I'm a business moron

Ok, moron is a harsh word, maybe I would be better off saying "inexperienced" or "undereducated" in the business world.

Here is my situation, I am a twenty year old college student (full time), covering 75% of college expenses myself doing pay per click management for a small LLC (maybe working ten hours per week). I'm very busy. During my time here at my current job, I have noticed an opportunity that I would like to capitalize on, involving the manufacturing of a simple industrial product. I know exactly what kind of product this niche market is looking for, but due to my inexperience and inability to generate up front costs, I am at a stand still. I can't afford $5k injection molding machines, distribution costs, $10k for a patent lawyer, or a "nice" website that is search engine friendly and up in the ranks. I come to you in hopes of gaining knowledge from your perspectives on business startups.

How should I model my business plan? Do I invest in a patent now, that way 3 years from now when I graduate I can take advantage of this simple device before someone else does? Do I register a domain and begin developing the site, if not for monetary benefits, but purely for an academic advantage on my part? Should I just stfu and take an office job on a fixed income?

What say you DP!?

 

At 20 I was in college but I certainly wasn't thinking about the things you're mentioning. My thoughts were not focused on getting $$. Instead I focused on getting... well, something else if you get my drift. So Kudos to you and your ambition.

Given this ambition, do you really think you would be happy taking an office job with a fixed income? I don't think so. With an entrepreneurial mind, you need to fly with it. Don't stifle yourself.

As for the investments... If you can't afford the money you'll need to find someone, or some people, who can and are willing. That seems very obvious AND daunting at the same time. You don't have to do it all yourself. Remember that part of the pie is better than NO pie at all. Find the person or people that fill the gaps (places where you are lacking) and go for it. Be creative.

I've had many businesses in my life. Some didn't pan out as I expected but most did. You will only truly fail if you have a dream and DON'T go after it.

Good Luck

 

First I would recommend getting business partner (this will help you greatly to achieve your goals)

second you and your business partner need to solicit startup capital from the three f's (friends family and fools)

If you think the idea is patentable then file what is called a provisional patent which costs only $75 and gives you a year before having to file the real patent. You can determine if the patent is worth the money in that year.

 

Ahh, I was afraid someone might suggest this. My family members are dirt poor, in debt, living in cardboard boxes (ahh you get what I'm saying). Not really an option, to my dismay. I have quite a few friends here at the university, however, though very intelligent/fun to hang out with/get drunk with, they also are of no financial use to my plan. Hell, I think I'm the only one in the group with a job. (rich bastards! )

In response to Mr. Marco, thank you for reemphasizing the importantance of the investment step. It looks I'm completely limited to the monetary aspect of this project, and until I come up with some money, there is little that can be done to put me ahead of the game until I can work on this full time.

Heh, yes, I have been fortunate enough in my travels to enjoy the pleasures of the opposite sex.

For the duration of the provisional patent, is my idea still protected from idea stealing thugs, or is it wide open for the world to impose upon?

Thanks for the replies!

 

NFL, I'm having the same problem as you. I'm a 19 year old college student and just can't get the $5k I need for a project together. It's very hard when (in my case) all the money I can get my hands on goes towards tuition and other school-related stuff (fraternity, marketing association fees, etc). Because you're in college it will make it near impossible to get a decent loan out because you probably don't have any or low credit and no collateral. Also, investors might be a little weary to invest simply because of your age and experience alone. And it seems we have the same situation with family. You are in a different boat because you're looking for a lot more money, and also, my project is solely based online so there's a lot of factors that I don't have to deal with that you will.

Someone telling you to "get a business partner" is probably something you knew already. Do a search on angel investors, they might be just what you are looking for in this case, but be prepared to give up a chunk of the ownership.

Of course, your other option is to just work your job and save up as much money as you can, work your ass off over summer and other breaks, and hope you can scrape up enough to go forward, or at least have enough that you can pay for a majority of it and then find another investor.

 

Provisional patents are used by many corporations for a couple of reasons.

First, nobody can see what you have filed. After a year you must file a full patent application at which point your application will become public.

Second, you may change you patent filing when you file the full patent application. This gives you time to figure out what was really important and what was not.

You are completely protected throughout the entire process. In the united states patents are granted to those "first to invent" not "first to file". This means that if you can prove that you came up with an idea before someone else who has gotten a patent, you can sue them and you will win the patent rights.

