Entrepreneur's Guide

You have a great invention. What should you do? The following is a guide for the inventor/entrepreneur. You can follow it step by step, more or less in the indicated order depending on your idea, on your resources, and on the business and regulatory environment.
  • Market Research. Carry out a market research for the product. Use commercial reference indexes like the Thomas Register and the Smart Yellow Pages. Marketing information is also usually readily available from those national associations somehow connected to your invention.
  • Early Disclosure. Since the in United States the date of the invention is the date of conception rather than the date of filing (as in most other countries) it is important to establish the date of conception as early as possible. However, a proof of early conception does not necessarily offer patent protection; the burden is on the inventor to show that he has exerted due diligence in "reducing his invention to practice." Diligence must be demonstrated by the inventor during  the period starting just before conception by another and ending with his own reduction to practice. "Reduction to practice" means either the building of a prototype or the filing of the application with the patent office. The safest approach is to file a provisional application which is retained for one year by the USPTO. A non-provisional application must be filed before the year is over, that refers back to the provisional to benefit from the early filing date.
  • Fictitious Business Name. Select a Fictitious Business Name (FBN) and form a company or apply for a “Do Business As” name with local county government. This business name should also be published within 30 days in a court –approved publication.
  • Web Name. Select a web name and open a web site under that name. Available web names can be searched and registered at a number of companies such as Yahoo, or Network Solutions. Create your web site.
  • Bank Account. Open a bank account in the business’s name to keep all business expenses separate from your personal expenses. Startups with little or no operating history find it difficult to find available sources of funding for their new business. A banker can help you obtain a loan, establish lines of credit and advise you with certain business operation.
  • Internal Revenue Service. Apply to the IRS for an EIN (Employee Identification Number also called federal tax identification number) on the web or at (800)829-3676. Because you are going to spend money to make money, you might as well get this identification number to allow expenses to be deductible. The IRS has a great guide for Starting a Business.
  • Telephone. Get a phone number for the business from a telephone company. Be aware of the deadlines for advertising in the yellow pages and in the business pages.
  • Provisional Patent. Choose a reputable patent attorney or a patent agent and file a provisional patent application. This document is retained by the USPTO for one year without being examined. This will give you patent protection for one year while minimizing your upfront expenditure, and allow you to begin talking about and marketing your idea. If your idea appears to have merit you must then file, before the year is over, a non-provisional patent that refers back to, and benefits from the filing date of, the provisional patent. Ideally, to maximize protection, the provisional patent should have the same form and structure in the specifications, drawings and claims as a conventional non-provisional patent. Make sure to file your provisional patent within one year of the first sale or public use of your product in the United States otherwise, according to paragraph 35USC 102b  of the patent code, you are barred from getting a patent.
  • Business Plan. Plan the business aspect of your invention including financing, obtaining personnel, office space, advertising, marketing, subcontracting, manufacturing etc. The Small Business Administration provides an excellent guide for writing a business plan.
  • Government Funding. Government usually is not as demanding in terms of ownership as private sources. You should therefore, if appropriate, apply for government funding. You can utilize the patent document and the business plan that you have already produced to help you write proposals to government agencies.  Government funding unfortunately requires a relatively long turn around time from initial solicitation to actually getting funding. If you do get government funding, you can still maintain control of the technology even though the government obtains the right of a license to practice the invention by performing, before the project begins, the following actions:

a) Filing a (provisional) patent application with very broad claims, and
b) Actually reducing your core technology to practice by building a prototype.  

  • Non-Disclosure Agreement. Write a Non-Disclosure Agreement Make sure to include a clause specifying that in case of a disagreement, any of the parties in the agreement can ask for binding arbitration by either an attorney agreeable to both parties or a member of the American Arbitration Association. If you have to fight a large company with deep pockets, you certainly would want to avoid the courts. While a binding arbitration is not guaranteed to keep the dispute out of the courtroom, its presence is a deterrent to going to court.
  • Stationary. Prepare business cards and stationary in the name of the business.
  • Technical Help. Research organizations such as universities and companies capable of helping you with unresolved technical issues and problems. If your technology is high-tech then you may seek help from one of the ten National Laboratories funded by the Department of Energy.
  • Presentation. Prepare a presentation for potential investors. This presentation should describe the product, the market and outline the business plan..
  • Business Help. Enlist the help of organizations seeking to help small businesses and startups. These include technology incubator programs such as  UCSD Connect in San Diego.
  • Prototype. Reduce your invention to practice by building a prototype. This step will force you to improve your initial design.
  • Validating Data. Test your prototype. Generate validating data to help convince potential investors that your idea is sound.
  • Endorsement. Obtain an endorsing statement from authority in the field. Get a “champion” on your side who will speak for you.
  • Customer List. Get a list of potential customers using resources such as infousa.com.
  • Non-Provisional Patent. File a non-provisional patent that refers back to the earlier provisional patent and to all the relevant disclosures to the patent office. To avoid losing the benefit of the earlier provisional filing date, make sure to file before one year is elapsed from the time of the provisional filing.
  • Legal Issues. Consult a business attorney on legal issues of business ownership such as partnership and incorporation. An attorney can help you choose the right legal structure for your business, file appropriate papers with the necessary authorities, draft and interpret contracts and leases. The attorney can defend or represent you when legal matters arise and advise you on the operation of your business, such as rules for hiring and firing employees.
  • Financial Issues. Consult an accountant. Many startups have failed because of insufficient cash flow, and maintaining accurate financial records is crucial to properly manage any business. Consult an accountant about record keeping procedures, taxes, and general operation of your business, such as retirement plans and tax deduction.
  • Liability. Speak to an insurance agent to evaluate your specific insurance needs. They can provide you with advice on business interruption, business life insurance, errors and omissions, floor plan insurance, group insurance, hazard insurance, key man, professional liability, property & casualty, commercial vehicle insurance, and any other business insurance coverage you may need.
  • Business Type. Determine your business type. The business type chosen will determine many of your startup requirements and the licenses needed to operate a business legally. If you live in California contact the State of California Department of Consumer Affairs on the web or at (800)952-5210, for a list of more than 200 regulated Occupational and Professional Services. If you live in another state contact the equivalent department.
  • Seller’s Permit. Obtain a seller’s permit. You will need a seller’s permit or a resale number if you plan to sell products. It will allow you to purchase inventory from your suppliers without paying sales taxes. Contact the California State Board of Equalization on the web or at (619)525-4526. If you live in another state contact the equivalent department. 
  • Personnel.  Identify qualified personnel/consultants. The right people for the job are worth their weight in gold.
  • Moving out of the Home. If you are busting out of your home office or garage, you may have to lease office/manufacturing space for the business and purchase office furniture. Select an office or manufacturing site with zoning requirements in mind. Before you sign a lease or contract, first determine the zoning requirements. You must make sure that the business you intend to start is legal in that particular location. If you are operating a home-based business, you must follow the requirements of the Home Occupation Regulations.