- “A licensing agreement with a company
- Business start-up: get your idea to market yourself
- A joint venture
- Outright sale of your idea.”
Before starting on this route inventors should satisfy themselves that they have the right personal qualities. Wherever they live in the UK, a good place to start is Business Wales’s Starting up and Business Planning page. In particular, they should read Is self-employment for you? and complete the Assess Your Personal Qualities questionnaire. There may be options even for those who score badly on that assessment such as employment or a consultancy with a business to be set up by others who are of the right temperament and possess the right skills and experience. Considerably caution should be exercised by both sides in those circumstances. Any agreement should be properly documented with both sides taking legal and accounting advice.
The next question for inventors is whether they have the right skills. Some of these can be taught. The Business and IP Centre at the British Library and its national network of city centre libraries host free or inexpensive courses and workshops on all sorts of topics from accounting to writing business plans. Other good places to learn include Tech Nation’s Digital Academy and the Google Campus. Another option is to build a team. Again, that requires caution. professional advice for all concerned and full documentation. Ideally, there should be a professionally drafted shareholders’ or other agreement between the promoters with robust dispute resolution procedures in case things go wrong.
Such an agreement should incorporate or at least refer to a business plan and it goes without saying that the business plan should take account of intellectual property (see Jane Lambert Why Every Business Plan Should Take Account of Intellectual Property 3 April 2016 NIPC News). The business plan should be more than something to impress the bank manager. It should be the company’s road map. The business plan should coordinate every aspect of the company’s activities and policy including research and development, marketing and of course intellectual property (see An IP Strategy for Private Inventors 13 Jan 2019).
The business plan will be relied upon by the company’s investors and lenders. Long term investment to enable the company to buy or hire premises, equipment, vehicles and the like will be exchanged for shares in the company. That is called “equity investment” and it is usually provided by inventors’ friends and family, business angels and private equity or venture capital investors. Working capital to cover components or raw materials, professional service and other short term costs may be provided by the company’s bankers or, increasingly frequently, peer-to-peer lenders. This is often referred to as “debt”. Lenders may require security over the company’s assets but they are unlikely to wish to interfere in its management. Equity investors 0ften want representation on the board. Again, both sides should take professional advice and document any agreement that they may reach in a shareholders’ agreement or some other instrument.
Inventors should be aware that very few fortunes are made from a single invention. It may give their business an advantage for a time but that advantage will usually be eroded as competitors’ launching their own new products or services. Research and development and innovation should continue. Inventors should always be looking for the next gap in the market or other business opportunity.
Anyone wishing to discuss this article or inventions generally should call me on 020 7404 5252 during office hours or send me a message through my contact page.