Product Licensing Basics

Big, and Getting Bigger

To make the licensing process easier, you can always employ the services of a licensing agent or firm like Design Plus. A licensing professional can help with everything from contract negotiations and product development to packaging and merchandising. (Just be sure any licensing professional you consult is actually a professional. For more on this, see "Do Your Research," below. Get far enough with your licensed product, and you may find your company growing rapidly. Little Ruler apparel is already a favorite with celebrity moms like Angelina Jolie, Britney Spears and Gwen Stefani. Plus, the company has gained media attention in a variety of forums, from parenting and skateboarding magazines to TV shows like Access Hollywood.

"Little Ruler received some valuable publicity immediately after the news that some high-profile celebrities had gotten some of our products," notes Jeff. "The Access Hollywood features drove a lot of traffic to our site and doubled our sales those months. A very large percentage of our business is repeat customers, so we'll continue to benefit from that."

Benefit they will. And so can you, if you're prepared to take on the challenges that licensing has to offer. Position your products as the ones consumers associate with their identity, and it won't be long before they'll have to have what you're selling.

Do Your Research
Where you start when seeking a license depends largely on the type of product you have, your prior industry experience and your knowledge of licensing in general. If you need to patent your product, as Bob Diee and Glenn Luthy did with their computer mouse shaped like a baseball cap, start at the U.S. Patent and Trademark Office website.

Then, to get the licensing ball rolling, visit the website of the International Licensing Industry Merchandisers' Association. In addition to basic licensing information, you'll find a feature called "Ask LIMA," where you can submit questions about the licensing industry. You'll also find links to dozens of licensing agents in a variety of industries. Another good resource is License magazine, which provides a searchable database of available licenses at http://tracker.licensemag.com.

Meyer Janet, a licensing professional in Atlanta, recommends attending a licensing show such as Licensing International, held annually at New York City's Jacob K. Javits Convention Center. "You can walk the show and find out what licensing is all about," says Janet. "People from around the world are there. You can really step into [licensing] and find out what you need."

Also, educate yourself about your target market. Read magazines and newspapers, and browse websites and blogs. Talk to or observe people in your target demographic, and take note of what they're buying at the mall, what they're wearing and how they're spending their time. "The most important thing is to have an understanding of the target market," says Janet. "That's a wonderful starting point to find a license that matches your goals."

Karen E. Spaeder, a freelance writer in Southern California, discovered the world of licensing when her son discovered superheroes.

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Karen E. Spaeder is a freelance business writer in Southern California.

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This article was originally published in the February 2007 print edition of Entrepreneur's StartUps with the headline: License to Profit.

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