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Ask Dave

New Way To Get The Money

Kyle wants to start a small business. He patented an invention and wants to manufacture it. How should he approach this?

QUESTION: Kyle in California wants to start a small business. He is in college and works full -time. He has patented an invention of his and wants to manufacture it, but that will cost $8,000, and he doesn't have it. He wants to charge $29 for the product, and his cost of goods is $6. How should he approach this? Dave has a creative way.

ANSWER: If you have a prototype built, you could sell it to a cell phone store or company. Why don't you go to some independent local cell phone stores? Not a Verizon or something like that, but someone local who sells cell phone service. Show them the prototype and let them know it's patented. Tell them that you normally charge $18 to sell this to them, but I'm willing to sell them to you for $8 for the first 1,000 units if they prepay you.

That's going to be a hard sell, but if it's a really cool item, and if you could get a couple of orders like that, they will give you the money with their deposit on the future order. They'll give you the money to make your first run. I've done that in business several times, but you have to be a really good salesman, you have to really believe in your product, and you have to really collect the money up front. That way, your customers fund it.