The majority of aspiring business owners believe that banks are the only source of funding for their companies, much as they believe that building a manufacturing and distribution business is necessary for their new product idea. For the majority of inventors with fresh product ideas, it is much preferable to license their invention to a manufacturer than to raise the money necessary to produce and market the product on their own.
Success as an entrepreneur frequently conflicts with the abilities and frame of mind that make them successful as inventors. Most fresh product concepts will never be realized unless they know how to raise significant amounts of money.
The best way for most people with a brand-new product creation or concept to monetize it is to simply license it. Giving a corporation the right to use your intellectual property to make money for themselves for a set period of time is known as licensing, provided certain requirements are met, such as achieving a particular sales volume.
The license is given in return for the corporation paying a set fee or a royalty on sales. The company that is interested in licensing a new product idea typically already manufactures, markets, advertises, and distributes products that are similar. The benefit of using existing infrastructure is one of the best things about licensing your idea. Most inventors want to focus on ideation, not running a business.
If you have a product idea, you might be debating whether or not to license it. There are several advantages to licensing your product concept that you might not have thought of.
To begin with, licensing your product concept can assist you in safeguarding your intellectual property. If you do not license your product concept, it might be stolen and used without your knowledge. You may guarantee that only people with your permission may produce your product concept by licensing it.
Your ability to make money is yet another advantage of licensing your product concept. A business will pay you a royalty for each unit they sell if you license your product idea to them. This can provide you with a nice stream of income that you can use to support yourself or your business.
Additionally, licensing your product concept might aid in brand development. If you license your product concept to a business, they will probably market it through their own channels of distribution. This can assist spread the word about your company’s name and encourage customers to buy from you in the future.
Overall, you should think about the advantages of licensing your product idea. Leasing your product concept can be the best option for you if you’re seeking a strategy to make cash, safeguard your intellectual property, or establish your brand.
How to License Your Product Idea?
If you have a fantastic product concept, you might be asking how to license it so that you can sell it and profit from it. Although licensing a product idea is not a difficult procedure, there are a few steps you must do to make it happen. Here is a brief overview of the procedures you must follow to license your product idea:
1. Do some research and make sure your idea is unique.
Before you start the process of licensing your product, you need to make sure that your idea is actually unique. There’s no point in trying to license something that’s already been done before or that isn’t really new and innovative. Do some research online and see if there’s anything else like your idea out there. If not, then you’re on the right track.
2. Find a company that would be interested in your idea.
Once you’ve established that your idea is unique, the next step is to find a company that would be interested in licensing it. This is where your research skills will come in handy again. Try to find a company that makes products similar to what you’re proposing. Once you’ve found a few potential companies, reach out to them and explain your idea.
3. Negotiate a licensing agreement.
If a company is interested in your idea, the next step is to negotiate a licensing agreement. This is where you’ll need to decide on things like how much the company will pay you for the rights to your idea, how long the agreement will last, and what rights you’ll retain. It’s important to have a lawyer look over any agreement before you sign it, just to be sure that you’re getting a fair deal.
4. Start commercializing your product.
Once you’ve signed a licensing agreement, it’s time to start commercializing your product. This involves marketing and selling your product to consumers. If you’ve done your research and found a good company to license your idea to, then this part should be relatively easy. Just make sure to follow through on your end of the agreement so that you don’t run into any legal trouble down the road.
Read Also: What Are Some Successful Business Ideas?
Licensing your product idea is a great way to commercialize it and make some money. Just make sure to do your research and find a reputable company to work with.
If you have a brilliant product concept, licensing it can be a reasonably simple procedure if you know what to anticipate and who to contact. The basics are as follows:
1. Do your homework.
Before approaching potential licensees, it’s important to understand the industry you’re targeting and the specific needs of companies within that industry. This research will help you determine the potential value of your product idea and identify potential licensee candidates.
2. Develop a licensing proposal.
Once you’ve done your research and have identified potential licensee candidates, it’s time to develop a licensing proposal. This document should include an overview of your product idea, an explanation of its potential value to the licensee, and your proposed terms for licensing the product.
3. Approach potential licensees.
With your licensing proposal in hand, you are ready to approach potential licensees. The best way to do this is to contact the companies directly and schedule a meeting or telephone call to discuss your proposal.
4. Negotiate the terms of the license agreement.
If a potential licensee is interested in your product idea, the next step is to negotiate the terms of the license agreement. This process can be complex, so it’s important to have a clear understanding of your goals and objectives going into the negotiation.
5. Execute the license agreement.
Once the terms of the license agreement have been agreed upon, it is time to execute the agreement. This document will spell out the specific rights and obligations of both parties, so it’s important to make sure you understand it completely before signing.
