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Licensing is difficult unless you have a production model, production and some sales history. The main reason is companies feel taking on an outside product is a lot of work and expense. But you can make the process much easier companies if you use an outsource model, using one company to market the product and another company to manufacturer the product. A sales outlet is most important, because if you can make a case that the product will sell, manufacturers will often be willing to make it and often pick up the costs.
One of the first inventors I worked for developed a market best dental chair and developed a full marketing organization. Another inventor of another item from the dental office, using the outsource model, approach the chair inventor to sell his product offering a 30% discount off the wholesale price. The chair inventor accepted the product and the second inventor was able to procure the product and everyone was a big winner.
This is often the fastest way to bring a product to market, is low risk and allows you to move onto new ideas quickly since the other partners will continue to manufacture and market your idea without excessive involvement on your part. This is not for everyone and will require you to have strong deal-making skills, but the low-risk and low-investment aspect makes this appealing for most inventors, who are often strapped for cash.
Not everyone will be a good candidate for becoming an outsourcing partner. You need to find manufacturers who can add your product without too much investment in new machinery and who are running below capacity. Marketing partners must carry products similar to yours and your product must represent a significant increase in sales for the firm, at least 20%. In short, you need to find potential partners who have a lot to gain from taking on your product. This usually means you will not be dealing with industry leaders, but smaller companies hoping to catch up and overtake those leaders.
There are many options for marketing partners, distributors, small manufactures of complementary products, groups of sales reps, larger companies, and specialized marketing companies. The best way to find outsourced marketing partners is by attending industry trade shows and association meetings. While at the shows walk around and talk to companies with smaller booths with complementary products, explain your product to them and ask: how they sell their product; what distributors they use, and see if they would be interested in any joint marketing programs.
To find a manufacturer you can use trade association directories, McRae’s Bluebook www.macraesBluebook.com or the Thomas Register www.thomasregister.com, and evaluate whether or not they could make your product, I’ve found it useful to contact instead companies that make the equipment needed to make your product. For example, if your product requires injection molding equipment, contact manufacturers of injection molding equipment and ask the salesperson there to recommend people in your area that have the right type of equipment. Tell salespeople selling the equipment you need a manufacturer with a fair amount of available production capacity and the salesperson will often give you the best list of manufactures to contact.
Proposing a Deal
Before you start approaching potential partners, you should know what kind of deal you are hoping to set up. Have an idea about what kind of investments each partner will make, how you will divide profits and how you will handle the future of your idea. Basically what you have to do offer is an exclusive, that you will commit to produce the product with a manufacturer for certain considerations, and you will commit to selling only to the marketer for a certain length of time in return for certain considerations.