This is the third part in a five part series on how you can profit from your invention or idea.

Part 1 described Stage 1, the Invention Stage. There were three steps illustrated in part 1:
1. Find a need and fill it
2. Record the invention in writing
3. Research the invention

Part 2 described the concept of the Business Stage and the first two steps in this stage.
Step 4. Complete a Feasibility Study
Step 5. Complete a Strategic Plan.

Part 3 will now describe the following step of the Business Stage, which is often the most difficult, and thus gets more attention.
Step 6. Attain Money to Finance the Business

6. Attain Money to Finance the Business. This is the stage where the money needed to finance the business for profiting from the implementation of the invention (as described in the Feasibility Study and further defined in the Strategic Plan) is acquired. This will usually be a very frustrating, time consuming, and difficult step for you. But this step can be made much easier and profitable. Lets discover how.

The first key for you is to thoroughly complete ALL OF THE PREVIOUS STEPS. Why? Because, the information and results gained from the previous steps will show that the business is worth pursuing and has a very good chance of being financed in the first place. In addition, virtually all of the important information needed to convince others to invest has already been gathered.

For simplicity, we will refer to all forms of money providers, as investors, whether lenders, or investors.

Investors have a different perspective and their goals need to be addressed in order to convince them to invest money. Investors need to be convinced that they will:

1. Make a profit from the money they provide that is commensurate with the risk/reward ratio they are willing to accept,

2. Minimize or eliminate their involvement in the effort to create business profits, so their money will work for them;

3. Have a "good feeling" about you, the invention, or the business.

You seize the investor's attention when you address these three points. Frankly, you are offering investors the "Opportunity" to invest in something they feel good about, will not have to work at, and can profit from, all at the same time. Such a deal!

The most effective marketing tool used to convince investors of all three of the above is the Business Plan. A Business Plan is a formal document that has specific formats and information required. However, virtually all of this information has been gathered in the previous steps and can be easily included in the Business Plan. The Business Plan informs an investor: how much money is requested, what it will be used for, how the business will generate profits, how much profit the investor can expect, who will operate the business, when everything will occur, and why the entire process will be successful. Note, the foundation of this whole process is being able to convince enough customers to buy and/or implement the invention at the price needed to generate the profits promised.

Most investors want and need to have some type of good emotional connection with the business and/or the invention itself. Investors with the greatest positive emotional connection with an invention are the most likely to provide funds. This fact is frequently overlooked in the normal pursuit of financing, and should definitely be addressed. Frankly, determining those who will have the highest likelihood of having strong positive emotional ties should be the basis of selecting whom to approach.

According to The Global Entrepreneurship Monitor, published by Babson College and Kauffman Center for Entrepreneurial Leadership, July 1999, "the highly visible SBA loan guarantee programs help a large number of small firms, but only 2-3 percent of the total number of start-ups." The report goes on to say that less than $4 billion of the approximately $60 billion provided to start-up firms come "from formal private equity sources (venture capital)." Thus, more than 90% of all financing for start-ups come from the informal sources, other than banks and Venture Capitalists. The report further states "success in raising equity capital requires successful promotion of the business opportunity and close personal contact with sources of equity."

Lets look at some potential investors from their emotional perspective, from the highest positive connection to the lowest: you (the highest possible emotional connection), your family and close friends (strong emotional bond to you), co-workers and business associates (respect and good feelings from working with you), potential vendors, manufactures, and businesses that market similar products (strong desire to benefit through their business), investors with good feelings about the field of the invention (with emotional interests in improving the areas that the invention benefits), investors, sometimes called Venture Capitalists that focus on inventions and new ideas (emotional ties to be part of something new, exciting, and profitable), money managers, investment groups, or corporations (that have some affinity to take the risk to fund the business of implementing an invention), stock underwriters (who thrive in the excitement and profits of taking new businesses public) and finally traditional lending institutions (with the least amount of emotion and the greatest number of risk avoiding policies).

Personal Options for you. You should definitely get very good help in this arena, because it as a very specialized game, the stakes are very high, and the investors know the rules and are very skilled at playing them. Caution is warranted: Frequently, investors will structure financing arrangements that virtually eliminate any possibility of you receiving benefits. You should remain very involved, because you will be directly affected, and will need to protect yourself by using professionals, who operate well in the financing game, and should have your best interest in mind.