In order to make a start-up prototype, you first must know your budget. If it is limited, then most of the work will need to be done on the computer and with a written business plan. You will use software and the internet to convince others that your new start-up idea is viable. If you have a large budget, you may want to think about starting a small business around this new start-up idea. That way, you can establish a track record that proves your idea was good. Either way, your goal should be to make some money with your new start-up prototype so that people will be willing to invest in your idea.
A million other people are also looking for startup ideas as if it is the answer to all their dreams. It might be the latest thing in roller skate sharing or oatmeal delivered to your door every morning! Whatever the idea, you need a way to prove that it has some sort of market potential before any investor will show interest.
Here at Invention Therapy, our startup ideas are rooted in reality!
Finding investors for your start-up prototypes and ideas won’t be easy and will take a long time for most people. There are ways you can help speed up the process and make your potential investors more comfortable.
I have been there, done that!
Very few, if any investors, will be interested if the founders of any start-up prototype ideas do not have some sort of financial investment on the line. After all, who would want to risk their own money if the people who started the business don’t have anything to lose other than time?
We talk about making money, starting an online business and selling products on the Invention Therapy Youtube Channel.
With the internet, it doesn’t cost that much to start a business. If you don’t have the capital for a start-up, rethink your plan. A website is like a piece of property where your potential customers will come to see what you have to offer. It costs a great deal less to build a website than it does to fill an office or storefront with furniture, products, and people!
How do I make a startup prototype?
- Understand the market.
- Do your research.
- Come up with ideas.
- Create a business plan.
- Build a model.
- Test your idea.
1. Understand the market
People are usually surprised to see the marketplace as the first step in a start-up of any kind. It doesn’t matter whether you are building and invention or starting a new company, you first must know if there are potential customers out there.
By studying different marketplaces, you can determine if there are voids and therefore opportunity. after all, it doesn’t make sense to start something if no one is going to want to use your product or services.
2. Do your research
Once you have found a niche or niches in the marketplace, it is time to look at what other companies or individuals are doing there to make money. You may even get lucky enough to find an entire group of people in an online community not being served by businesses. Either way, it is your job to spot these potential opportunities.
3. Come up with ideas
Once you have found potential in a marketplace, you need to start coming up with ideas. These ideas can include products, software or services. whatever your start-up idea is, you will need to create something people will be willing to spend money on.
4. Build a model
We talk about how to build prototypes of invention ideas throughout this website. These prototypes are not limited to just physical products. You can also create a prototype of software and business ideas. Simple software programs can be written to test your concepts for a new website or a business plan can be developed to flesh out your plans.
5. Test your idea
Once you have your plans laid out, you will need to test the market. It may even require you to start making some money at this point before you get to the point of being able to get funding for your start-up. Very few investors are willing to give up their money unless the founders have some sort of proven track record.
Here is how your startup ideas can grow efficiently and quickly:
- Make or find products and software people want to buy.
- Build websites that show off your products and services.
- Take great product photos or make catchy artwork for the software.
- Write enticing and detailed product descriptions.
- Optimize the website for Google search (there are enough experts in this field already!)
- Advertise via Facebook, Adwords and all other places on the web.
- Collect emails from your potential and existing customers.
- Create great email campaigns that make people buy more.
- Woo investors as you grow. Once you build the business a little by showing some revenue, it will be easier to find investors.
In a nutshell: Invoke action by converting visitors to sales. After that, you can convert your sales numbers to investors. But you may not need investors at that point and that is a good thing! Remember, nobody cares about your story or your idea. They care about how you are going to make the business successful. That really means they want to know how you are going to pay back their investment and reward them for the risk they are taking. You need to speak to potential investors in the terms they really want to hear.
Investors don’t want to hear about how your idea is more efficient or how it will save the planet, all they want to know is what is in it for them! This is a hard fact of life so you need to be prepared to talk to people that have the money you need in a language they can understand.
Investors want to know:
- How much money (real cash or via loans) have you personally invested?
- How much time have you invested (not as important since your time has no value)
- Who is your competition?
- What is the real market potential for your product(s)?
- How many other investors are currently involved and at what percentage and cost?
- How much in real dollars has it cost the company to get where you are now?
- How much money do you need to grow?
- If you get the money what do you plan to do with it?
- How much revenue (sales) do you currently have?
- How much did those sales cost you to acquire?
- How much profit do you make on each item or service?
- How long before the company can be profitable?
- What percentage of ownership will I (the investor) get for my investment?
- If I don’t get a percentage of ownership, what are the terms of my loan and my profit sharing and/or interest payments?
- How will I (the investor) be paid back?
- How will I (the investor) see a profit for my risk?
- What type of profit can I expect for my investment?
- What are some of the risks?
- Do you plan on seeking other investors after my investment?
- What is your exit strategy? (Google it)
- and many other versions of these questions.
I made this post a few days ago about why your invention idea is a small part of the process. The same holds true for start-ups looking for seed money. If all these questions are giving you a headache, there is much more information to come on Invention Therapy.
If you can’t do these things, there is no point in thinking about your start-up ideas because ideas themselves rarely have value. Investors are usually only willing to turn over their cash to talented people with some sort of track record. There are already millions of people out there with ideas but only a few have gotten them off the ground.
Does Your Invention Idea Have Market Potential?
Just because you may have a good idea for an invention, the next important question to ask yourself is related to the potential marketplace for your product. There is no point in investing time and money into a prototype and final product if there isn’t a significant amount of money to be made from your idea.
- Is there a reasonable size market potential for sales of your invention idea?
- Although you may never have made a prototype or manufactured a product to sell, you still must do some simple research and determine if the product can be made at a reasonable cost.
- Once you have a very rough estimate of what the invention might cost to manufacture, it is important to know the potential selling price of the finished product. The sales price must be within a range that people would be willing to pay but also one that is high enough to make you a reasonable profit.
Determining the sales price of a product is a complicated process but I have made this informative video that can help you at least do some rough calculations of the potential sales price. People don’t always agree with me on this one but I find that selling a product for two and a half times the cost to build it is a great price point to start. Watch this video and I will explain why I have always calculated my sales prices this way.
If your invention idea meets all of these requirements on our checklist, it is time for you to start thinking about design. We will be discussing the next step which is just coming up with a simple sketch of your idea. I hope you learned something from our easy to follow the inventor’s checklist and will continue on to the next step.
Are you ready to become an inventor?
Getting your idea out of your head and into your hands is only the first in a long set of steps towards becoming a successful inventor.