Bizstartup.ie - I have a business idea but don’t have the time or resources to work on it. How can I sell it to a company I know does?

To illustrate why it is so difficult to sell a pure business idea, imagine that you were the first person to come up with the concept of a dog-walking service: the business idea is that busy pet owners will pay money to have someone regularly exercise their dog. In hindsight we all now know that a dog-walking service can be a profitable business, but until someone has put in the time, effort and money to show it will work, it remains an unproven idea. 

The question is whether you can persuade some other businessperson, in advance, to part with cash for that basic idea. There are a couple of reasons why this is unlikely to happen.

The perspiration/inspiration mix

Firstly, recall that Thomas Edison said: "Genius is one percent inspiration and ninety-nine percent perspiration". The same mix of inspiration and perspiration is probably required to get from an idea to a profitable business.

If you can demonstrate the idea to work by actually getting a business up and running, then perhaps someone will buy the business. However, in that case, they will not be paying for the idea, but instead will be buying what really gives the business its value: the list of clients; the ongoing contracts; the brand name and loyalty; the trained employees; the branded van; etc.

Secondly, unlike a patentable technical invention, a pure business idea cannot be protected and is not the property of any one person. A technical invention, if new and not obvious, can be patented and that patent right can be sold for real value. This is because the patent gives the buyer an exclusive right to make and sell the invention. In contrast, a business idea can be copied by anyone, so any competing entrepreneur can give the dog-walking idea a try as soon as they hear of it, or as soon as they see someone else doing it. 

Since you can't get exclusive rights in the idea for a business, it has no value unless and until it has been proven as a viable business.

Selling your idea to potential investors

Potential investors often ask the question: "what's to stop me from doing this better and cheaper than you?" Unless you have a good answer to this question, then the bare idea has no objective value to an investor.

It may seem unfair, but remember that lots of clever business ideas were never owned by anybody – think of pizza-delivery services, photocopy centres, drive-through restaurants, price-comparison websites, inkjet cartridge refills ... the list goes on and on. Since nobody ever owned these ideas, not even the first person to do them, it would never have been possible to sell the ideas. In contrast, successful businesses based on these ideas can have huge value, but the value comes mostly from the perspiration, not the inspiration.