 

Those are some high startup costs. Any chance you can spill some more details without "giving away" your niche??

Off topic: Have I seen you around ars? Nick looks familiar

 

Bah, you caught me! Yeah, I've been active at Ars for quite a while now.

Details of my niche? Sure, I have an idea for a new type of funnel. Something that would be used to fill a steel drum with a certain type of mineral based hydraulic fluid. A thermoplastic product, if you will.

Once funded, I'm confident that with my internet street smarts I could get the ball rolling on the website portion. However, I do realize this is only a small part of the equation. To develop and mold a funnel shaped polymer, I'm going to need machines. Injection molding machines. Vulcanization agents to harden the thermoplastic. I'm going to need a patent, a website, packing materials, storage for inventory, a shipping system- you can integrate ecommerce websites with UPS these days can't you? This is all before I even make my first sale.

Maybe I'm in over my head here, I think posting here at DP and throwing my ideas out on paper (cyberspace) put things into perspective. I'll think things over these next few weeks while I'm out of school. Keep the ideas coming!

 

Outsource...

You wouldnt actually need the machines. You would have the product made overseas (mostlikely China). Mass produced at the quality you want while also keeping costs down. You have them shipped to the USA in a 40 ft container. Last time I checked that will be about $1000 to ship, then you need it trucked to whereever you are going to have it stored. You could probably start off keeping them in a rented storage locker/unit type place until you see that the ball is indeed rolling and you need to step it up a bit.

Then you can rent out part of a bonded warehouse where they can even ship for you while you cash the checks. Depending on sales it might even be cheaper for you to rent your own space and pay some drone (or a few) to do the work for you.

I have been traveling Asia for about a year now. It amazes me how cheap you can get things done. Anything you need can be made and at a decent rate. If you talking about a large run here then chances are they can do it for you.

 

The first thing I would do is get a patent to secure the device. Second I would do my homework to build a solid business plan. The third thing I would do after all that is go to Venture Capitalists or Angel investors with my proposal. If you have good credit and savings you could also try for a small, low interest loan.

 

Here is what you could do.

1) Create 2 Business plans.

A) One for the "big VC": The "go big" plan...Maybe even with an Excel spreadsheet showing how your kick-ass product can grow in the next 5-8 years.
A short, high-level, attractive document like maybe 15 to 25 pages.

B) One more realistic, as if you will barely get funding . Define the sequence of events and the mile stones you might reach. Cost everything, document every tasks, you can think of, related to your venture.

Then try to execute your plan B).
If you get stuck, regroup and build a mini plan to make it thru.

I would not recommend a loan with a bank unless you are pretty much 110% sure of success, with no further funding required.

Try to get money, after having people signing a "None Disclosure Agreement", from:
- Friends, friends parent, your next rich girlfriend
- People around you, that will listen?
- The people you might use to produce your product might have recommendations.

Always be ready to present your "A" Business Plan to a group of serious investors. Practice with someone and/or with a camera/mirror. Ask your good friends to seriously challenge your ideas and see if you can keep your credibility, cool and good looks.

Here is the Top100 Entrepreneur.com VC firms:
http://www.entrepreneur.com/listings/vc100/0,5946,,00.html

Being young is not that much of a handicap, if you can demonstrate professionalism, drive and competency.

Once you feel comfortable with your "raising money" skills, contact the VC firms.
It's ok to be "small" and have big dreams.

This route will be hard, grasshopper , but the rewards can be great. Each failure during your adventure will make you wiser.

Don’t forget to enjoy the journey.

 

I think you definately need to write a business plan detailing how this will be succesful. This process alone will provide you some insight on what you need to do. From there I would follow the patent advice others gave here. I do not have any experience with such things but the advice would be sound.

Finally you need to get the investment to at least create a prototype of what you want to make. With a prototype it will be much easier to get things going. As others pointed out, you do not need to invest in machinery and such initially. All of that kind of stuff can be outsourced. You will need a prototype, though in order to get investors and start production.

I think without a tangible product that investors are able to see, you will have very little luck overcoming the other obstacles. Show them you are serious and you already have a prototype and with a proper business plan it should be child's play getting investment dollars.

 

Shouldn't you create a provisional patent first?