(Business 2.0) – You've just had that magical "AHA": A brilliant idea for a brand-new something-or-other. Congratulations. Now for the hard part, because when Thomas Edison said genius is 99 percent perspiration, he may well have been talking about the sweat that goes into making money from your inspiration. Indeed, a successful inventor must be able to handle many roles at once--market researcher, sales manager, and patent attorney, for starters, not to mention that all-important job as head of R&D. Let us take you through the basics of turning your aha moment into a lifetime of ka-ching. --OWEN THOMAS

I

DEFINING THE MARKET

You could hire a high-priced market research consultant--if you have $10,000 to spend before you know whether you'll ever make a dime. Or you could simply apply some of the same ingenuity that you used to develop your invention, and research its potential yourself. Read specialized reports (many are downloadable from market research firms' websites for $250 to $1,000), compile pricing data on competing products, and interview potential customers. (Keep plenty of nondisclosure agreements handy.) All the while, focus your attention on the "five Ps," a framework for evaluating the potential of an idea that's familiar to any first-year MBA student.

Product Obvious, you say? Not so fast. It's possible that your invention isn't salable on its own, but instead forms the foundation of a successful product or service. If you've invented, say, an airbag for bicycles, you could find that customers won't buy it as an add-on but might shell out a lot more for a bike that already has it installed.

Positioning Show the product to people from all walks of life to get an idea of which segments it appeals to. A few tweaks to the prototype--anyone for airbags in designer colors?--might give you clues about how to home in on the most lucrative market.

Price Don't make the classic mistake of starting with your production costs and then adding a profit margin. Ask questions that get to the heart of the matter--namely, your pricing power. How much do similar products cost? Will a 5 percent increase in price lead to a 20 percent drop in sales? You might find that you can't make your product at a price people will pay--but it's better to learn that now, before you waste any more time and money.

Place Knowing whether you are going to sell directly to consumers, through retailers, or through resellers will help you decide what partners you need. If it's a consumer product, talking with buyers at retail chains could help you find the answer.

Promotion Ask your prospects how they make buying decisions, then push your product through the appropriate channels. This is least important in the early stages--you can leave it for later, when your hired help (or a partner) can assist.

II

STAKING A CLAIM

To market your invention, you obviously have to tell people about it. But don't disclose too much without applying for a patent. Most manufacturers, fearing that competitors will flood the market with knockoffs, won't deal with you unless there's a patent pending. Here's how to get there.

Step 1. Think you've invented the greatest thing since sliced bread? The U.S. Patent and Trademark Office may disagree. It says the idea must be novel, so you'll be spending a lot of time searching for evidence of similar inventions, known as "prior art." (It must also be useful and nonobvious, which usually means that it produces new or unexpected results.) You can do the legwork at the PTO's huge library in Arlington, Va., or at any Patent and Trademark Depository library, located in all 50 states.

Step 2. After building and testing a prototype, file a patent application with the PTO. There's no form to fill out; you're on your own to describe how your invention was built and how it operates. The key is specificity. If you make too broad a claim, you risk invalidating your application if a past invention does essentially the same thing. Too narrow a claim diminishes your patent's value. So make an initial "independent claim" that's broad, then add "dependent claims" that describe your invention more narrowly.

Step 3. Prepare an Information Disclosure Statement that shows the results of your prior-art research. Don't leave anything out; a patent can be invalidated if an opponent proves in court that you were aware of but omitted relevant prior art. When you mail the document with your patent application, you can start marking your invention "patent pending."

Step 4. A government patent examiner critiques your application in an "office action." Don't get your hopes up: It's rare for an application to be approved right out of the gate. One round of revisions usually does the trick; if not, you can appeal the decision or ask for a fresh examination.

TIP: You can actually request that a patent examiner rewrite your claims for you. While he may write narrower claims than you want, the PTO is extremely unlikely to reject claims written by one of its own examiners.

Step 5. When you get an official Notice of Allowance, you've got a patent. It's yours for 20 years from the date of your application.

III

FROM RESEARCH TO REALITY

You've determined that there is indeed a market for your invention. Now you need to get it made. For decades inventor Dean Kamen sold his gizmos to big manufacturers like Baxter International. But with his latest creation, the Segway Human Transporter, he formed a limited liability company, raised venture capital, and hired Baxter's former CEO, Vernon Loucks, to run the operation. If you're not ready to start your own company, your other options are to partner with a manufacturer that's willing to make your product or to hire a broker to sell your idea. Here's how to decide which path to take.

Going It Alone

Best for: The inventor who can get financing, has management skills, and is convinced the profit potential is huge.

Strategy: Develop a business plan, line up financing, and find and hire operating executives.

Finding help: SCORE (Service Corps of Retired Executives; www.score.org) can hook you up with an experienced adviser, often in your field.

Red flag: Don't get carried away by greed or hubris. Unless your invention is really one of a kind, it may not be enough to support an entire company.

Partnering Up

Best for: The inventor with considerable sales skill but no stomach for risk.

Strategy: Target small manufacturers first, since they're less likely to have their own designers and less likely to "design around" your idea. A company that makes similar items may see your invention as an extension of its line.

Finding help: Business directories like Hoover's (www.hoovers.com) can help you pinpoint a product development VP.

Red flag: Be wary of waiving confidentiality. You should have a stack of nondisclosure agreements ready.

Cashing Out

Best for: The inventor who would rather just head back to the lab.

Strategy: Interview a number of brokers and then diligently call your fellow inventors to check references. Set clear expectations, such as a sale within 12 to 18 months.

Finding help: Most universities have technology licensing arms for inventions from their labs. Some may take on outside clients or steer you to a broker.

Red flag: Scams are rife. Insist on a contingency-fee arrangement; the broker profits only if your invention sells.

RESOURCES

InventNet (www.inventnet.com). Forums and links for inventors.

NIFC (www.inventorfraud.com). The National Inventor Fraud Center helps investors avoid promotion scams.

Online patent databases at www.uspto.gov/patft, www.delphion.com, and www.spi.org.

Patent and Trademark Tactics and Practice, by David A. Burge ($75; John Wiley & Sons, 1999).

Patent It Yourself, by David Pressman ($50; Nolo, 2002).