The process of licensing your product idea can be fairly simple if you know what to expect and whom to approach. By doing your homework, developing a strong licensing proposal, and negotiating favorable terms, you can increase the chances of successfully licensing your product idea.
How do You Sell an Idea to Someone?
During the sales process, differentiate yourself from the competition by selling ideas. They aid in establishing you as a solutions provider rather than a seller. It’s no longer a commodity transaction where your success depends on being able to outbid your rival on price. For instance, you don’t market tools for tiny businesses. You’re pitching them on how to grow their little business, and you have a good concept.
1. Make it personal
When you’re trying to sell an idea, the best way to position it is to focus on how your idea will impact the person you’re targeting. This requires investigation on your part to understand how your idea will translate into solving a problem for the buyer.
If your idea can help them meet their sales quotas or make their systems or processes more efficient, that’s great. If it helps them achieve personal goals, it’s even better. Include a personal selling approach to your sales strategy.
2. Sell yourself
People buy from people they trust. It doesn’t matter if you’re selling a product, service, or idea. If they don’t trust you, why would they accept your premise? If you want to sell an idea, you’ve also got to sell yourself.
This is more important than ever. Just 18% of people consider salespeople to be trustworthy. That’s less trustworthy than professional athletes, musicians, lawyers, or baristas. Tackle this head-on and provide evidence that you can be trusted.
3. Tell stories
Stories are powerful. They can help you make a connection with a prospect and show how an idea becomes a reality. Too many salespeople tend to load up their presentations with facts and figures. While they may help tell a part of the story, these numbers just aren’t memorable. One study showed that 63% of attendees for a presentation remembered the stories told while just 5% remembered any of the statistics presented.
Stories should have a beginning, middle, and end and lead to your goal: validating your idea. A lot of salespeople have made a lot of money using this simple four-step formula:
- Identify the hero: This is your prospect, who wants to build a successful company and take care of their customers.
- Create a villain: This is where you describe the problem or pain point that prevents your hero from meeting their goals.
- Vanquish the villain: Banish the problem or pain by having your idea or solution come to the rescue!
- Live happily ever after: You’ve vanquished the foe, solved the problem, and the hero — your prospect — gets the results they needed.
4. Be transparent
Be as transparent as possible when you are idea selling. For your prospect, it may be the first time they’ve heard your idea. All the work you’ve done to develop the idea and bring it to them is hidden from view. Open up the curtain and let them see the work that’s gone into it. Explain the research you did and why it’s the right idea for them.
5. Highlight your unique selling proposition
When you’re trying to sell a business idea, you’ve also got to sell what makes it different from anybody else’s ideas. You need to highlight your unique selling proposition (USP). Your USP is the one specific benefit that only your idea or business can provide.
Once the conversation moves past the selling a business idea stage, the next question will be “Why do business with you?” You’ve got to have the answer ready. There’s no shortage of suppliers out there in any industry and many can sell it cheaper. If you can’t articulate your USP and what sets your idea apart, you won’t close the deal.
6. Showcase the ROI
No matter how great your idea is, you need to demonstrate the ROI. This goes beyond telling people how much money they’ll make. The best approach is to visually walk them through it.
ROI = Net Profit / Total Investment * 100
If it costs $20,000 to implement your idea and it brings $100,000 in new sales, the ROI is 500%. Breaking it down to easy-to-digest numbers can make it tangible.
7. Share success stories
Help mitigate risk by sharing success stories of how others using your ideas benefitted. There’s safety in numbers. Better yet, use testimonials. Talk to your best customers and ask for a quote and a picture you can drop into a slide deck, or record a video on your phone.
Focus on quantifiable results. “She brought me this idea and told me we’d get a 5 to 1 return. We actually got 7 to 1,” is going to be more effective than a generic endorsement. Use success stories to create confidence in your ideas. It reduces the feeling of risk in buying your idea.
8. Create comfort
Idea selling pushes someone to think differently or take a leap of faith. You must get people comfortable with buying ideas and provide them with peace of mind.
People worry about their jobs, reputations, status, families, and finances. If your idea helps reduce their concern or worry about any of these items, it helps remove doubt. That’s part of why ROI and success stories are so powerful.
9. Create urgency
We hear it from our sales teams frequently. Creating urgency is one of the top challenges when getting someone to buy an idea or close the deal. You can inject some urgency by setting deadlines for follow-up, offering incentives to move forward, or letting a prospect know that you’ve got other people who will hear your idea.
Whatever you do, don’t create an artificial deadline or false sense of urgency. This can damage your relationship and undermine the trust you’ve established.