Up and Running:

Starting your business with growth in mind

By Tim Berry
Pros and Cons of a Product-Based Business

So here’s a question I got in e-mail the other day:

I am an engineer and I’ve designed a machine and got it patented. I am struggling between selling my patent or starting my own business. I am trying to balance out all the pros and cons of a product-based business. I had really great offers for my patent, but I think more money can be made if I manufacture the machine and sell it myself. What do you think? What are the pros and cons of a product-based business?

And here’s my answer:

Pros

Cons

Chance to make real money Chance of losing money
Control your own destiny. Lots of hard work
Turn your idea into a business. Serious uncertainty
Prove the value of your idea. Get your bluff called

By the way, have you actually tried to sell rights to that patent? Make an informed decision. Something like a patent is worth what a buyer will pay for it. Most patents, the vast majority of patents, have no buyers.

And then there’s the problem of the buyer who offers a royalty for a license, then does nothing with the patent. You make no money.

And, on the other hand, there’s also the chance that you try to build a business and fail. Lose your shirt. Lose your house.

Which do you prefer, a bird in the hand or a successful business that you build yourself in the bush?

This entry was posted on Friday, May 16th, 2008 at 6:18 am and is filed under bootstrapping, business planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.




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