Many of the businesses and entrepreneurs I know still don’t realize that they need to use and understand the Internet, even if their interest is not e-commerce. Maybe you have also heard a lot of Internet terms, but are not sure you can explain how, when, and why they are relevant to your business success. Here is a quick test of your real Internet savvy.

See how many of the following “new” Internet concepts you recognize, and can explain in terms of value to your business. If you have heard the lingo, but most of these are not in your startup business plan, you are already in jeopardy as an entrepreneur:

1. Blogging. A blog is basically a journal (“web log”) that is published on the web. Business blogs are an extension of your website and can effectively communicate the value of your business. You are now reading one of about 50 million out there already. Blogs composed of video clips are called “vlogs.”
2. Social media marketing. Today there are huge communities online, like Facebook and Twitter, which grew in popularity for socializing with friends. For businesses, these are now prime sources of business networking, customer service, and client leads. Facebook alone has 800 million active members. Do you have a business presence there?
3. Search engine marketing (SEM). This popular form of Internet marketing seeks to increase website ranking in search engine results. Techniques include search engine optimization (SEO) and paid result placement. No SEM plan means you are missing a huge marketing opportunity.
4. Viral marketing. This is a marketing program on the Internet that you make so popular it spreads like a virus, like “word of mouth.” Examples include give-aways, contests, and celebrity stunts that grab attention. Viral marketing costs real money, but is often worth it.
5. Streaming video. Watching video has now surpassed text searching, with popular sites like YouTube, so you see more video ads – in banners, news lead-ins, and site placements. Most videos are now in-stream (no download first), and new ones can be interactive, with clickable hot spots.
6. Internet radio. Sometimes called blogtalk radio, this is essentially the same as regularly broadcast radio, except it is streamed (realtime) on the Internet from websites such as AccuRadio, which alone reaches nearly a million listeners per month. People simply log on and listen. Use them to deliver a business message.
7. Podcasting. This is a variation on Internet radio, named from iPods and broadcasting. A pod-caster creates music and/or business material and makes it available for Internet download to iPods or other devices, where users may then listen at their convenience.
8. Pay per click (PPC). This is how you make money from advertising – someone else runs ads on your site or your blog, and you get paid for everyone who clicks on the ad. Rates per click are very low, so don’t try to live on ad revenues until visit rates are very high.
9. Crowdsourcing. This is a term indicating the use of “crowd wisdom” to get a task done free by interested people on the Internet. Wikipedia started this, but it is also used for technical support, software, and product reviews. You can use it for your business.
10. Wiki. This is an Internet website that allows the easy creation and editing of interlinked web pages via a web browser text editor. Wikis are used to create collaborative websites on a given subject, maintain corporate intranets, and build simple data bases.

Just for fun, I’ve come up with a scoring system based on my own non-scientific survey to help you rate yourself on your level of Internet business acumen. How many of the terms defined above have you personally used or explained in the context of your business?

• 8 to 10 – Excellent business savvy (or a Gen-Y)
• 5 to 7 – Average, keeping up with the crowd
• 2 to 4 – Beginner, struggling to catch up
• 0 or 1 – Wake up, the business world has moved on

The Internet is here – there is no going back. It’s probably the biggest source of change and innovation in business today. As entrepreneurs and business people, it behooves us all find and adopt changes which can improve our startup. These days, a static business is a dying business. How dynamic is yours?

Most people think innovation is all about ideas, when in fact it is more about delivery, people, and process. Entrepreneurs looking to innovate need to understand the execution challenge if they expect their startup to carve out a profitable niche in the marketplace, and keep innovating to build and maintain a sustainable competitive advantage.

Everyone thinks they know how to make innovation happen, but I can’t find much real research on the subject. At the same time, myths about innovation are commonplace in business. Vijay Govindarajan and Chris Trimble, in their book “The Other Side of Innovation: Solving the Execution Challenge” have done the best recent research I have seen on this subject.

