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TIA: Tennessee Inventors Association in Knoxville Tenn and Oak Ridge TN
Oak Ridge and Knoxville, TN  

A Business Plan for the Inventor

Tom Kulaga's picture

Inventors invent. But, what to do after inventing? A common question asked by inventors is "what is the next step?"

The next step after inventing is to determine the commercial feasibility of the invention. It is a rare inventor who is capable of objectively evaluating an invention to determine if it is commercially feasible. Inventors are optimistic and believe that everyone will want their invention. Unfortunately, this is rarely the case.

A good next step is to develop a business plan. A business plan is a document that identifies with broad brushstrokes how a business is run. The business plan focuses on the viability of a business idea by analyzing the marketplace and establishing realistic projections, including financial projections.

Inventors are typically at a crossroads when it comes to profiting from their invention. Should they license their invention to a company? Or, should they be in control of manufacturing, marketing, and distribution and sell their own products? In order to license their invention, inventors should know enough about the business to be able to manufacture, market, and distribute the product themselves. Without the level of knowlege required to know these things, it is difficult to market a patent to another company for a license. So, the first step should be to work on a business plan as if the inventor was going to have a business selling their invention themselves.

A business plan typically has the following sections:

  1. Description of the business
  2. Marketing plan
  3. Project management plan
  4. Management plan

1. Description of the business

This section includes a description of the business, that is, what you plan to do and how you plan on doing it. The invention should be described, along with the products that can be offered based on the invention. The section should also include a brief description of who the customer is and why they would buy the product.

2. Marketing plan

The marketing plan requires research. First, describe the product and how it will be packaged. Then describe competing products. These can be products that directly compete with your product or they can be products that would compete for the customer's dollars.

The marketing plan needs to identify the potential customers. Be specific. Try to paint a picture of the customer, for example, income level, education level, where they live and work, what they do for a living or for pleasure, etc. Any supporting information should be in an appendix, not in the main body of the business plan.

The marketing plan needs to identify the top competitors and their competing products. Who is your competition?

Your strengths and weaknesses need to be identified. Why would you succeed over your competition? Why would your competition beat you out?

Then you need to describe how you plan on reaching your customers. Describe how your customers will learn of your product and what you will do to get the word out.

3. Project management plan

The project plan describes the steps and tasks that need to be done during the initial, startup phase and afterwards. What tasks need to be done, what is the estimated cost of those tasks, what is the source of funds to pay those costs, and when does the task need to be done. For example, an inventor may identify the following development and startup tasks:

  • Build proof-of-concept prototype
  • Test prototype
  • Build production prototype
  • Test prototype
  • Identify the customers, including who the inventor will be directly selling and all downstream customers
  • Investigate the market
  • Identify competition and competing products
  • Seek patent and trademark advice
  • Seek business advice
  • File provisional patent application, if necessary
  • File non-provisional patent application, if necessary
  • File design patent application, if necessary
  • Obtain funding
  • Promote invention/product (press releases, articles)

Someone who wishes to license or sell an invention may have the additional tasks:

  • Contact potential licensees

 Someone who wishes to make and sell a product may have the following tasks:

  • Research manufacturers
  • Research distribution channel
  • Advertise

A business adviser, such as someone from SCORE-Knoxville or the Tennessee Small Business Development Centers, can assist in determining the tasks that need to be considered.

After the tasks are identified, then the cost of each task needs to be estimated. The order or schedule of the tasks also needs to be determined. With this information, the inventor can determine how much money is needed and when it is needed. The inventor can then consider where the money will come from.

4. Manage