Products churn in and out of the marketplace faster than ever these days. Marvelous, ambitious products whose debut we watch in videos that go viral don’t seem to make it to market at all. In significant ways, it’s a fantastic time to be a product developer. 3D printing has become affordable. Maker spaces are widespread. You can use crowdfunding to pull, rather than push, a project to life. Want to grow your brand? Download Snapchat, the free app. But, there’s also the fact that the lifespan of most consumer products is a mere 18 months. Which, needless to say, is brief. Launching a product from scratch — prototyping, filing intellectual property, working with manufacturers likely overseas — is a major feat that can easily take years. I know firsthand because I meet inventor entrepreneurs all over the country who tell me about it.
Venturing isn’t their — or your — only option, though. There’s an alternative: You can try to license your ideas for new products. Open innovation is more popular than ever. Don’t just take my word for it. A recent WSJ article detailed at length how industrial companies like Airbus, the aircraft manufacturer, are embracing it.
But when I spoke at an expo hosted by the Michigan Inventors Coalition recently, many of the people I met had never considered licensing. (I might add, despite my best efforts! I’ve been writing about the licensing lifestyle for two years now.) By and large, they were doing it the old way. Building prototypes, filing expensive patents, and ordering small runs of inventory that then sat idle in their garages. One gentleman told me that it had taken him ten years to pay off the debt he owed and sell his company.
He was one of the lucky ones.
Even if you do bring your idea to market, most retailers aren’t interested in carrying a single new item. They want to see more than one SKU. So really, you need an entire line. It’s doable, but it’s hard — even with a good business plan and self-funding. I know firsthand; I built an award-winning company selling unusually shaped guitar picks. It took more time and money than you can possibly imagine. And we’re talking picks — tiny, thin pieces of plastic. If you’re lucky, you can become successful. But even then you’ll always be looking over your shoulder, wondering when and how your competition is going to come in.
The conclusion I’ve come to after a lifetime as an entrepreneur? Test before you invest, and quickly. These are the strategies I rely on and recommend. They will save you time, money, and most of all — from ending up with a garage full of product you can’t sell.
1. File a provisional patent application first. If you’re classified as a small entity, doing so will cost you $65. Given the lifespan of most new products, filing a patent is foolish to me. To be clear, ideas differ. I focus on bringing small improvements to existing products to market because they’re the most likely to work out. If you have a big idea, meaning an idea that requires a lot of capital and a tremendous amount of time to develop, then no. Those kinds of ideas require an entirely different strategy. To establish ownership over an idea like that, you will need to build a wall of protection with many patents. That, needless to say, requires a lot of money. I’m a no-risk entrepreneur, so that doesn’t work for me. Again, it’s because that’s what I experienced: When I hurried to file two patents on one of my innovations, they later turned out to be worthless.
2. Try to license instead of venture. The great thing about licensing is, you don’t have to make a decision right away. You’re basically renting out your invention idea to a company that agrees to pay you royalties on the wholesale price of every unit it sells. Licensing is a partnership. A great one for solo artists, I’d argue. Your licensee has the capital you need. It has the existing relationships with distributors and retailers you need. It’s capable, in short, of bringing your product idea to market speedily. Beyond that, submitting your concepts to companies for licensing consideration is in and of itself a kind of test — a cheap one. Is the manufacturer intrigued? What are their concerns? What don’t they like about your idea or envision as an obstacle? That information is priceless.
3. Sell the benefit first. Personally? I want to know whether my idea is marketable or not as soon as I can, preferably before I spend one dime. Creating a sell sheet and aproduct marketing video will cost you more than that, which I recommend doing — but not by much. Use those tools to see the benefit first.
4. Focus on speed to market. If the most powerful company in the world cannot protect its technology, what do you think our chances are? Speed to market is the best protection. So focus on partnering with a potential licensee that has great distribution. Stay involved enough to ensure your licensee is doing everything it should to leverage its power to compete in the marketplace. Protect yourself further by providing outstanding customer service.
5. Keep coming up with more new ideas all the time. Never stop. Be fluid. In the blink of an eye, it will be time to bring a new product to market. Licensing is a numbers game. The possibilities are limitless! Can you imagine how many ideas you can come up with? Send them to as many potential licensees as you can. Your chances of success are going to be far greater than if you work on just one of your ideas.
Don’t let your ego get in the way. And don’t just take it from me: Educate yourself. You have options.
Originally published on Inc.com September 30th 2016.
