I received this question in e-mail today:

I am in the processes of developing a small business around what I have been told is a great idea by friends, family and SCORE. I am very near the manufacturing stage, which obviously requires venture capital and the manufacturing process. I’d like to present my idea to anyone that is interested. I would appreciate your interest and thoughts.

I get that question a lot, so I want to share my answer:

  1. cashYou don’t own your idea. Your idea has no intrinsic value. Building a business on it gives it value.
  2. Plan. Figure out how much money you really need, based on a plan you can defend when asked. It’s a matter of startup expenses, assets, and how much time it takes to get to monthly cash flow break-even. Sure, it’s all guesswork, but make it an educated guess that you can explain in detail. Don’t ask for more or less than what your plan says you need.
  3. Large companies don’t buy ideas. I don’t see that suggestion in your e-mail, so I assume you’ve already figured that out. It’s important for others.
  4. You don’t want just any investor. Choose an investor like you would choose a spouse.
  5. More on finding investors: Don’t ask people if they’re interested; ask them whom they know who might be.
  6. Aside from your SCORE counselor, you can also ask at your local Small Business Development Center. Find a local angel group.
  7. Don’t rule out bootstrapping. See point two, though, and consider what your startup sweet spot is.
  8. Look for partners with experience in your area. People you can trust who’ve been down this path.
  9. Look for an attorney with real, verified small-business experience. Forget the stereotypes. There are lots of honest competent attorneys around. Get recommendations
  10. Don’t forget the five hard realities about selling an invention.

And I’m assuming a lot of these answers are not what you would have hoped for. I’m sorry for that. A lot of people will give you detailed advice and step-by-step instructions that don’t actually work. It’s better to go into it knowing what you’re up against. Share/Bookmark

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.