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Making money from your ideas requires a combination of disciplined actions and “good luck.” The disciplined actions include taking advantage of legal protections and using good business practices. “Good luck” has a way of finding those who pursue opportunities with preparation and persistence.

(1) Recognize the market potential for your idea.

Observation and experience can provide insight for a new solution to an old problem. For example, Ann Moore created the “rough draft” first Snugli for her own newborn after a stint in the Peace Corps. She based her approach on her observation of the quiet, contented babies carried in cloth carriers by their African moms. She recognized that she had a potential product with a large market (parents who want comfortable ways for transporting children).

Tip: To evaluate the market potential of your idea, ask yourself, who will buy it? What problem does it solve? Who are the competitors?

(2) Take steps to legally protect your idea.

There was no financial reward for the creator of the smiley face, Harvey Ball, because he did not take steps to legally protect his idea and it fell into the public domain for all of us to enjoy. Similarly, the inventor of the World Wide Web, Tim Berners-Lee, reaped no direct financial reward from his invention, although he has been awarded a knighthood for his pioneering work.

To maximize the revenue from a “hit” character, SpongeBob SquarePants, a multi-pronged strategy was used to protect the intellectual property. Copyright protection for the show and registering the trademark in multiple categories covers a broad spectrum of potential spin-off products. You can check online at www.uspto.gov and see that parent company Viacom registered the trademark in numerous categories, protecting its rights to the clothing, toys, games, etc. Registering multiple versions of the domain name helps prevent “cybersquatters” (people who register a name similar to yours).

Tip: Take advantage of legal protections such as Trademarks, Copyright, Patent and Trade Secrets, and register the domain names.

(3) Use smart business practices.

Using non-disclosure agreements consistently gave Hotmail a competitive advantage, getting to market 6 months ahead of competitors. Financial success for Harry Potter’s author, J.K Rawlings, came after many rounds of rejection. The success came in multiple streams of income, from book and film royalties to royalties from all manner of collateral merchandise (including clothing and toys.

Tip: Don’t inadvertently give away rights in the early days.

(4) Keep expenses down, but don’t be “penny wise and pound foolish.”

Start small and keep expenses down in the start-up period. Many successful businesses have been launched from the kitchen (Liquid Paper) and the garage (Apple Computer).

Spend carefully. Many businesses fail because they run out of cash. Spending on good legal and business advice as you go forward can save you a lot of problems down the road

Tip: Chose your advisors carefully. Beware of the invention promotion scams.

(5) Grow by joining forces with others.

Most of the time, you can’t afford to do it all. You need to join forces with others to commercially exploit your idea. This may mean a licensing deal with a larger company who has the deep pockets to handle the manufacturing, distribution, sales and marketing. Licensing deals are all around us – from Sesame Street characters to computer chips and software. Another possibility is “franchising” your business. For example, Curves grew from a single outlet in 1992 to the largest fitness center franchise, with more than 5,000 franchisees, by 2004.

Tip: Think through your business plan, on paper. Get legal advice before you sign that contract!