Inventors, Here's How to License Your Idea and Make Money Your honest, no b.s. guide to profitable inventing.

By Stephen Key

Opinions expressed by Entrepreneur contributors are their own.

Jonathan Brady - PA Images | Getty Images

Like anything else, to improve your odds of success at licensing a product idea, you need to be able to play the game longer and smarter.

The longer you're in the game, the better chances you have of reaching your goal.

Take it from me. I'm not a gambler. In fact, I consider myself a no-risk entrepreneur. Early on in my career, I realized that I needed to find a way of increasing my chances of success at bringing my ideas for products to market.

Related: 3 Takeaways From Lori Greiner's Invent It, Sell It, Bank It.

I flat out did not want to work for anyone else. I was newly married, and my wife was obviously not going put up with me struggling to make a living.

Truth be told, I've only ever really worked for one company. Back in the mid to late 1980s, I was the manager of design at the Bay Area-based toy startup Worlds of Wonder for two years. I've been creating and getting paid for my ideas since my early 20s.

So, you could say I've only had one job. But, from my perspective, every time I got paid, that was a different job.

Sometimes the money came in fast and sometimes it came in very slowly, but I taught myself how to make a living from being an inventor. (I explain how much money I made from products I licensed onto the market in this video.)

Here's a big tip. Don't take inventing advice from anyone who hasn't made a living from inventing. And I really do mean make a living. It's one thing to bring a product to market. It's an accomplishment to bring two products to market! Still, it is something else entirely to support yourself and your family day in and day out with royalties that your creativity produced.

Inventors, here's an honest guide to profitable inventing.

1. You're going to need a lot of ideas

In fact, you're going to need to learn how to become an idea factory. You cannot bank on one idea. Learn how to focus your creativity, to be in control of it. Creativity is like a muscle in that it needs to be exercised every day.

2. Don't spend a lot of money on any one of your ideas

You need the test the benefit of your ideas to see if there's interest first — before spending a lot of money on prototypes and patents. Then, if they're interested, take the next steps. Only take advice from companies that you are trying to license your idea to. No one else knows for sure.

You can test the waters with a one-page advertisement (a sell sheet) that showcases the benefits of your product idea. Sell sheets are simple, affordable, and when done right, powerful. You can get a good one made for less than $100.

3. Only when there's interest, build a prototype

Companies are going to want proof of concept, of course. They want you to spend money and time on your prototype, of course. But that's what they want.

If you were to build a prototype for every idea you could possibly have, you'd go broke. That's not smart. Anyone who tells you that you need a prototype right away has not made a living as an inventor, because inventing is a numbers game. Use a sell sheet first.

Related: The Inventor of the George Foreman Grill Sets the Record Straight

I love prototypes. My background is in sculpture! I truly love to build things. But I have learned that prototypes take time and money, and resources are limited.

So, be very careful. Only build prototypes when you have interest. People always ask me, "But how do you know if it's going to work or not?" I don't. But if there's interest, I'll figure it out. This way, you're only spending money on an invention that can possibly be licensed.

4. You don't need a patent

This surprises many people. Patent lawyers and the United States Patent and Trademark Office don't love to hear this.

Sure, in a perfect world companies would love to have a monopoly on an idea. But in reality, patents don't work that way any longer. Given the short lifespan of most consumer products, sometimes a patent doesn't really matter because the selling cycle is so short. If you wait for a patent to issue, you might miss the opportunity of selling that invention in the marketplace. It's hard to stop the copycats online. Chasing people down, in most situations, is a waste of time and money.

Then again, in some situations, applying for a non-provisional patent can be extremely useful. A patent can help you raise money or give you the perceived ownership you need to get a company to license your idea.

Most product ideas that I see get licensed today, there's no patent. Only a provisional patent application. (The licensee has the option to file a non-provisional patent application if warranted.)

So, what should you do? File a well-written provisional patent application. Make sure you include workarounds, variations, and manufacturing know-how about your invention because these all have value. They help establish your perceived ownership, which is what allows you to get paid.

5. Find inventing-friendly companies

Over the years, I've noticed that very large companies (market leaders) don't license many ideas. I've also noticed companies demanding that an invention be patented before they'll review it are not serious about open innovation. Companies that do not review product submissions internally, instead of relying on a third party, are not particularly serious either.

Find the companies that have worked with inventors in the past, have a very good track record and value open innovation. This advice will save your time, energy, and money.

6. Find your community

Who has your best interests in mind? Make other inventors and entrepreneurs your tribe. Not those who are just trying to sell you a service. Look for people who are not afraid to help by giving you access to their resources and shining a light on your success. Seek out mentors who have a truly long list of successes they have been a part of.

Making a living as an inventor is not easy.

7. It's "what you know" and "who you know"

I heard this from Richard Levy, the very successful toy inventor who came up with Furbies. He's right. You need to educate yourself about the inventing process — that's what you know.

But you also need to stay in an industry long enough to get familiar with the companies you're submitting your ideas to. You need to know their points of difference, their sweet spots, their product lines — and then build relationships with those companies.

Now, it's all about who you know.

Staying in one industry and getting to know the right people and their business is what allows you to laser focus and target your creativity. Stop jumping around! Getting to know the ins and outs of an industry just takes time.

I'm currently involved with a new company called Fishbone Packaging, whose goal is to eliminate plastic rings in the packaging industry. It's been tremendously helpful to have 25 years of experience in the packaging industry guiding me.

Fundamentally, to make a living as an inventor, you need to educate yourself and be very frugal about how you spend your money. At the end of the day, licensing success is really about knocking on doors to show your good ideas to companies that want to see them and have your best interests in mind.

Wavy Line
Stephen Key

Entrepreneur Leadership Network Contributor

Co-Founder of inventRight; Author of One Simple Idea Series

Stephen Key is an inventor, IP strategist, author, speaker and co-founder of inventRight, LLC, a Glenbrook, Nevada-based company that helps inventors design, patent and license their ideas for new products.

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