{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to Amazon.com and enter inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}
Inventors Second Licensing Attempts Part 2
Many inventors are unsuccessful at first when they try to license their products. This can be either because no one wanted to license the product or no one was willing to offer a reasonable agreement. Before scrapping the product, inventors should reevaluate what they have done so far to see if they can still yet find a lucrative licensing deal. We will deal with this topic in two parts: Part 1 — Did You Do Your Homework — Catching Up and Part 2 — Sales — Where Did I Go Wrong?
There are many steps involved in bringing a product to market. We have a simple outline of these steps called 10 Steps To Bring a Product to Market (click here), but each step contains many small steps. Your attempt to license your product may have gone wrong at any one of these steps, but typically inventors run into trouble in three areas: market research, product development and preparation for your licensing presentation (including researching potential licensors).
Many inventors think they can have an idea, get a patent and companies will be clamoring to license the product. This almost never happens. When you patent an idea, you have a patent for an unproven concept. Companies will worry first that your idea might not even work without seeing a working prototype and even if it does work, they have no idea if it will sell — the concept is still unproven.
It is completely up to you to turn your unproven concept into a proven market success. Until you do this, your chances of successfully licensing your idea will be very low. It is impossible to completely prove your concept, but a mix of salesmanship and some hard facts can convince your licensors that your product can succeed.
The first step to proving your concept is to build a prototype, at least some kind of working model just to prove that your concept works. If you have not done this you are asking potential licensors too much: to believe the concept works and that it will sell. Take some of the doubt out by proving it works.
The closer your prototype resembles the final product the better. If your prototype is made from wood and duct tape it is less impressive than a prototype made of plastic and metal. You want to make licensing as easy as possible so you want a prototype as impressive as possible.
The same goes for packaging. You want to show that your product can be effectively packaged and will look attractive in packaging. Also, for most products, the packaging is the only sales person it has, so if your packaging strongly sells your product, licensors will be more strongly convinced of its potential. A simple test will show how important a package can be. For the next five products you buy, take them out of the package and lay them on the table. Would you have bought the product as it is without a package? Maybe, but the packaging’s job is to sell the product, and that is just as true when you are trying to license the product as when you are trying to sell it in a store.
Packaging is not as important as a working prototype, but if you can afford to design packaging, it is often worth it. I believe a great package will double your chances of licensing an idea.
If you tried to license your product without a prototype or package, your potential licensors might not have been able to visualize your idea or maybe just didn’t believe it would work. Give them something to touch and see.
Another way to take the uncertainty out of the picture is to have expert help, in any capacity (i.e consulting, mentoring, investing, as a partner). Having an expert behind you gives extra credence to your idea. It shows an expert thought enough of your idea to offer help and it also shows you have had knowledgeable advice guiding you through market research and product development. The goal of having expert help is to help convince the potential licensee that your product is worthwhile. So when you look for help, look in terms of what impact that person’s help will have on a potential licensee. If you have a baby product, a partnership arrangement with a baby store owner, a manufacturer’s sales rep that sells baby products, or an inventor that has licensed several baby products are the types of partners that will interest a baby manufacturer. To be a meaningful, your expert help needs a direct tie into the industry.
Often inventors send their ideas into a company and expect that company will respond. They might, but that is not the most effective approach. I find you will have much more success if you have someone the company knows present your product to them. I recently wanted to help an inventor license a product. Step one was approach the owners of stores who sold the type of product that the inventor wanted to license and ask the owner for the names of sales reps who they bought products from. Step 2 was to take those representatives out to lunch to see if they might be interested in the product idea. Step 3 was to ask the representative if they knew any companies that might be interested in seeing the product. Step 4 in some cases is to ask for the name of the person to contact, or better yet to have the person set up a meeting with the right people in the target company. In this recent example, the inventor followed these steps and now has an appointment with the President of the company.
The best thing you can do to make your concept as proven as possible is to have a low volume production run and a small market test. You will probably lose money on this test since low volume production is very expensive, but a successful market test will greatly increase your chances of finding a licensor. You may want to enlist some help to set up a proper sales test or just choose a small area and do everything you can (advertisements, in-store demonstrations) to make that test succeed. Then make the successful test a key part of your licensing presentation.
If your attempt at licensing has failed, it is likely because your product is just too unproven for potential licensors. You can ask them why they didn’t license it and they may tell you exactly what they think is unproven. Then take steps to prove your product’s marketability to them. In fact, ask them what you can do to prove the concept to them ( i.e. sales test, working prototype) and then do all they ask you to. If the company says your product doesn’t really fit the company’s direction, just take your product to the next company.
Even if you take all of these steps you still may need to talk to dozens of companies before finding one willing to license your product. So stick with it. Even if that doesn’t work, you still have one option left open to you: sell the idea yourself.
You may find that you can make a nice income selling your product yourself in some limited way. You can grow your business slowly as you are able and then, once you not only have proven that your product can sell, but also that you can base a business on it, you may finally find your licensor.
Do you need web content? Don Debelak, who has written 15 books published by major publishers such as McGraw Hill and Entrepreneur Press is currently writing web content. Check out more information at:
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