Now Presenting...

Zeroing In

Once you have identified those companies likely to have the expertise to get your product manufactured, the next step is to determine their receptiveness to purchasing ideas from individuals. You need answers to these questions:

Does the company have a history of buying or licensing new products from individuals?

Does the company have a history of stealing ideas from inventors?

Does the company have existing products your idea can complement?

Does your idea fit with the company's product lines?

Has this company recently introduced a new product similar to yours, which it needs to protect?

Does the company have the necessary tools and work force to efficiently design, build and sell your idea?

You will have gotten the answers to some of these questions through the research you've already gathered. If a company is publicly traded, information on license agreements and litigation can be obtained through the company's required financial filings and annual reports. Additional information can be obtained through the Better Business Bureau, a Dun & Bradstreet Business Information Report or by having an attorney conduct a litigation search on the company.

Find out as much as you can about the financial condition of the prospective company. You need to know if it's going to be around to market the product and pay you what you're owed. This is a difficult task, especially if it's privately owned. Search the Web or visit the library to research articles about the company. Talk to the company's sales representatives, suppliers or customers to get a feel for the company.

If you discover something negative about the company's financial situation, this isn't necessarily a bad thing. A company in a financial crunch can still be a good licensee if it sees your idea as a way to save the company.

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This article was originally published in the June 1997 print edition of Entrepreneur with the headline: Now Presenting....

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