7 Steps to Turning Your Idea or Invention Into Cash

Goofy cat photos, pet rocks and a “gas-passing” app: All are simple — and dare we say dumb? — ideas that reportedly made their creators millions.

Do you have a fabulous idea? Great! But that is just the first step on the path to riches. If you’ve got an innovation percolating in your head, you need to act now before someone else does.

Follow these steps to turn your idea into reality.

1. Do your research

Before you spend time or money on your invention or idea, make sure it hasn’t already been created.

Internet searches are always a good place to start, but don’t stop there. Go to the U.S. Patent and Trademark Office’s website and search for existing patents.

Also, do some market research to determine whether there’s actually a demand for your product or idea. Before you start sharing your plans with too many strangers, see step No. 3 below.

2. Develop a business plan

The second step is to create a business plan. Even if your idea isn’t fully formed yet, know how much money you can afford to spend and what the process of developing and marketing your idea looks like.

If you’re unsure where to start, arrange an appointment with SCORE, a nonprofit organization through which businesspeople volunteer to mentor and advise small businesses and startups.

Another option is to contact your local office of the U.S. Small Business Administration, or SBA, to see what services it can offer. The SBA’s website provides a wealth of information about business plans, financing and other issues associated with startups.

3. File for a patent if applicable

The law regarding patents changed dramatically several years back.

Prior to the 2011 passage of the America Invents Act, the first person to invent a product retained exclusive rights to sell or license it for 20 years — a “first-to-invent” system. However, the federal law switched the U.S. patent system to a first-to-file system. It no longer matters who came up with an idea first. Instead, the 20-year exclusivity rests with the person who first publicly discloses the idea or first files for the patent.

TechCrunch published a good article on the law and how various scenarios play out. For further guidance, check out “7 Simple Steps to a Patent for Your Big Idea.”

But again, before you start having too many private conversations about your big idea, make sure you have taken the appropriate steps to protect it from thieves.

4. Make a prototype

At this point, it’s time to turn your idea into reality. You need to build a prototype.

Depending on your invention, you may be able to construct the prototype yourself or you may need to get some help. You can find suggestions for making prototypes from Entrepreneur magazine and StartupNation.

Regardless of how you find help, you may want to consider using a nondisclosure or no-compete contract, especially if your idea isn’t patentable.

5. Get feedback from beta testers

Once you’re happy with the prototype, find some people willing to try it out (called beta testers, a phrase that came from the second phase of software development testing). Feedback from beta testers can not only lead to product or service improvements, but it also may help when it’s time to find investors.

As you near the end of the beta testing phase, try selling prototypes to better gauge customer demand.

6. Find investors

By now, you should have a polished prototype and hopefully some early sales to bolster the case that your idea is profitable.

The next step is to find some deep pockets willing to pay for large-scale manufacturing or deployment of your plans.

Locating private investors can be a challenge. Rather than finding one or two people able to invest large sums of cash, consider the crowdfunding route with websites like Crowdfunder and Fundable. You can also visit the Angel Capital Association’s website for more information on finding angel investors.

However, in the end, it might be up to your savings account — and maybe some close family and friends — to get your idea off the ground.

7. Make millions — hopefully

Ah, time to enjoy the fruits of your labor. Sell that grand idea to an existing business for millions, or live the good life using the proceeds from the quadrillion sales you make in the first year.

In reality, the odds of anyone becoming rich from an idea are small. Still, some people make it big, so why not you?

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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