How to Protect Your Invention and Finance Its Development

“Do I need a business plan?” “How do I introduce drug testing for my employees?” “Where can I get legal advice on a merger?” Small-business owners often have questions about how to run their companies. This column will attempt to provide answers from a variety of experts. Consultants are interviewed by freelance writer Karen E. Klein.

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Q: I have an idea for a product that could possibly be sold to the National Basketball Assn. How do I take my drawings and turn them into a model? Is there an organization that could guide me in product development? Are there individuals who would finance projects such as mine?

--Ron Smith, Inglewood

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A: The most important thing for you to do at this point is to transfer your drawings into an “inventor’s journal” that is signed, witnessed and dated. Once you do that, you will have a powerful form of protection for your idea--the first step toward getting your invention patented, which you should look into soon. You should also investigate early on to make sure your product has not already been invented and patented by someone else. You don’t want to spend lots of time and money going down a dead end.

Converting your drawings to a three-dimensional model can be done a number of ways: The cheapest way is to do it yourself by going to hobby shops, dime stores and salvage yards to gather the parts you need and constructing a facsimile that can be used for testing and market research, which most certainly must be done. The most sophisticated way to make a model is through new computer technology that can take drawings and--through a process called stereolithography--generate component parts or whole models.

A third way is to hire a professional product designer. You can find firms that develop products and create prototypes by looking in the yellow pages under “industrial designers” or “product development.” This approach can cost you thousands of dollars, depending on how complicated your idea is.

Our organization, a nonprofit inventor’s group founded 25 years ago, can refer you to designers that work with our members at a discount. We help nurture new ideas from the concept to the market-ready stage and then assist in entrepreneurship, licensing and selling. We also hold consultations, workshops, seminars and contests. Membership costs $139 for the first year and $59 annually after that. For more information, call our headquarters in Santa Barbara at (805) 962-5722.

As far as financing, there are groups of independent investors called “angel networks” that look for hot new ideas, products and companies. You can get more information on them by visiting the Los Angeles Public Library’s department of patent science and technology. I also recommend a book written by Bruce Blechman called “Guerrilla Financing: Alternative Techniques to Finance Any Small Business.” An additional good resource is the Southern California Funding Directory, published by the Orange County Venture Network. It is available for $34.95, including tax and shipping, by calling (714) 855-0652 or faxing a request to (714) 859-1707. To request the directory by mail, write to Renee Wagner, executive director, Orange County Venture Network, 23011 Moulton Parkway, Suite F-2, Laguna Hills, CA 92653.

--Alan Arthur Tratner

President, Inventor’s Workshop, Santa Barbara

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Q: Must the residence being used as a home business be the principal residence of the business owner? In other words, can I buy a house and use it as my small business location even if I don’t live there?

--Buff & Associates

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A: If you are running a business in a residential zone and not living there, you’re just asking for trouble. Once the neighbors notice that it’s vacant at night and it’s only being used as an office, it is like hanging out a red flag. There will be concerns about how well the property will be maintained, whether this is going to be the beginning of somebody else bringing a business in and whether the neighborhood is going to change and become unsuitable for residential living.

You would be risking a lot to invest in a building and then get a cease-and-desist order that gives you only 10 days to move out. You’d be putting your business in jeopardy because you’d have a negative cash flow until you could sell the house or get a tenant.

However, there are lots of homes located in commercially zoned neighborhoods, where you see insurance offices or dentists’ offices mixed in with residences. I recommend checking to make sure the residence is commercially zoned if you want to buy a home principally to run a business out of it.

--Paul Edwards

Author and home-business expert

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Q: Where can an entrepreneur go to really learn business strategy and savvy, short of getting an MBA?

--Bonnie Wells-Taylor

Wells & Associates, Gardena

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A: Business owners should check into extension courses at universities and colleges, many of which offer outreach programs to community businesses. One example is the Business Expansion Network at USC, which consults to small businesses and helps entrepreneurs get training and financing.

The Small Business Administration has a wealth of information, and there are myriad trade books on issues related to growth.

Being part of your industry through a trade association allows you to network and learn what other businesses are doing to solve problems associated with growth.

Also, going online will allow you to find articles and case studies of businesses that have approached these problems in a variety of ways.

--Kathleen Allen

Author and associate professor of

entrepreneurship, business school,

University of Southern California

If you have a question about how to start or operate a small business, please mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or e-mail it to [email protected]. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.

* JANE APPLEGATE

Craftsmen learn the art of business. D14.