They take you step-by-step through the innovation execution process, in the context the ten most common myths about innovation, which I think makes their approach particularly instructive:

1. Innovation is all about ideas. While it is true that you can’t get started without an idea, the importance of the Big Hunt is vastly overrated. Ideas are only beginnings. Without the necessary focus, discipline, and resources on execution, nothing happens.
2. A great leader never fails at innovation. When in comes to innovation, there is nothing simple about execution. The inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone.
3. Effective innovation leaders are subversives fighting the system. Effective innovation leaders are not necessarily the biggest risk takers, mavericks, and rebels. The primary virtue of an effective innovation leader is humility. What you want is integration with real world operations, not an undisciplined and chaotic mess.
4. Everyone can be an innovator. Ideation is everyone’s job, as are small improvements in each employee’s direct sphere of responsibility. Yet most team members don’t have the bandwidth or interest to do their existing job, and well as address major innovations.
5. Real innovation happens bottoms-up. Innovation initiatives of any appreciable scale require a formal, intentional resource commitment. That requires the focus and resources from top executives to sustain, even initiate, relevant efforts.
6. Innovation can be embedded inside an established organization. Some forms of innovation can be imbedded, like continuous product improvement, but discontinuous innovation is basically incompatible with ongoing operations.
7. Initiating innovation requires wholesale organizational change. Innovation requires only targeted change. The first principle is to do no harm to existing operations. A common approach that works is to use dedicated teams to structure innovative efforts.
8. Innovation can only happen in skunk works. Innovation should not be isolated from ongoing operations. There must be engagement between the two. Nearly every worthwhile innovation initiative needs to leverage existing assets and capabilities.
9. Innovation is unmanageable chaos. Unfortunately, best practices for generating ideas have almost nothing to do with best practices for moving them forward. Innovation must be closely and carefully managed, during the 99% of the journey that is execution.
10. Only startups can innovate. Luckily for entrepreneurs, many large companies are convinced that they must leave innovation to startups. Yet research suggests that many of the world’s biggest problems can only be solved by large, established corporations.

Everyone agrees that the goal of innovation is positive change, to make someone or something better. Entrepreneurs need it to start, and established companies need it to survive. The front end of innovation, or “ideating” is the energizing and glamorous part. Execution seems like behind-the-scenes dirty work. But without the reality of execution, big ideas go nowhere, even in startups.

What sparks paradigm-shifting innovation in any business? It’s a special mix of entrepreneur and company, regular in every respect except for having the courage and foresight to make an idea happen that was supposed to be impossible. As an entrepreneur in a startup, how do you know if you have this potential, and what are the steps to get from an innovation to a revolution?

The first step is to meditate on the examples set by others, like Steve Jobs of Apple, Jeff Bezos of Amazon, or Thomas Edison with the electric light. There are many others, like the one I just finished about Ratan Tata bringing out the Nano car in 2009 in India for less than $2,500. The book is called “Nanovation,” by Kevin & Jackie Freiberg.

These authors have studied many such examples, and summarize my own perspective on the characteristics of entrepreneurs they call “nanovators,” that produce true, life-changing innovations, which they call nanovations:

1. Get wired for nanovation. We all agree that innovation is an adventure into the unknown. If you want people to follow, you need to be able to convince them of three things: (1) your mission is worth supporting, (2) you have the competence to build a critical mass, and (3) you have integrity to look out for their best interests along the way.
2. Lead the revolution. Nanovators have more than the vision; they have the drive to lead, and the focus to stay on target. They are wired to win. Organizations don’t produce game-changing innovations; people do. They allow a leap of faith in their own ideas, as well as in the ideas and capabilities of their team.
3. Build a culture of innovation. You need a culture where restlessness is tolerated, curiosity is encouraged, passion is inspired, creativity is expected, and people are always talking about what’s next. Ultimately, the mind-set changes so significantly that innovation is natural, and no one is conscious of it.
4. Question the unquestionable. Outsiders ask a lot of questions because they don’t presume to know why something is done a certain way. Make your insiders think like outsiders. Provocative questions like “What if?”, “Why not?”, or “So what?” can help to get everyone outside the box.
5. Look beyond customer imagination. First-of-a-kind products empower customers to do things they didn’t even know they wanted to do, and now can’t live without them. The computer mouse, Tivo, and Teflon are examples. Listen to customers, but remember that they can’t always tell you what they don’t know.
6. Go to the intersection of trends. Nanovators pay close attention to the early warning signs that precede major cultural, societal, and market shifts. Where most people see an isolated trend, nanovators connect the dots by relating one trend to several others. They focus on next practices, versus best practices.
7. Solve a problem that matters. The key here is to resist the temptation to pay more attention to the technology solution than the problem. Some people create brilliant solutions to non-existent problems, like maybe Segway and satellite phones. These solutions may be nice to have, but won’t ignite a revolution to get there.
8. Risk more, fail faster, and bounce back stronger. When you pursue a creative idea that takes you beyond, fear tempts you to make compromises. If you can push through this fear and doubt, or bounce back intelligently from initial setbacks, you often arrive at something that has truly never been seen before.

