make a living as professional gamblers. Most people can't. The same is true in the world of inventing.

Kenny Rogers said it well:

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done

But there is a big difference between playing black jack or poker and developing an invention. When you develop an invention you have control over the cards you draw. You actually get to make your own cards and choose the game you want to play. You can set the odds in your favor by deciding on the right cards and choosing the right game.

The key to success is confirming your cards and choosing your game. This starts at the beginning with two questions every inventor should ask:

1. Why do I believe my invention will make me money?

2. Do I want to earn money by making and selling my invention myself or by licensing it and receiving royalties?

Only you can answer the second question. It comes down to how you want to spend the hours of your day, your appetite for risk and your personal (much more than financial) resources. Answering this question doesn't cost you anything (unless you're the kind of person who needs to put your hand in boiling water to know it's hot*).

Answering the first question requires you to get input from your target market to confirm that they will actually buy your invention and from suppliers to confirm you can make your invention, with a profitable spread between manufactured cost and retail. Answering this question costs money. The way you win the invention gambling game is to spend as little as possible to confirm your invention and to run away if the confirmation isn't there.

Low cost confirmation means:

• Look online for similar products. Google search. Amazon search. Google patent search. Ask yourself how yours is better.
• Ask, actually beg, trustworthy friends and relatives to give you the brutally honest truth about your idea. You don't want a pat on the back from them. You need them to tell you what they really think and you need to make that super clear to overcome their natural desire to be nice.
• Use Invention City's free Inventicator - a professional tool for invention evaluation. Be aware of your own biases, do a benchmark product and you'll gain good insight.

So far you've spent $0.

• If you pass those tests get an outside review like Invention City's Brutally Honest Review ($185). It's hard for inventors to see their baby as anything other than smart and beautiful. You need an unbiased third party perspective.
• Now things start to get more bit more expensive. The next step to serious confirmation is a well executed survey using a platform like Survey Monkey. To do a survey you'll have to disclose your invention idea publicly and disclose it in a way that sells it like a real product. For this step you'll need:
  • Provisional patent application - between $65 (if you file on your own) to $1500+ if you use an attorney.
  • 3D images - between $0 if you can make your own to $1500+ depending on your graphic artist
  • Sales sheet/product listing - This is how your product will be presented in the survey. Doing this well is critical to getting good survey results. It should be similar to how you actually expect your product to be sold. It should also parallel a competitive/alternative product that you'll show in your survey.
  • Online survey - between $100 if you do it yourself on Survey Monkey (with 100 untargeted people) to $2500+ if you hire a professional and need more targeting and or a larger audience.

Now you may be out of pocket somewhere between $260 if you've done as much as possible on your own, up to $10,000 if you've hired first rate professionals to help you. $10,000 is a lot, but far less than what comes next. At this stage, also, if your survey results are great (and the survey was done well), you'll have a great story to sell to prospective investors and licensees.

Going still further means:

• Developing your invention idea into something that can actually be manufactured, which means hiring a professional designer, creating working prototypes and getting quotes from manufacturers. This could cost between $1000 and $1,000,000+ depending on details and how much you can do on your own. In most cases, this stage is where the most meaningful patentable details are discovered and created.
• Filing a non-provisional patent. You'll want a professional to do this and the cost will begin at around $3-$5,000 for the initial filing and in the years to come could easily rise above $200,000 depending on the decisions you make about international patents.
• Manufacturing...
• Sales and Marketing...
• Running a business...

And each step of the way, even if you get to the stage of running your own business, the words of Kenny Rogers ring true:

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run...

- Mike Marks

*That would be me on more than one occasion.