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If you have a special talent, hobby or skill that could create a little nest egg that could be allocated for your invention, this is a great way to come up with the needed cash. Do you have a service you can offer to make extra cash or a product that you can create and sell? Lots of people have taken the time to learn specialized crafting and they can make and sell products or offer a class to teach others the skill. We know of a man whose “regular” job is an airline pilot, but in his spare time, he designs and creates special t-shirts for charity events, sporting events, school groups and so on.

Think about what you like to do in your spare time. Do you play an instrument so that you could provide music for social occasions? Perhaps you know how to bake beautiful pastries or can sew like a professional. Can you groom pets or teach a craft? Get your creative juices flowing about what you could do in your spare time that would bring in the extra income to pay your invention costs.

If you can finance your invention from your own funds, this is the very best, least complicated way to go. We did exactly this with a twist. As we have previously mentioned, quite a lot of the initial steps were funded by our personal savings. Once we were patent pending we started manufacturing and selling Ghostline® on a limited basis. We loaded up the trunk of the car with 100-piece packages and drove around selling it to local independent teacher stores and office supply stores. We made enough money doing this to pay the legal fees when our First Office Action came back from the patent office. An Office Action is any correspondence that comes from the USPTO relating to your application for protection of your intellectual property, whether it is a patent application or a trademark application. Office Actions require a response from whomever is prosecuting your application.

We also made enough money from sales of the poster board to pay for the next run of the product. Several times we repeated the cycle of manufacturing small runs and then selling it to earn enough money for the next run and to pay patent related expenses until we finally received notice that our patent would be allowed. So, even though we weren’t selling a lot of Ghostline®, we were “in the black.” We were covering our expenses as we went.

By proceeding in the pay-as-you-go mode we kept complete control of our product and our company. For us, it was the right decision. Success might have come sooner had we gotten investors or loans, but the comfort of knowing that we were limiting our financial risk was worth the extra time it may have taken. Only you can decide if this is the proper course of action for you and your product. If your product is “time sensitive,” that is if it is essential that you get to market as soon as possible or risk losing out entirely, you may need to consider the following options.

Expenses during the development, protection and marketing phases of inventing do not all occur at once. There is no need to have all the money that will be spent on the project at the beginning of the process. Very few independent inventors have a surplus amount of money set aside with which to pursue their product ideas. Most of us are operating on shoestring budgets. Many have succeeded and so can you. It may be necessary to save for a while and then move to the next phase of your product development. Then save again for the next phase and so on. As you read this book – or any book that details the steps in product development – you will see that there are lots of details related to your invention that you could be doing while you are saving between expenditures. So, it isn’t as if you have to spend all of your time in a holding pattern while you accumulate the needed funds.

Shoestring Budget™ inventing does not mean cost-free inventing. If only that were the case! It means that you must contribute, at least some of your own money, to the project. You may be saying, “But, I don’t have any money!” If that is the case, then you might as well stop now. Almost anyone can tap into savings or plan for future expenditures by saving small amounts as they can for something that is really important to them. As we mentioned in an earlier chapter, an inventing project does not require that you have the entire amount at the start. It is very possible to pay for your invention in segments as you move through the steps. In fact, that is the way it must be done since product development, protection and marketing take place over a somewhat extended period of time and the expenditures are made in different areas, such as prototyping, legal, and so on.

When we were first inventing our product, Ghostline ®, we were the epitome of Shoestring Budget™ inventors. We were a couple of wives and mothers who were working full time jobs and we did not have a lot of expendable income. We did have faith in our idea; enough faith to dip into our savings to get our first prototypes made. We did it in bits and pieces.

First, we each contributed about $200, when that money was exhausted we each dipped into our savings again to replenish our “company fund” in order to have the money to continue the prototyping process. Thankfully, our first visits to patent attorneys were free (we interviewed several patent attorneys before selecting one) but when the time came to start the patent application we each dipped into our family savings again. If you truly have faith in the potential of your idea, you will be willing to invest at least some of your own money. If you do not have enough faith in your idea to put your money, even if it is limited, where your mouth is, stop now. Do not waste your time or anyone else’s.

It is often the case that an individual who is very creative about coming up with a great idea does not use that same creativity when it comes to finding the money to move forward with it. It is our aim in this chapter to shed some light on how to approach the problem of funding your invention. As a Shoestring Budget™ inventor, the very first place you should look for help is in your mirror. We know that is not what you want to hear, but it is the truth of the matter. Before others would even consider investing in your idea they would need to see that you had enough faith in your idea to put your own money where your mouth is. Many independent inventors have the very mistaken notion that the idea for a terrific new product is contribution enough on their part. Wrong!