Jeffrey Immelt of General Electric argues that the next big thing, like the Nano, could well be from “reverse innovation,” where instead of industrialized nations adapting their products for emerging markets, innovation in emerging markets will bring new paradigms to home markets. In any case, the future is defined by what we put off until tomorrow, so don’t wait too long to get started.

Entrepreneurs are always looking for “the next big thing,” when maybe in fact it’s a lot of little things that are only recognized after the fact as components of a big evolution or revolution. In my view, the Internet “connectivity anywhere” has already spawned several of these, but the global change has only begun.

Emily Nagle Green, in her recent book “ANYWHERE,” argues effectively that the future of the world and business is ubiquitous connectivity, the total interconnection of people, ideas, and products through a global digital network. Every person will have access to virtually anything in the world from virtually anywhere he or she happens to be at the moment. Key vehicles already include wireless for communication, and RFID for product location.

The implications for startups in this context are huge. On the hardware side we need better technology to provide a common digital network around the world, better broadband to satisfy the demand, and wireless ubiquity for connecting people, devices, and businesses. The needs for new software and services are just as pervasive.

So how do entrepreneurs train to lead the Anywhere Revolution, rather than be dragged along by its wave? Here are some principles I have adapted from Emily’s work:

1. Be eternally curious. You need to be an eager investigator, avoiding the temptation to write things off before you’ve opened your eyes to all the possibilities they offer. Don’t let yourself be talked out of powerful ideas. Develop a keen sense of customer appetites, as well as current solution strengths and weaknesses.
2. Be a ubiquitous connector. Some people are naturally “connectors,” using their links with others to create or promote opportunities between them. The Internet dramatically reduces the cost of being a connector. In fact, now we can all be connectors, and should be.
3. Be an analytic thinker. Already today, your skills in searching for information and then synthesizing that information, looking for patterns, and interpreting it, can be more valuable than the actual information you’ve amassed in your experience as a person and as an employee.

Entrepreneurs should be asking themselves for every consumer and business product, how can we add “anywhere” connectivity to this item? This is called the connectivity diffusion.

• If you can enhance the user’s experience with sending, or getting, real-time information, you should.

• If you can add value to the product with connectivity – perhaps contributing to the cost, too, and thus defraying the price of the product for the customer – you should.

• If you can extend the life of the product in the customer’s hands by providing service or updating it with new features, you should.

• If you can partner with a firm that can do any of these things to bring your service or message to more “surfaces” in the customer’s life, you should.

Also, put your marketing hat on and realize the wealth of new potential opportunities to create more awareness and consideration of your product or service in the future of ubiquitous connectivity. Whether it’s coupons, or advertisements on the mobile, the connected device with geo-location that’s always in a pocket or purse is literally a whole new world for marketers.

As an entrepreneur, don’t apologize for your self-interest and profit motivation. Be an optimistic adopter of connectivity. Be a connectivity evangelist and embrace the connectivity future that is opening before you. That’s a win-win for everyone anywhere.

That means the target market must be large (at least $500M), proven and growing, with revenue potential of at least $50M within five years. Initial investment targets are usually larger than $2M, sometimes up to $25M or $50M. To make this work, you will need an initial valuation of at least $5M.Current market conditions should still convince you to be totally thorough, thoughtful and aggressive in your approach and presentations. But now is the time to get started, and remember to work friends, family, and angels before you tackle the big boys.

In finance, a bubble is too much money chasing assets, greater asset production and a herd mentality. In startup business plans, a bubble is too many entrepreneurs and too many investors chasing the latest “next big thing,” like Google search engine, Facebook social network, or Amazon e-commerce site. In all these cases, a bust is inevitable, and everyone loses.

The big question is how to spot these bubbles and jump to a better alternative, rather than get sucked into the vortex. I read a book recently by Vikram Mansharamani, “Boombustology: Spotting Financial Bubbles Before They Burst,” which gives some insight on the financial side, but I believe it can be equally applied to bubbles for startup ideas as follows:

