How to Sell Your Idea for a New Product or Service
Have you ever wanted to get paid for your ideas, without the trouble or risk of starting a company, raising money, or dedicating your life to them?
No need to be humble, admit it, you’ve had some great ideas in your lifetime. You may have even seen one of your ideas become a successful product or service. You said to yourself, “Damn, I had that idea five years ago, now someone else is doing it and they’re getting rich!” Worse yet, you might have confided an idea to a friend or colleague, then found out they ran with it. You said to yourself, “Damn, that A-hole stole my idea!”
What if you could have sold that idea?
The irony about ideas is that they are the genesis of all innovation and new wealth, yet they have no tangible value in-and-of-themselves. (They may have a lot of intrinsic value, but that’s the subject of a different post.) Ideas have to be brought to life to have tangible value. Let’s talk about how to create that kind of value – cold hard cash – for a good idea. In this case, an idea you can sell to someone, not start a company around.
To do that…to sell a good idea….it must be expressed in the form of Intellectual Property (IP). Stay with me, this isn’t a legal lecture. You don’t need to run out and hire a lawyer, you just need to create some IP around your idea and figure out which company would be motivated to buy it from you. An idea all by its lonesome cannot be protected, valued or sold, but IP can be. This assumes the IP is original, meaning you created it, you didn’t copy it. It also assumes the IP personifies a GOOD idea, meaning there is a need for it and enough people would be willing to pay for it, if it ever became a product.
You can create IP with little or no money, and you never even have to make the product. Engineers, designers and inventors have been doing this for decades. You can do it too. There is no magic to it. Creating IP is the act of describing how an idea could be brought to life, and showing why the world would care. It simply requires a little follow through after the initial inspiration.
I’m going to go out on a limb here, because many people (especially some lawyers) will disagree, but I believe you can create valuable IP for less than $1,000 and sell it for many times that amount. There are plenty of examples of people who have done exactly that. Let’s not dwell on those examples just yet (I’ll cover some of them in my next post), let’s stay focused on how YOU can do it.
What is required more than cash is “sweat equity.” That is really the only thing that separates successful entrepreneurs from people who have good ideas – the willingness to act on them. So, if you think you have a good idea, and if you want to create some IP around it with the goal of protecting it, valuing it, and possibly selling it, here are some actions you can take:
1. Gather some data on the likely customers (users) for your idea.Explain who would buy it and why. Conduct some market research and survey some potential customers. There are a bunch of free and cheap tools on the Internet for doing this. Budget: $100. Projected by copyright © and non-disclosure agreement.
2. Write a Product Specification. Outline the features and benefits of the core product, based on your market data and customer feedback. Budget $0. Protected by copyright © and non-disclosure agreement.
3. File a provisional patent application. Explain in detail how it would work in practice. Do a prior art search to make sure someone hasn’t already patented your idea, or some form of it. There are lots of blog posts on how to do this yourself. Budget: $400. Protected by patent-pending.
4. Trademark the name or logo. A good idea needs a good name and mark. Have a graphic designer create a logo and trademark the product name and/or the graphic representation of the product. Budget: $375. Projected by trademark ™.
5. Register a domain name. People have made tons of money on domain names alone. Register one that embodies your idea. Budget: $10. Protected by ownership registration.
6. Draft basic financial projections. Provide some top-line financials showing the economic potential of the idea as a finished product. How many people would by it and what would they pay for it? How much would it cost to make each unit in volume (COGS)? There are numerous free Excel templates for this. Budget: $0. Protected by copyright © and non-disclosure agreement.
7. Create a prototype or trade secret. You can use Powerpoint, 3D printing, or any number of online product prototyping tools to visualize the product. You can stipulate an exact formulation of the product that is not disclosed to anyone, which is treated as a trade secret (think recipe for Coca Cola). Budget: $100. Protected by copyright © and non-disclosure agreement.
8. Secure Letters of Intent (LOI) or Pre-Product Subscriptions from Target Users. Lots of startups have been funded on LOI’s, Kickstarter campaigns and pre-launch user registrations (like launchrock), before the product was ever made. Show enterprise (B2B) or consumer (B2C) interest for your idea. Budget: $0. Projected by one-on-one customer relationships and/or private user lists.
These are all examples of creating Intellectual Property (IP). They are not terribly expensive to create. The biggest investment is time. These are ways in which an idea that has no value, begins to amass value. And the more IP you create around the idea, the more valuable the idea becomes and the greater the chance it can be sold.
There will come a point when you will need the expertise and counsel of a good attorney to “prosecute” and solidify your IP, but you don’t need one to get started. You’ll know it when you need professional expertise, because your idea will either fade away or take on a life of its own.
After you turn your idea into IP, the challenge is to figure out who the likely buyers are and how much they might be willing to buy it for. Maybe you can only get $10k for it? Not bad for a $1k investment and a little time. But what if you could get $100k or more? If there is a market for your idea and you have created some solid IP around that idea, it can be valued and sold for a tidy sum, trust me. Having sold IP myself, I can testify that this process is both an art and a science. It deserves its own post, so stay tuned….