Using the patents that are most similar to your invention, click on the link for each patent that is listed under “References Cited.” This is the prior art that has been listed as being the most similar to that patent. This is where you will find the patents that are similar, regardless of when they were issued. Often you will find patents dating back many years in this section. Examine each of those carefully, looking at the images if you need to, in order to understand how they are similar or dissimilar to your idea. If you continue to pursue your invention and a patent application is filed, some of these same patents may be cited as prior art on your application. Look at the classification numbers on these patents to make sure that you have not missed one that should be checked.

The steps given below are very basic and they are not intended to be exhaustive but they will help you to learn how to do a simple, preliminary patent search in order to avoid unnecessarily spending money for a professional patent search if you should happen upon your invention idea very quickly.

The USPTO database is the same one that you would find if you went to one of the patent and trademark depository libraries that are scattered around the country. By the way, although you can do these searches on your home computer, it is a good idea to go at least once to one of these libraries if you have the opportunity to do so because the librarians are so knowledgeable and helpful and it is a wonderful experience for an inventor. It’s just a great place for creative people to hang out and learn! The United States Patent and Trademark Depository Libraries around the country frequently hold free classes and seminars on all subjects related to inventing, patents and trademarks. Call your nearest branch to be placed on a mailing list for these opportunities.

Margin is particularly troublesome for optimistic investors. For every dollar of stock you own, your broker will “let” you borrow up to 50 cents to buy more shares. While 100 shares of a company sounds good to you, 150 shares, putting down the same amount of your savings, sounds like a bargain. Of course, there is interest to pay on the loan, but the optimist reasons that the inevitable rise in the stock price will more than compensate for the interest and will accommodate an easy repayment of the loan when necessary.

In practice, though, things often go quite differently. Should the company temporarily swoon, you will get a call from your broker advising you that the loan is now due and you need to either come up with more cash or he will sell out your shares, at a loss, and cover the margin. Now a particularly optimistic type will find more cash, buy more shares, and set himself up for an even bigger fall. Many optimists have lost their life savings from a series of these episodes. Lawsuits inevitably follow.

In particularly bad markets, you are more likely get a call stating that the matter has already been taken care of and you now own only 50 shares of this company, but you no longer owe the broker a dime. This may be fortunate as it avoids the opportunity for you to put up more of your cash. However, should the company immediately recover and soar, lawyers will argue for you in court that you were not given proper notice and an opportunity to cover the deficit, which you certainly would have done.

Brokers know that you want researched stocks recommended by experts. That is why you came to them to begin with. Each brokerage house, therefore, has its own experts rating stocks just for you. When brokers rate stocks, on average more than 65 percent are rated buy, less than 35 percent are hold, and less than 1 percent are rated sell. Every broker, therefore, has a long list of buys to show you, several of which are certain to piqué your interest.

Unfortunately, buy ratings have a dual purpose. Buy ratings sell stock to you and they sell services to companies issuing stock and bonds. In 2000, brokers made more than $30 billion dollars helping companies issue stocks and bonds. These stocks and bonds are always given buy ratings. That keeps the client coming back; it may or may not keep you coming back.

Studies show that buy-rated stocks have random returns on average no better than the market. Frequently they serve to prop up stock prices temporarily so insiders can cash out their stock options at a profit before the collapse. Insiders have to act quickly, though. According to a 2001 study by Investors.com, buy ratings on IPOs by the analysts of the underwriting firm lead to losses six months later of greater than 50 percent.

Investors also go to their broker for comfort and support during the markets down periods. Unfortunately, a full-service broker is not a financial counselor or a psychologist, but a salesperson looking for a commission. He will always have a product to sell you in an attempt to ease your discomfort.

Many investors go to full-commission brokers for stock research, investment advice, and financial planning. Today, online discount brokers also provide these services. Unfortunately, most brokerage information is designed to sell more product more often, not to improve your financial position.

Wall Street has always known that buyers are primarily interested in stocks that increase in value. Profiting from declines is un-American. The easiest sell is a stock or fund that has already gone up. You will naturally be more confident that a stock or fund that has gone up will continue to do so. A broker will show you a select list of stocks that have strong momentum. Your overconfidence will hurt you. Studies show that stocks that have good streaks soon revert to the mean. While your broker is sure to know this, he will not disclose it to an optimistic buyer. He also has other sales tools.