1. Avoid the herd mentality. In theory, this is called the “emergence of group order” or swarm mentality, where everyone rushes in without regard to whether there is enough food to go around. For startups, investors usually toss business plans with ten or more real competitors, especially if a couple have the penetration of a Facebook or Google.
2. Overconfidence. In finance, “this time is different” is the beginning of a new bubble. In startups, it is the idea that “this solution is different,” without sufficient analysis of base anchoring features, differentiation features, or no new early adopters. Change is always hard, so people already on Amazon are not easy convert to another e-commerce system.
3. Supply and demand ignored. We all believe that supply and demand meet to create stable prices (reflexive). But sometimes higher prices create higher demand, causing a boom. Busts result when lower prices stimulate more supply. In startups, a great success like Google causes busts by stimulating more supply, without regard to demand.
4. Cheap money. The Austrian school of economics asserts that “cheap money is the root of all evil” as an explanation for all boom and bust cycles. This also works for startups, where cheap money occurs when too many investors jump on a bandwagon. Experts argue that a higher percentage of startups fail with too much money, rather than too little.
5. Policy-driven distortions. Government actions sometimes meddle with normal supply and demand equilibriums, or money allocations. In startups these days, governments are incenting green and alternative energy solutions, to intentionally create a bubble. All too often, that leads to a bust for startups who have not adequately prepared or executed.
6. High valuation, low profit. A sure sign of a bubble is when assets are artificially valued high, without a corresponding intrinsic value or cash flow. Social media darling Twitter is the most fragile of these bubbles. In my opinion, now is not the time to bet your startup on a Twitter clone.

Every startup wants to be the one to start the next bubble, but these are impossible to predict. It’s much easier to spot current bubbles, and resist the urge to build a “me too” product. The focus should always be on execution, revenue, and profits. Vision, growth over profit, and eyeballs won’t do it this time. Startups that master iteration, momentum, and the ability to pivot will win.

I’m personally looking to Gen-Y as the source of the “next big thing,” that will become the next bubble. To the rest of us, new great things often start out looking like toys, and Gen-Y knows their toys. In addition, they have less baggage, more creativity, and already understand the market segments with the most buying power.

I also believe we are beginning a new wave of startup investing. Angels are becoming more liquid as their stock market and real estate assets recover, and institutions again have earnings to put into venture capital funds. It’s a good time to start some new bubbles and win. Don’t let the fragile old ones burst your bubble as well.

Based on my own experience and feedback from friends, every investor is approached by at least ten entrepreneurs with a “hot idea” for a new business, for every one who has a real “plan” for a new business. That’s why I often say that ideas are worth nothing, until they are put in the context of a business plan and real people committed to executing the plan.

In fact, you can find websites full of ideas, like these “Free Innovative Ideas,” by serial entrepreneur Kim E. Lumbard of CalTech. Or you can find books of free ideas, like “Ideas,” by Matt Schoenherr, providing 101 great ideas for increasing your visibility and profitability. Most investors will tell you that they rarely see a new idea that they haven’t heard before.

I’m sure you all realize that there is quite a distance between a good idea and a good business, or even a plan for a business. Here are a few tips on how to bridge the gap. The first step is to pick one idea (that seems to be the hard part for idea people), and go to work along the following lines:

• Do some specific market research. Scan the Internet for existing patents and some “credible unbiased third party” data that confirms there is really a market for a solution resulting from your idea. Just because you or your friends think it is a great idea or great technology, that doesn’t mean that a large number of customers will buy it.

• Make sure the idea is technically viable. I hear many ideas that sound more like dreams, rather than products. It’s not hard to come up with the idea that a cure for cancer would make a great business, but some things are harder than they look. You need some evidence of a real solution before any business plan makes sense.

• Draft a business plan summary. Rather than starting with a full business plan, I recommend that you start with an executive summary of a couple of pages, or an executive level presentation of maybe ten charts. It’s easier to see the big picture, and find out if your strategy can excite people before you work on a detailed plan.

• Prepare 5-year financial projections. For most people, this is the hardest part, because it forces you to contemplate real costs, prices, delivery, and volumes. Yet these are the elements that make a business, so without them no one can assess the potential for success or failure. Don’t spend time on precision here – that comes later.

• Start your search for key resources. These would include people and money first, and maybe software or manufacturing later to produce and deliver the solution. Other important elements of every business include the name, logo, type of company, licenses, location, advisors, and operational details.

Obviously, some of these can and should be started and executed in parallel, rather than sequentially, depending on your own time and skills. Don’t be surprised if your base idea changes considerably as you learn more about the market, technology, and the sales process. It’s a lot cheaper to learn it early, rather than after spending critical time and money.

If at all feasible, I recommend starting your rollout early with a pilot or “beta” phase, before the main rollout. You will be amazed at how much you learn about the market, the scope of the opportunity, and the real product features required. Iterate at this level to get it right before you try to scale up, or even finalize the plan.

