Perhaps you've got a keen mind for inventing--but not much of a head for business. Or maybe you're good at both, but you'd rather focus your time on developing ideas rather than launching a full-scale business. Fortunately, there's an option that suits your needs perfectly: licensing your invention idea. Licensing is simply the process of selling your idea to a company that'll develop it fully, taking on all the business-related tasks that launching a new product involves. Licensing can also be a great option for those whose financial resources are very limited.
Just as there are steps to starting your own business, there's a smart way to approach licensing your invention. I break it down here into three main steps.
Step 1: Gather Information
Yes, it's the information age--which means the more info you're armed with, the better off you'll be. Licensing your idea is no exception. Before you even consider approaching prospective companies to sell your idea, be sure you're clear in the following areas:
- Know your market. This means gathering as much feedback as possible on your own invention idea. Focus group testing, even among friends and family, is one good way. You should also compile data on similar and competing products--info on what's out there, what's selling and who's producing it, for example.
- Do some legal legwork. Go as far as you can to determine if your invention is patentable or if it can be produced without infringement on other filed patents. A preliminary patent search on www.ustpo.gov will get you on your way. Also, the more information you can gather about regulatory issues or necessary legal steps, the better.
- Look into production. Learning about the production process can be extremely helpful, particularly if your invention calls for unique materials or unusual manufacturing techniques.
Step 2: Prepare a Professional Presentation
After you've gathered all the relevant information, you'll need to present it to potential licensors. Along with your most effective tool--a three-dimensional prototype model--you should develop a simple sell sheet to convey all the information you've gathered.
Your sell sheet should be a one- or two-page document that clearly states the following:
- The problem, challenge or need the product meets
- The product's features and benefits
- Your product's market
- The legal status of your invention (ie: patent pending, copyright or trademark info)
You should also develop an introductory letter to accompany your sell sheet, which introduces yourself, explains why you're contacting the licensee, and sets a time when you plan to follow up.
Step 3: Pinpoint Your Targets
You've gathered and prepared your information. Now what? Your next step is to determine the most appropriate contacts for this awesome new business opportunity. As a first step, I recommend you create a list of at least 50 prospective targets. As with any type of sales, the more prospects, the better. It's a numbers game, and most companies will turn you down for one reason or another. Also note that a more focused list will bring you more effective results.
So how can you identify companies that might make a good fit? If it's a consumer item, it's as simple as a shopping trip around town. Go to a store where you'd expect to see your product sold and jot down the names of manufacturers who produce similar products. You may also be familiar with many of these companies from your prior market research.
Another way to identify prospective manufacturers is to identify the trade association that serves the industry in which your product will fall. Visit their websites and look for member lists. Some trade associations list the manufacturers scheduled to exhibit at their upcoming trade shows.
Online databases can also be a great resource. Local public business libraries are often linked to database systems that allow you to search for companies in specific industries. And, from your own computer, you can visit www.hoovers.com , a great online database that provides information about many large-sized companies. The site even enables you to find companies that have specific key words in their description.
Tamara Monosoff is the author of Your Million Dollar Dream: Regain Control & Be Your Own Boss and The Mom Inventors Handbook, Secrets of Millionaire Moms, and co-author of The One Page Business Plan for Women in Business. She is also the and CEO of www.MomInvented.com. Connect on Twitter: @mominventors and on Facebook: facebook.com/MomInvented.