No matter if you are a healthcare professional, a sales rep, an engineer, a marketer or just someone who has walked into a hospital or clinic, we’ve all seen things we know we could make better. The next step is the hardest.

You have to actually create your great idea.

This means taking some type of action and, probably, spending some money, maybe a lot of money.

Rule 1: If you aren’t willing to spend money, don’t expect someone to give you money just because of your good looks.

It costs a fair piece of money to create. How much? Depends…

When people have asked me how much they can expect for their medical device, I group my responses in the following way

• Is it just your idea, maybe sketched out on a napkin? Don’t expect much, sorry.
• Have you gotten a patent? Or has a patent been applied for? Probably not much cash, but you might be able to negotiate a royalty-type compensation (but don’t expect a huge percentage)
• Do you have (more than one) working prototype? What this means is that you have written drawings and the beginnings of a manufacturing process. You have invested in the drawings, the engineering time, the prototype molds or machining time, the electromechanical parts and the software to make it do something. What this shows is that your idea actually might even work! This is worth a bit more money, but you’re not going to be able to retire quite yet.
• Has it cleared the FDA or have a CE-mark? Now we’re getting somewhere. This means you have invested in a Quality System, you have done substantial testing on the components, software and the function. You have gotten to the point of being able to say your product is “safe” and “effective”. If an acquiring company just happens to be looking for what you have developed, you could be one of the lucky ones. The hard work is getting your great idea out in front of the people with the bulging checkbooks – not as easy as it may seem.
• Do you have sales? A continuous revenue stream? This the first time that the word “multiples” actually has meaning. Revenue means somebody actually likes it. Continuing revenue means they came back to buy again. This is where the potential compensation is a multiple of your NET PROFIT – note I did not say a multiple of your revenue stream. A potential buyer really could care less about the Revenue. The only thing that matters is how much money you have left in your pocket after you have paid everyone else. What multiple? Again, depends. Depends on how badly someone wants your product and the number of companies you have in the bidding process.

The TV show, Shark Tank, is really a good primer for anyone thinking about getting into this world. The folks on the panel did not get to where they were by throwing their money away. Listen to the questions they ask because they are the same ones you will be asked if you are trying to sell your idea. If you can’t answer, don’t expect much to happen.

Can you develop your idea alone? Yep. Just won’t be easy and you will keep running through minefields every step of the way. That’s why Medical Device Experts exists. We can bring the right experts into the process at the right time. Just fill out the Contact form and we can discuss your needs and next steps.

Next: Rule 2