Let's say you've just come up with an idea for a ladies' shoe with interchangeable heels. How can you know whether this brainstorm would really work? And how would you explain your idea to someone else so they'd want to buy it? The answer to both questions: Make a prototype.
A prototype is simply a working model of your idea. Most of the time, it's not an exact model of the eventual finished product. In fact, it will most likely be very rough around the edges. However, it will provide you with a means to demonstrate your idea and give you--and investors--a glimpse at what your idea might eventually look like.
Many times an idea makes perfect sense in your mind. When it is turned into a working prototype, however, unexpected flaws appear. This is especially true for complex ideas needing many parts to work. The exercise of building a prototype will help you better develop your idea: You'll discover areas that need improvement and implement changes that could make your idea more valuable and marketable.
Having a prototype makes it easier to sell your idea to potential buyers, who can now see, touch, hear and smell your idea instead of visualizing what you're talking about from looking at drawings or reading a product description. It also proves your idea works, making it helpful in attracting investors, working with manufacturers and finding licensees.