So if you know someone who is always talking about their hot ideas, just suggest, like the investors I know, that they come back for money when they have completed the above steps. The reality is that customers only pay for solutions, and there is no market for ideas. Everyone dreams of having the magic “million dollar idea,” but I haven’t seen one yet.

You can’t succeed in your new startup if you can’t win customers, and the new Internet-empowered customers are tough. They are in control, and they no longer care where or from whom they buy. They do have a specific purchase progression with key milestone moments that determine your win or loss outcome in every transaction.

I agree with the premise in a new book by the widely respected expert on business growth, Robert H. Bloom’s “The New Experts,” that today’s customers are armed with three lethal weapons – instant access to information about every potential purchase, immense choice, and real-time comparison of competitive prices.

They don’t care about customer loyalty, and all that matters is that you deliver what matters most to them, when it matters most. If you are a new entrepreneur, you business life depends on understanding the following four decisive moments in their buying process:

1. Your now-or-never moment. This is your buyer’s all-too-brief first point of contact with your business. You have to create customer preference at this moment or the customer will vanish – probably forever. The key lesson here is to think like a buyer, not a seller. The first priority must be to get your prospect to know you and trust you.
2. Your make-or-break moment. This refers to the often extended period of consideration, negotiation, and decision to purchase, during which far too many transactions fall through. You win here by remaining consistently engaged with real interaction and involvement, and by knowing their needs and values better than any competitor.
3. Your keep-or-lose moment. This moment is the period when your customer is actually using your products and services. Rather than a sigh of relief at the sale, you must redouble your efforts to improve the relationship while the customer is first using, consuming, enjoying, and relying on the product or service they purchased from you.
4. Your multiplier moment. This moment is when you can convert a one-time customer into a repeat customer and an advocate and referral source for your company. These are the transactions that require far less investment and will create far more profitable revenue. You need a reliable system of metrics to measure your performance here.

While this is viewed by customers as a blessing, this buyer empowerment is seen by many businesses as a curse. Some won’t change, and they will die. As a startup, you at least don’t have to overcome the inertia of how things have always been done in your company, but you do have to recognize the new reality and use it to your competitive advantage.

The simple recommendation is that empowered customers have to be met by your empowered employees, using the same Internet technologies to keep up . After you embrace the new reality, the first thing you need to do is get the new requirements ingrained in your most innovative employees. Then you have to trust them.

Trust them to think and act independently on behalf of your startup and your brand. Clear a path for them, see what they come up with, provide resources, and support them. When they make mistakes, highlight the learning experience, pick them up and get them innovating again.

The other things that your whole team needs to do are to reduce complexity and deliver a consistent customer experience. This allows your startup to handle new input, resolve customer issues and move forward more swiftly. Entrepreneurs that recognize this empowerment and the importance of delivering a positive, consistent customer experience will gain and maintain the competitive advantage.

Because it’s a wide-open market, the latest technology often comes to consumers first. The old-style, top-down, “push” marketing, where you drive the process, isn’t working anymore. You need to understand and capitalize on the decisive moments of empowered customers now-or-never.

These days, I’m hearing more and more about Location-Based Services (LBS) as the next big opportunity for startups. So far, it’s just another mobile phone app that tells people where there friends are (Foursquare and Facebook Places), but it’s poised to be a lot more. Internet marketers see it as a better way to target consumers, and even retarget them to close a sale.

But entrepreneurs need to look more broadly than this to tracking, navigation solutions, safety, security, local business search, and payments. Beyond mobile phones, the same concepts can be applied to embedded systems, portable navigation devices, and laptops. Before long, the opportunities will be even greater from mining this data to reveal further insights.

As outlined by Adam Holden-Bache recently on Social Media B2B, I’m convinced that business-to-business has more money and more untapped opportunities, along the following lines:

• Strategic partnerships. If your B2B contacts are frequenting other non-competitive local businesses, LBS data could point you to more lucrative business partnerships. “Coopetition,” or strategic cooperation with a competitor is another angle.

• Sponsorships and advertising. If your B2B contacts check-in regularly at certain types of locations (entertainment venues, stores, etc.) then you may want to consider potential sponsorships or advertising opportunities with that business or venue.

• Incentives or rewards. Knowing what your contacts like to do will give you insight on ways you can reward them. If you see a large percentage of your contacts checking into coffee shops each morning, you may want to consider gift cards as a possible reward for an upcoming incentive program.

• Event marketing. Are you seeing a lot of your contacts attending certain business events? Whether it’s a local tweet-up or a major conference, this knowledge could be useful to help you plan what events you should sponsor or where you should set up your next booth.

