In the previous blog – I – Invent Things that are simple and Low Cost – I posited that what seems common sense is not. People often seek to invent exotic, expensive products that have virtually no chance of over being commercialized.
Let’s look at a much-discussed topic for inventors – C – Creative Financing.
Virtually every inventor, who isn’t independently wealthy, must use creative financing to move forward with his or her invention. The reality is that obtaining a bank loan for an invention, while possible, is not probable: the risk is simply too high and reward or payoff too uncertain. Therefore, other sources of financing, especially creative ones will be needed.
Below are three forms of creative financing every inventor should consider:
• Incremental financing – break large expenses into smaller more manageable increments
• Network to find lower cost resources for the things you need
• Crowd funding – Kickstarter, Indiegogo, et al
When you need to buy something that is too expensive for your budget, consider negotiating a creative way to break the large expense into smaller more affordable incremental expenses spread out over time. I source my Savvy Caddy wallets from a factory in China. Because of long turn around times for orders, I had to finance a 90-day supply – an almost unaffordable expense. It takes 90 days to turn an order, so I must initiate another order as soon as my current supply arrives – even before I have made any sales.
I found a simple solution: make monthly payments (smaller outlays) for an ongoing supply. This effectively reduces my order outlays by almost 70% since each capital outlay is for only a 30-day supply. This is vastly more financially manageable – but it is not a typical arrangement and I had to negotiate it.
Inventors need help from talented individuals including prototype experts, developers, and marketers. Such resources are often expensive, causing the inventor to do without or attempt doing the work themselves. I needed a PR person to help me get on television and into media, but could not afford a PR agency. Through networking, I found a person who had been in radio and was free-lancing between jobs. He needed work and I needed his talents, so it worked out well for both of us.
I have not used crowd funding but have colleagues who have done so successfully. Crowd funding can be a great resource for financing a new product. It takes time, effort, planning and only a small amount of capital to put a project onto Kickstarter or Indiegogo. If the project meets or exceeds your funding request, then you get the capital you need plus great PR for your product.
The next key to inventing success is K – Keep Going, Persist for Success
B – Balance Risk versus Opportunity
R – Resources, Find and Develop Them
I – Invent Things that are Simple and Low Cost
C – Creative Financing
K – Keep Going, Persist for Success