• Lead generation. Identify potential new relationships. See who is checking into your business. See who checks into your competition. See who checks in to the business events that your existing contacts attend.

• Thought leadership. If you know your contacts’ real-life interests, you could use that information in your marketing efforts. Here we tread on that fine line between value delivery and individual worry about privacy invasion.

• Branded entertainment. Leave tips where your contacts go (maybe similar to what History Channel does on Foursquare). Create a trip in Gowalla (see what Whole Foods or Toms Shoes is doing) or create a society in Whrrl (check out USA Today’s society).

• Understand the competition. Understand how users are physically interacting with your competition, and if so, what they are doing before and after those visits. If you notice any trends, you may be able to position your brand to cut-off a potential visit before it happens.

• Stronger nurturing and relationship building. During lead nurturing, you could use LBS data to better understanding your contacts’ interests and use that to your advantage. LBS data can not only give you information to drive the relationship, but you can also use it to identify your sales reps with similar interests and partner them with the prospect.

If you think location-based services are a long way from mainstream, take a look at the new research from a Microsoft survey that LBS may be poised to follow in the footsteps of the ATM, which took some time to dispel safety and privacy concerns on its way to being universally accepted. They claim 51% of the people surveyed around the world have already used LBS.

Juniper forecasts that by 2014 the global opportunity for LBS will reach $13 billion, and Global Industry Analysts projects that by 2015 the global LBS market could be $21 billion. These numbers and the B2B applications are more than enough to catch the attention of venture capitalists and angel investors. All you need to add is an innovative idea and viable business model.

It’s a long way from an entrepreneur’s “idea” to a working product with a real market and paying customers. A necessary intermediate step for proof of concept, credibility with potential investors, and communication with your team, is a working prototype. Building a prototype should be an early and high priority task for every startup.

A prototype doesn’t need to look great, or be built to scale, but it better accurately translate your vision into something real and tangible. For less tangible products, like software, it should simulate the look and feel of the final product on relevant base hardware. Here are some key objectives to keep in mind when designing your prototype:

1. Validate the customer need and opportunity. I always hate it when I see startups invest millions of dollars in technology before they validate their ideas in the market, only to find that customers seem to be looking for something slightly different. Test your idea early in a form that is easy and inexpensive to modify.
2. Demonstrate to you and your team that your idea is implementable. No matter how strong your vision and theory, you won’t know for sure until you see it, that it really works. Even the best ideas often fail. Even when it works, key members of your team may not understand it all until they can touch and feel it.
3. Leverage the technology to change directions as needed. In these days of rapid change, almost every startup has to adapt their solution, business model, or target customer. A pre-production prototype will allow you to be adaptive without dire consequences.
4. Convince potential investors to take you seriously. Angels and venture capitalists are all about reducing the risk. Per the above points, if you have a validated a working prototype, investment risks are dramatically reduced. These days, if you don’t have a proven prototype, investors probably won’t even talk to you.
5. Early start on testing performance, materials, and quality. Work with the prototype will help you determine the best materials, like metal versus plastic, to assure acceptable performance and durability. Don’t wait for the final production model to find out that your product has a weak link in one of the common environments.
6. Basis for working with vendors to finalize costs, manufacturing, and marketing. After the market and product have been validated, the real challenge comes. You need to find vendors who can deliver in less cost and time than competitors, and build distribution and support channels. A prototype is the three-dimensional version of your vision.

There is nothing wrong with starting simple, engaging a friend who does mechanical design, or a student at a local industrial design school. In fact, many universities have expert professors, graduate students, and laboratories in all the key technologies, and they may be happy to do the work for you, if they can use it for class projects and Government Grant applications.

If you are ready for the next stage, it’s easy to find commercial resources on the Internet, like ThomasNet, a one-stop database of 650,000 manufacturers, distributors, and prototype developers, covering every state and country. There are new methods of prototyping, like stereo-lithography, which allow plastic prototypes to be made directly from computer drawings for a few hundred dollars, rather than waiting for injection molding at more than $10,000 per item.

Even at early stages, you can get invention support services from sites like Invention Home in Pittsburg. Just don’t get carried away here, and remember that the invention process is risky, with only a small percentage of inventions or products succeeding on the market. There is no magic, so don’t spend all your money assuming that these companies will guarantee your success.

Don’t skip the prototype stage for all the business reasons listed, and because it is a great way to explore possibilities, and have fun using your creative juices. The prototype is where you really bring your product idea to life, for yourself, as well as for everyone else.